MNI Monthly European Carbon Market Policy Monitor: December

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Executive Summary: 

• EU Automotive Package: The EU’s 2035 combustion-engine ban faces growing pushback from member states and automakers, prompting a potential delay of the Commission’s 10 December review.
• UKA/EUA Dec25 Options Expiry: On the non-policy side, EUA Dec-25 options head into 10 December expiry with implied volatility inching up from record lows, skew turning more negative, and open interest thinning—highlighting steady volatility expectations but rising relative demand for downside protection. UKA Dec-25 options approach 10 December expiry with implied volatility at multi-month highs and a record put/call tilt, underscoring heightened demand for downside protection as overall open interest dwindles.