Key points
- TTF traded near €89/MWh on 22 October 2026, 177% above its level when the Middle East conflict began in February.
- Carbon is now priced at the EU border as well as inside it: the first CBAM certificate price was set at €75.36/tCO₂ in April.
- The Commission's AccelerateEU plan names biomethane as a homegrown supply lever. We expect buyers to value it as security supply, not only as a green attribute.
Ten months ago the European gas market looked settled. The one-month TTF contract fell below €27/MWh in early December 2025, its lowest level in 20 months, as LNG supply grew and storage looked comfortable. On 22 October 2026 the same benchmark stood near €89/MWh, according to European Commission data reported by ANSA. That is a 177% rise since February, when the conflict involving Iran began and shipments through the Strait of Hormuz came into question.
Single-day prints, mostly the first trading day of each month. The late-February level is implied from the Commission's +177% figure.
Source: minfin.com.ua TTF history · Trading Economics · ANSA via SoldiOnline; Qiao Partners.
Diversification reduced one risk and exposed another
After 2022 Europe replaced Russian pipeline gas with LNG from the United States, Qatar and elsewhere. That reduced dependence on a single supplier. It did not reduce dependence on shipping lanes, or on competing with Asian buyers for the same cargoes. The 2026 disruption tested exactly that exposure.
Three features now define the market. Price volatility has become structural: a buyer who budgeted on the December 2025 forward curve is paying more than three times as much today. Gas and carbon now trade as one complex. December 2026 EUA futures touched about €92/t in mid-January, then fell back to €74–77/t by May as high gas prices changed fuel-switching economics. And carbon is now charged at the border. CBAM entered its definitive phase on 1 January 2026, and the Commission published the first quarterly CBAM certificate price, €75.36/tCO₂, on 7 April.
Brussels has framed biomethane as a security measure
The Commission's response, AccelerateEU (COM(2026) 370), was published on 22 April 2026. It combines short-term relief for households and industry with measures to cut exposure to imported fossil fuels, and it names biomethane among the domestic sources to scale up immediately. An EU biomethane platform followed. Energy Commissioner Dan Jørgensen described its purpose as strengthening security of supply.
The long-term carbon framework has hardened at the same time. On 5 March 2026 the Council formally adopted a 2040 target of a 90% net cut in emissions against 1990. In the same package, the start of ETS2, which prices fuel for buildings and road transport, moved one year to 1 January 2028.
| Date | Event | Relevance for gas buyers |
|---|---|---|
| 1 Jan | CBAM definitive phase begins | Carbon cost applies to imported steel, cement, aluminium, fertilisers, hydrogen and power |
| 15 Jan | EUA Dec-26 trades above €92/t | Highest carbon price in more than two years |
| 5 Mar | 2040 target adopted; ETS2 moved to 2028 | Long-term carbon trajectory fixed in law |
| 7 Apr | First CBAM certificate price: €75.36/t | Border carbon cost becomes a known number |
| 22 Apr | AccelerateEU published | Biomethane named as a domestic supply lever |
| 22 Oct | TTF near €89/MWh | Up 177% since February |
Source: ICAP · GMK Center · Homaio · Brussels Times.
Why the molecule matters here
Electrification will carry most of Europe's decarbonisation. A large share of demand still needs a gas or liquid fuel: high-temperature industrial heat, chemicals, heavy road transport, shipping, and seasonal balancing of the power system. For that demand the realistic options are imported fossil gas, hydrogen, liquid biofuels and biomethane.
Of these, biomethane is the only one that is produced domestically, chemically identical to natural gas, compatible with existing grids and burners, and commercially mature today. A plant fed by manure, crop residues or food waste injects into the same network that carries imported LNG. No new end-use equipment is needed.
Implications
For industrial buyers, fossil gas now carries three price risks at once: the commodity, the EU carbon price and, for exporters into the EU and their competitors, the border price. A multi-year biomethane contract addresses all three, which is why procurement teams that treated it as a sustainability purchase are starting to treat it as a hedge.
For investors, the security framing matters because it widens political support. Climate policy can be delayed, as ETS2 was. Security policy tends to outlast changes of government. Biomethane now has both behind it.
For governments, the 2030 target of 35 bcm is out of reach on the current build rate, which we examine in the second and third parts of this series. The lever that moves investment fastest is revenue certainty, through contracts for difference, auctions and blending obligations, rather than capital grants alone.
Outlook
Gas prices may ease if shipping normalises, and EUA prices will continue to move with them. We do not think the change in buyer behaviour will reverse with the price. The 2026 shock has shown industrial and public buyers what an imported molecule costs in a crisis, and the regulatory calendar to 2030 adds carbon cost on top. Capital that builds domestic renewable gas supply now is entering at a point where demand is supported by climate law and by security policy at the same time.