EU Carbon Prices Tumble to More Than Two-Year Low

Europe’s carbon prices continued to slide on Monday and tumbled to levels last seen in October 2021, as renewables surge while natural gas prices slump and industrial activity slows down amid weaker economies.  

The EU has a carbon permit market in place, in which industry, power firms, and airlines pay a carbon price for their emissions, as the bloc seeks to lower its carbon footprint and become carbon neutral by 2050. 

The EU carbon futures for December slumped by 5.3% on Monday morning in Europe to $58.39 (54.17 euros) per ton on the ICE Endex exchange, according to data compiled by Bloomberg.

That’s the lowest price for carbon allowances since October 2021. The price of polluting per ton has dropped below the $59.29 (55 euros) per ton threshold for the first time in 28 months.   

To compare, at this time last year, the price of carbon dioxide on the EU emissions market hit a record high of 98.30 euros per ton, or $104, as Europe was bracing for a cold spell and a forecast for low wind power output.

Many energy transition proponents in Brussels have hoped to see such prices as soon as possible as the higher cost of emissions is seen as critical for motivating more efforts—and investments—in decarbonization.  

However, prices began to tumble last year amid low demand and weaker industrial activity, while renewable power generation continued to surge.

So far this year, the EU carbon price has slumped by 30%, while the price of the UK carbon permits has tumbled by 23%, according to data from CarbonCredits.

Carbon prices in Europe have further room to fall, Per Lekander, CEO at London-based hedge fund Clean Energy Transition, told Bloomberg last week. That’s because of rising renewable power generation, declining natural gas prices, and a recovery in nuclear and hydropower, according to the investor. 

By Tsvetana Paraskova for Oilprice.com

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