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European Commission President Ursula von der Leyen confirmed on 16 September that the EU would back the proposed 55% reduction
According to Refinitiv Carbon Research, if the EU does go ahead and increase its climate ambitions from a 40% reduction in emissions to 55% by 2030, carbon prices will increase as a result.
The research suggests that the average carbon price between 2021 and 2030 will surpass €30. Beyond 2030, the price would increase again to beyond €50. In comparison, the EU carbon price reached €15 in May 2020, as a result of the coronavirus, its lowest level since 2018.
Ingvild Sorhus, lead analyst at Refinitiv Carbon Research said: “EUAs are trading around the all-time high of €30/t this week. With a 55% reduction target, elevated carbon prices will be needed to trigger more costly emission reductions in industry sectors as the fuel-switching potential fades when coal will almost disappear from the power mix.”
Earlier this week, more than 150 businesses and a group of investors with €33trn in assets under management called on the European Union (EU) to back the ambitions set out in its Green Deal by committing to reduce greenhouse gas emissions by at least 55% by 2030.
European Commission President Ursula von der Leyen confirmed today (16 September) that the EU would back the proposed 55% reduction. The target would align with the European Green Deal, which would include a climate law to reach net-zero emissions by 2050; and a transition fund worth €100bn and a series of new sector policies to ensure all industries are able to decarbonise.
In comparison to Refinitiv’s predictions, the International Emissions Trading Association (IETA) predicts that the average carbon price in the EU throughout the 2020s will be €32 per tonne of CO2 equivalent. This is an increase on the €27 average recorded between June 2018 and June 2019 but falls short of the €50 which think-tank Carbon Tracker has concluded would be necessary to decarbonise the bloc’s most-emitting sectors and nations in line with its Green New Deal climate targets.
The EU looks set to revamp its Emissions Trading System as part of the new targets. Expected reviews and proposals are due in Summer 2021.
In June, the UK negotiated its post-Brexit emissions trading framework with EU lawmakers, who had previously expressed concerns that the UK’s system would undercut the bloc’s own carbon market. An agreement has been struck to reduce the existing EU ETS cap by 5% within a year, with further reductions to be confirmed as the UK approaches its 2050 net-zero deadline.
However, the Zero Carbon Commission has published a report calling for the UK Government to increase its carbon charge to £55 per tonne (€60) by 2025 and £75 (€81) by 2030. Such a charge would be necessary to deliver against upcoming carbon budgets and should be adjusted on a sector-by-sector basis, the report states.
Matt Mace
Carbon pricing has only cut one third of one percent of CO2 emissions. Instead we need the government to be telling companies to adopt low carbon emissions. The book and website "Drawdown" lists 100 inventions that between them do so, so give it a read.