The EU carbon price has extended its record-breaking gains, surpassing 50 euros per ton for the first time, pushing EU pollution costs to more than twice the pre-pandemic level.
The EU Emissions Trading System (ETS) aims to reduce the cost of carbon dioxide for some of the most polluting industries, from power generation to aviation, and has risen by more than 50% since the beginning of this year.
Until December last year, the carbon price has never been stable at more than 30 euros per ton, but because traders are betting that if the EU is to achieve aggressive climate targets, including the need to tighten the price of carbon allowances in the next few years, the carbon price It has soared. Reduce emissions by 55% by 2030.
The surge in carbon emissions has made carbon one of the most popular commodities in the world, although the rise of the industry has increased people’s concerns about inflation. Although environmentalists welcome the increased cost of pollution from electricity suppliers and industry, people worry that it will rise faster than companies can easily adapt.
Last week, companies from the steel industry and other heavily polluting industries (such as petrochemicals and cement) called on the European Union to speed up the plan to impose a carbon border adjustment tax on imports from countries outside the plan, fearing that this would put them in competition Disadvantage.
Take the European steel industry as an example. At current price levels, the cost of carbon emissions will reach about 2 billion euros this year, although most of the carbon allowances are provided by member states for free.
According to the EU’s emissions trading system, companies are allocated a certain amount of allowances to cover at least part of their emissions. If they reduce the amount of pollution, such as using renewable fuels or natural gas instead of coal, they can freely sell the remaining allowances for profit. However, if they increase pollution, they need to purchase additional allowances to pay for their emissions in accordance with the so-called cap control and trading model.
The rise in carbon prices has attracted the attention of hedge funds and other financial investors. These investors, utilities, and other industries engaged in credit trading have penetrated into carbon trading.
Some analysts in the industry believe that the price may reach 100 euros per ton by the end of the decade, which they believe is necessary to make alternative fuels such as “green” hydrogen competitive.