From tariff threats to geopolitical tensions in Iran and rising energy costs, European carbon markets were tested on multiple fronts but ultimately held their ground, rebounding in March.

The Northeastern US power market (RGGI) stood out as anticipation builds around Virginia rejoining the program. Prices have rallied on expectations that rising emissions from the state’s data center expansion and increased reliance on gas-fired generation are expected to significantly boost allowance demand, helping drive prices higher.

Meanwhile, California regained policy clarity following the release of its long-awaited reform package and now heads toward a pivotal May Board vote.

As a whole, the quarter reinforces the case for carbon allowances as a differentiated source of return potential and portfolio resilience, particularly in volatile macro environments, where carbon markets have continued to move independently of traditional equities.

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