Polluting is currently expensive for companies. The European carbon price exceeded 100 euros per tonne on Wednesday, making emissions of the main greenhouse gas more expensive for companies on the continent, ahead of a major reform led by Brussels.
The price of the benchmark contract for a tonne of carbon in Europe reached 100.60 euros in the morning on Wednesday, before falling back and ending at 96.30 euros per tonne. On Tuesday, it even reached 101.25 euros, according to data from the financial news agency Bloomberg. This is the first time that this reference contract, equivalent to a right to pollute for companies in Europe, exceeds 100 euros since the creation of the market in 2005.
A way to tax the most emitting energies
Through the European Emissions Trading System (ETS), companies in the energy and industry sectors receive free CO2 emission allowances and must buy additional allowances if they want to exceed their allowances, at a price that fluctuates according to demand. Putting a price on the tonne of CO2 released into the atmosphere is a way of taxing the most emitting energies, in order to encourage consumers and companies to use clean energies... and to less warm the climate.
Among the reasons for such an increase is "greater economic optimism" for the eurozone, which could translate into an increase in corporate output, and therefore the resulting CO2 emissions, said Barbara Lambrecht, an analyst at Commerzbank. Progress on the reform of the carbon market at the European level after an agreement reached in December to tighten market rules, and voted in early February by the European Parliament, is also pushing prices, she notes.
Analysts do not expect the price to continue rising in the coming months. "The downward revaluation of gas prices relative to coal is a bearish factor," said UniCredit analyst Trevor Sikorski. The surge in gas prices in 2022 has pushed companies to turn to coal, a much more carbon-emitting energy. But the price of European natural gas is now hovering around €50 per megawatt hour, a level nearly seven times lower than its peak in August 2022.
"The effects of standardization in French nuclear and European hydropower, as well as the progression of renewable energies" could also allow companies to emit less greenhouse gases, according to Barbara Lambrecht.
- Greenhouse gases
- Global warming