EU carbon emissions price hits 10-year high

• 5 years ago (2018-08-14)
• David Flin

Coal 282 Europe 1068

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The price of carbon in the EU’s emissions trading scheme reached €18 per tonne, triple the level last year, and the highest level for ten years. Observers said that the carbon price rise, along with further anticipated increases, will hurt coal operators’ profit margins and influence investment decisions.

Phil MacDonald, Head of Communications at Sandbag, a group that monitors the carbon market, said: “It will already be cutting into coal profits. Renewables get a big win from this and so does nuclear.”

However, Mark Lewis, Head of Research at the Carbon Tracker thinktank, said that the price would need to be much higher, possibly as much as €30 per tonne, to trigger large-scale switches from coal to gas and renewables. He said: “I don’t think we are at the stage yet where the carbon price will have a major effect.”

Sandrine Ferrand, a Market Analyst at Engie Global Markets, said the extra cost would be significant for coal, about €11-12 extra per MWh, but that the incentive to switch fuels was reduced because gas and oil prices had also increased. She said: “So far, the carbon price is not high enough to trigger a large switch from coal-fired power generation to less polluting gas-fired power generation.”

The increase in the carbon price has been caused partly by European Commission reforms to cut the supply of carbon permits from January. The heatwave that had been affecting large parts of Europe also had an impact, as demand increased while generation from hydro and wind were down due to low water levels and wind speeds.