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The price of carbon in the EU has widened its record rally to jump above € 50 a tonne for the first time, which has raised the cost of pollution on the block to double its pre-pandemic level.
The EU’s emissions trading system (ETS), designed to cost CO2 for some of the most polluting industries, from power generation to aviation, has risen by more than 50% since the beginning of the year.
Until December last year, the price of carbon had never been constantly traded above € 30 a tonne, but prices have risen as traders bet that the availability of carbon quotas will increase. it will have to tighten in the coming years if the EU is to achieve aggressive climate targets, including reducing emissions by 55% by 2030.
The rise has made carbon one of the hottest products in the world, even as the rise in the sector has sparked fears of inflation. While environmentalists have celebrated the rising cost of pollution for energy suppliers and industry, there are fears that the pace of the rise will be faster than companies can easily adapt.
Last week, companies in the steel sector and other highly polluting industries such as petrochemicals and cement called on the EU to speed up plans to implement a carbon border adjustment tax for imports from countries outside the world. plan, for fear that they would be put at a competitive disadvantage.
The steel sector in Europe, for example, would have to face carbon costs of around € 2 billion this year at current price levels, even though member countries have given them most of their carbon quotas.
According to the blog’s ETS, companies are assigned a certain number of rights to cover at least part of their emissions. If they reduce the amount they pollute, such as by using renewable fuels or natural gas instead of coal, they are free to sell the leftover profits for profit. But if they increase pollution, they have to buy additional diets to cover their emissions, according to the so-called limitation and trade model.
Rising carbon prices have attracted the attention of hedge funds and other financial investors who are delving deeper into the carbon trade, along with utilities and other industries operating loans.
Some industry analysts have suggested that prices could reach € 100 a tonne by the end of the decade, a price they say is needed to make alternative fuels such as “green” hydrogen competitive.
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