EU Carbon Price Goes Under €56 T/CO2, Lowest Levels In Two Years

EU Carbon Price Goes Under €56 T/CO2 Or Lowest Levels In Two Years - Carbon Herald
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The EU carbon allowances price have dropped to levels not seen in the last two years as weather conditions are improving. The EU carbon prices have fallen to under €56 per ton of CO2 emitted, or a level last seen in August 2021, due to several factors such as a slowdown in the manufacturing industry, falling natural gas prices and unusually hot winter. 

The Eurozone’s manufacturing sector has been contracting since July 2022, although the rate of decline has been decreasing which has reduced the demand for allowances. February is also on course to break a record number of heat records as climate change and El Niño patterns increase temperatures on land and oceans globally.

Relevant: EU Carbon Price At All-Time High, Trading Over 100 euros/tonne

The same period last year, in contrast, saw a record high for the price, when it surpassed the €100 per ton/CO2 barrier. The shift in market sentiment and its effect on the EU carbon price is challenging previous beliefs that the European Union’s permits price will consistently ascend as the climate ambitions are increasing.

Source: Trading Economics

Another factor that is influencing the price is the rise in renewable energy production which has offered hope for the acceleration of the green energy transition, even though it is shaking the carbon market in the near term. However, moving forward accelerated phase-out of fossil fuels is likely to require stronger climate policies and regulations and put high pressures on producers to curb emissions which could boost once again the price on carbon emissions. 

Relevant: Germany Votes To Increase Its Carbon Price By 50%

According to reports, the recent downtrend of EU carbon price is also being witnessed in the United States, China, and India. They have been seeing a decoupling of GDP growth from CO2 emissions which hints towards a potential for sustainable economic expansion.

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