The price of benchmark European Union carbon permits rose to an all-time high above 31 euros a tonne on Friday, after EU leaders reached a deal on more ambitious emissions cuts this decade.
The contract rose to 31.30 euros a tonne, its highest since the EU’s Emissions Trading System (EU ETS) was launched in 2005.
European Union leaders on Friday clinched a deal on a more ambitious target to cut greenhouse gas emissions this decade, European Council President Charles Michel said, after all-night talks on the goal at a summit he chaired.
The target will be at least a 55% cut in emissions by 2030 and will replace the bloc’s existing goal to cut emissions 40% by 2030, from 1990 levels.
Traders said this was a driver for the move in carbon prices, as well as stronger energy prices in Europe over the last few days mainly due to a strike at French power plants.
The EU ETS is the EU’s main tool for curbing greenhouse gas emissions and charges power plants and factories for each tonne of carbon dioxide they emit.
Since the European system was launched, emissions from participating power plants and factories have dropped by 35% – a sharper drop than seen in sectors not covered by the scheme.
In the power sector, the scheme has helped to make coal plants uneconomic, compared with less-polluting gas plants or renewables but the scheme saw prices drop to nearly zero in 2007 during a financial crisis.
Reporting by Nina Chestney and Bozorgmehr Sharafedin; Editing by Jane Merriman and Barbara Lewis