Real World Effects of Energy Policies on Fuel Prices
Market Monday - Week 4 - Regulatory measures affect local diesel fuel markets in the EU
Typically, the first weeks of the year are about spotting trends that will define the quarters ahead. But some of the time within those weeks also needs to be spent on adjusting the new realities coming with the date change to 1st of January 2026. It brought not only numerous bright celebration, but also a plethora of legislative changes, directly affecting transportation markets like changing labor laws, salaries, road tolls and energy policies.
While Brent Crude oil price remained virtually flat over the turn of the year, European wholesale diesel markets experienced volatility decoupled from supply. Several countries enacted significant policy changes, which shifted the market by more than 5% upwards or downwards, as reflected in the table below.
In those seven countries I am seeing significant movements, especially compared to the rest of the EU or pure oil price evolution.
What actually happened in the outlier countries? Let’s examine them:
The Netherlands: The shift from the HBE (Renewable Fuel Unit) system to the new carbon emission reduction model ERE, which eliminated “multipliers” and introduced stricter compliance. Previously, suppliers could count one liter of biofuel as 2 or 4 toward their target, but now they pay for the full physical carbon intensity, increasing the compliance cost per liter.
Germany: National CO2 certificate price (BEHG) floor rose, the GHG reduction quota increased to 12%, and double-counting biofuels was removed, coupled with stricter verification rules on imports. While each of the changes had relatively minor effect, all of them combined contributed to a sizeable increase.
France: The government increased the “Energy Savings Certificates” (CEE) obligation by 30%, driving up prices of certificates. This extra cost was passed directly into wholesale contracts.
Sweden: After slashing biofuel mandates in 2024, the government reversed course, raising the reduction obligation from 6% to 10% to meet EU targets, forcing more of the expensive HVO back into the mix.
Finland: In stark contrast to its western neighbor, the Finnish government activated a “Flexibility Mechanism” allowing suppliers to meet obligations by financing cheaper emission reduction projects (like forestry or heating) rather than physically blending expensive HVO. This effectively brought the cost of carbon down, removing nearly 20 cents per liter of “green premium” overnight.
Similar policy bifurcation occurred in the Northern Balkans:
Croatia: The government lifted long-standing price and mar caps, allowing retailers to restore commercial margins to more attractive levels.
Slovenia: The state doubled down on market regulation, extending strict margin caps to highway service stations, artificially forcing average prices down.
Overall, while average EU price movement was relatively minor, it was heavily influenced by the few markets with significant regulatory changes. If you are utilizing “EU-average”-tied fuel floaters in your contracts now it might be a good time to rethink this approach.
Oleksandr Kulish
Senior Consultant