As Europe melts in record breaking temperatures, the price of carbon under the bloc’s Emission Trading System (ETS) has hit a seven-year high of almost €18 per tonne. What’s going on? Could the two be related? Yes, as it turns out. Even before the heatwave hit, it’s worth noting prices were on the up. ETS prices have rapidly accelerated over the first half of the year to around €16 per tonne, due to strong demand in the latest auction. Overall, carbon prices have more than doubled this year and more than tripled over the past 12 months. Market confidence has been buoyed by reforms to ETS rules agreed by the EU late last year, which has helped deliver long term certainty in the system, while anticipation of the new market stability reserve (MSR) coming into operation next year has also helped rally prices. But market analysts suggested the latest price surge seen this week – when prices climbed a further 2.2 per cent – is also partly down to the heatwave across Europe, which has seen temperatures higher than 30C in the Arctic Circle.
Business Green 2nd Aug 2018 read more »