The price of permits in the European Union carbon dioxide market reached 100 euros ($106.57) per tonne for the first time on Tuesday, reflecting
the increased costs that factories and power plants must pay if they pollute (EU). The Allowance (EUA) contract hit a high of 100.70 euros per tonne at 11:35 GMT and was at 100.21 euros per tonne.
EUAs are the main currency of the European Union’s Emissions Trading System, which they emit per tonne of carbon dioxide as part of the bloc’s efforts to meet its climate goals.
The more emitters have to pay for EU carbon permits to cover each tonne of carbon dioxide they produce, the greater the incentive to invest in low-carbon technology and switch to less polluting fuels.
EU countries and lawmakers agreed on reforms to the EU carbon market at the end of the year, sparking a rally that has intensified in recent weeks as companies approach an April deadline to buy and deliver enough carbon permits to cover last year’s CO2 . pocket money emissions Expectations of cooler weather and lower wind speeds boosted demand for permits from fossil fuel energy producers in recent days,
traders said, and buying by speculators also pushed prices higher.
The price increase also follows an increase in demand for CO2 permits in the electricity sector in 2022, when a decrease in gas supply from Russia increased 7 percent of the EU’s electricity production, despite fossil fuel producing the most carbon dioxide emissions high CO2 price.
The return to coal has raised fears about Europe’s climate targets, although EU politicians say is a short-term answer – and the high cost of fossil fuels, both coal and gas, will ultimately accelerate the transition to renewables.
However, the increase in the price of coal is the cause of political tensions in the EU, and crossing the limit of 100 euros is likely to cause another discussion about prices. Poland, which produces most of its electricity from coal, blamed high carbon prices on speculators and called for EU measures to limit price rises. Last year, Spain’s prime minister Pedro Sanchez called for a carbon price cap to combat rising inflation.
Other EU countries consider strong coal prices necessary to achieve climate goals. A diplomat from one EU member state, speaking on condition of anonymity, said a strong carbon market sent the “right signals” to investors and industry about the need to accelerate the transition away from fossil fuels.
EU emissions trading was launched in 2005 and the price fell to almost zero in 2007 during the global financial crisis when the market was very oversupplied. There followed years of low prices until CO2 prices began to recover in 2018 when the EU agreed to remove
excess allowances from the market.
Prices rose by 150 percent in 2021 as EU politicians announced the latest legislation to reduce carbon emissions.
That growth helped reduce emissions by encouraging utilities to switch from coal to gas, which produces about half as much carbon dioxide when burned, to avoid paying a higher carbon bill — although rising gas prices last year made coal production temporarily cheaper.
The 100€ level has long been cited as a price that could encourage some of the expensive technologies seen as necessary to limit global warming investment in renewable hydrogen -instead of traditional gas production methods could become economically competitive if carbon dioxide Andur and Capital Director of climate research management, Mark Lewis said prices remained above €100 per tonne.
“I wouldn’t underestimate the symbolic importance of this. People are starting to understand that we’re in a new paradigm,” Lewis added. but added that once reaching 100 euros does not guarantee that prices will remain higher at this level in the future.
Such technologies could also receive a boost from new state aid or EU funding as the block races to create green industrial incentives to prevent companies from moving to the region to take advantage of US subsidies offered to companies developing such technologies in northern Europe,. America.
The iron and steel industry is one of those looking to use green hydrogen to help meet carbon neutral steel production.
Brussels plans to remove the free carbon permits currently given to the steel and cement sectors and replace them with the world’s first carbon tax on imported goods so that foreign companies pay the same carbon price as Europeans. are