European carbon prices have exploded to €43 a tonne, doubling in four months and fast reaching levels that profoundly disrupt the EU’s energy architecture. The surge is driving coal out of the EU market as intended. But it is also starting to threaten the commercial viability of natural gas projects, until now seen as big beneficiaries of the net-zero transition. Futures contracts under the Emissions Trading Scheme (ETS) have risen eightfold since 2017 as the Commission reforms the broken system. The moves have turned parabolic this year after a one-off “rebasing” to soak up the glut of permits, enriching hedge funds and speculators who spotted the implications immediately. The carbon price is already within a whisker of the €44 “mid-ambition” level assumed for 2030 in the Commission’s climate impact report last year. It could go much higher yet, causing heartburn for industries that failed to prepare. Some may have to chase a rising market to cover their emissions.
Telegraph 14th March 2021 read more »