Polluting is currently expensive for companies. The price of European carbon indeed exceeded 100 euros per tonne on Wednesday, making emissions of the main greenhouse gas more expensive for companies on the continent, before 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 of Wednesday, before falling 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, has exceeded 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 purchase additional allowances if they want to exceed their allowances , at a price that fluctuates according to demand. Putting a price on the ton of CO2 released into the atmosphere is a way of taxing the most emitting energies, with the aim of encouraging consumers and companies to use clean energies… and to warm the climate less.
Among the reasons for such an increase, “greater economic optimism” for the euro zone, which could translate into an increase in business production, and therefore in the resulting CO2 emissions, explains Barbara Lambrecht, analyst at Commerzbank. Advances in carbon market reform at European level after an agreement reached in December aimed at tightening market rules, and voted in early February by the European Parliament, are also pushing prices up, she notes.
Analysts do not expect the price to continue rising in the coming months. “The downward revaluation of the price of gas compared to coal is a bearish factor,” said Trevor Sikorski, analyst at UniCredit. The surge in the price of gas in 2022 has prompted companies to turn to coal, a much more carbon-emitting energy. But the price of European natural gas is now around 50 euros per megawatt hour, a level almost seven times lower than its peak in August 2022.
“The effects of standardization in French nuclear power and European hydropower, as well as the progress of renewable energies” could also allow companies to emit less greenhouse gases, according to Barbara Lambrecht.