EU Carbon Credit Prices Gain Footing

EU Carbon Credit Prices Roar Back as dealers bet on intervention.

Not since March (when the coronavirus hit markets) have we seen carbon credit prices gain footing. This month, dealers are hopeful that the prices may fully revive with the help of green recovery plans.

The credits aim to cut air pollution within the EU by attaching a price to CO2 emissions. Companies are allowed to buy and offer their specific carbon-emission allowances. Over the last three months, there has been a 50 per cent increase, priced at 25 a tonne.

When the coronavirus pandemic disrupted the global economy, costs dropped to as low as 15 a tonne. The rebound it is experiencing is attributed to dealers who've snapped credits in anticipation of a more parsimonious market.

The economic crisis of early this year caused many to compare it to 2008-2009. The sudden fall of manufacturing during those times left a big surplus of credits that heavily affected the market for years. But in 2017 to 2019, a visible change in prices was felt. Costs went up from 7 a tonne to 25 a tonne. The EU redesigned the device to help tighten up products and the industry. Traders note that compared to the previous economic crisis, we've witnessed a faster recovery, revealing the effectivity of the regulation.

EU policymakers are aiming for an eco-friendly data recovery from the pandemic. Experts speculate that this direction could further support carbon costs. It's worth noting that Brussels is in talks of imposing a levy on imported products from nations outside of the EU bloc who have weaker pollution regulations.

"Carbon was the number one performer into the European power complex for a while now and is becoming bolstered by hopes of trade relief and an easing of lockdown constraints." Matthew Gray, from think tank Carbon Tracker, comments. Experts like him are hopeful of the next few months.

Source: https://www.ft.com/content/be382b73-cb83-4997-b0a6-dc543f30877c