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The price of CO2 breaks 100 euros in Europe due to the rebound in the use of carbon

Date: April 1, 2023 Time: 23:07:21

The price of carbon dioxide emission rights in the European Union (EU) has reached a historical record above 100 euros due to the improvement in the European economic outlook, expectations of an increase in industrial production, but above all due to the return to the intensive use of coal in electricity generation in countries such as Germany, Poland and Central and Eastern Europe as a result of the gas crisis, which has forced the economies dependent on Russia to return to coal.

According to data from the German EEX market, the contracts for December 2024 have skyrocketed this Tuesday to 104.7 euros per ton of CO2 and dragged the rest of the references towards 100 euros. The auction of this February 21 has still been below the psychological barrier. So far in 2023, the price has skyrocketed by 22% after registering a sharp decline at the end of 2022, but its evolution has been reactivated since January.

A rise of 2,000% in six years

Since 2016, CO2 prices have multiplied by 20, going from trading at just 5 euros, to more than 100 now. Since the economic reopening after the pandemic, at the end of 2020, its price has increased fivefold from 20 to 100 euros. Listed station is actually a tax that the most polluting economic operators such as airlines or electric companies have to pay to offset their carbon footprint. The EU created this system to reduce greenhouse gas emissions in the region and it is an important source of tax collection for the different European governments.

The high prices of CO2 are determined as an incentive for investment in clean and renewable energy but, at the same time, they represent a drag on the competitiveness of European companies in the global market. In fact, the large electro-intensive industry such as the steel industry will be determined to be the big losers of this situation due to the lack of alternatives when it comes to consuming energy. In this context, Europe is exploring projects related to the generation of hydrogen for industrial use.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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