Northwest Arkansas Democrat-Gazette
Cost of EU carbon allowances rises to 100 euros for first time
BERLIN — The price of releasing planet-heating carbon into the atmosphere rose above 100 euros, or about $107, in the European Union for the first time last week, a signal that experts said recently speaks for the bloc’s efforts to make polluting costlier.
The EU has laid down a path to become carbon neutral by 2050, meaning it would only emit as much carbon dioxide as can be absorbed again through natural or artificial means. In 2005, it established an emissions trading system, or ETS, where major emitters have to buy allowances for every ton of CO2 they release.
The price, calculated per ton of carbon dioxide or equivalent greenhouse gas emissions, had long remained under 25 euros, or about $26.50, before rising sharply about two years ago. It had hovered around 90 euros or $95 for the past year until last week, when it passed the 100-euro mark for the first time.
“No one thought it would be likely or feasible that the price would go up to such a level in such a short time,” said Michael Pahle, who heads the energy policy group at the Potsdam Institute for Climate Impact Research.
“Politicians and policy makers put a lot of effort into bringing it up to that level,” he said last weekq, referring to a deal agreed by EU governments and lawmakers in December that will reduce the number of carbon allowances on the market faster than previously planned, phasing them out completely by 2038.
The bloc’s executive Commission wants European industries to reduce their emissions 62% by 2030 from 2005 levels, compared to a target of 43% under the previous rules. Those efforts received a boost from Europe’s push to massively expand renewable power production at home following Russia’s invasion of Ukraine.
While the utility companies and heavy industries
that currently have to buy carbon allowances will likely pass some of the cost on to consumers, this will mainly be felt in countries such as Poland, where electricity production relies heavily on coal, Pahle said.
In the medium term the price is expected to rise even further, to between 125 and 160 euros, or about $132 and $170, per ton by 2030, he said, not accounting for inflation.
Juliette de Grandpre, an expert at the Berlin- based think tank NewClimate, said the recent increase showed that — barring a sudden economic downturn — the price of emitting greenhouse gases in Europe will only go up.
“It’s going to increase further, just because we know that in 2038 there won’t be any more allowances in the system,” she said.
“That’s only 15 years from now.”