ACER warns EU that delayed gas decarbonisation will drive up energy bills
Europe's energy markets regulator says rising carbon costs will compound into higher prices unless the bloc accelerates clean-up of its gas market.
Europe's energy markets regulator called on Tuesday (2026-06-23) for the EU to accelerate decarbonisation of its natural gas market, warning that rising carbon costs would otherwise push energy prices higher across the bloc. The warning from ACER, the EU Agency for the Cooperation of Energy Regulators, frames what is often treated as a climate obligation as an affordability risk.4
Natural gas sits at the centre of European power generation and heating, meaning that carbon allowance costs pass directly into marginal electricity prices. As long as gas remains the dominant balancing fuel, every rise in the cost of ETS compliance adds to consumer bills. ACER's point is that the EU cannot decouple its energy price goal from its decarbonisation pace; delay on the latter creates the bill for the former.4
The regulator's 2026 monitoring programme, which covers electricity and gas wholesale markets as well as liquefied natural gas, tracks precisely these dynamics. ACER set up its monitoring framework to identify systemic vulnerabilities in EU energy markets, and Tuesday's (2026-06-23) communication signals that carbon cost passthrough in the gas sector has risen to that level of concern.3
ICE Endex TTF front-month natural gas traded at €41.73 on Tuesday (2026-06-23), a level where gas-to-coal switching in European power generation remains economically active at current carbon prices. That switching dynamic is precisely the transmission mechanism ACER is pointing to: carbon costs strong enough to push some generation away from coal do not disappear — they embed in the cost structure of the gas that replaces it.4
Energy Aspects offered a partial offset last month. The consultancy said in late May that the EU's Industrial Decarbonisation Bank and ETS investment booster scheme could channel more carbon allowances into the market from next year, applying downward pressure on EUA prices.1 Cheaper allowances would reduce the carbon passthrough into gas-fired generation costs in the short run. But they do not address the underlying question ACER is raising, which is about the gas market's long-run carbon intensity rather than the near-term allowance price.1
Storage adds a further complication. In late May (2026-05-21), the CEO of Met Group's Hungarian subsidiary described replenishing Europe's depleted gas storage ahead of winter as "the most important challenge ahead," with prices at the time failing to provide sufficient incentive for injections.2 Low storage going into winter tightens the balance, pushes TTF higher at peak moments, and amplifies the compounding effect ACER is warning about: elevated carbon costs on top of structurally higher gas prices.2
The regulator did not specify instruments or timetables in Tuesday's (2026-06-23) communication. Policy levers under active discussion in Brussels include biomethane blending obligations, hydrogen substitution targets, and adjustments to the pace of ETS carbon budget reductions. How quickly any of those translate into binding gas market changes will determine whether ACER's warning remains theoretical or becomes measurable in forward price curves.4
For traders, the immediate signal is limited. TTF has not moved sharply on the announcement, and the carbon channel into power prices is already well modelled by the market. What the ACER statement does is add institutional weight to the argument that EU gas demand should structurally decline through the decade — a view that, if reflected in policy, would put downward pressure on TTF prompt-seasonal spreads as medium-term demand expectations are revised lower. Whether Brussels acts with enough speed to affect the 2027 and 2028 forward markets is the question the regulator has put back on the table.4