Carbon pricing will be an important measure to reverse global warming. High level executives from different fields and geographies emphasize the carbon price as the most important tool to reduce carbon emissions and benefit the sustainable solutions in a fair way. Carbon pricing will certainly not be the sole solution for the future, more incentives and actions needs to be taken but it will play a key role.

The European Trading Scheme (EU-ETS) has struggled with low prices of the allowances because of too many allowances, but that will change by entering into the forth phase of the system. EU has taken actions by reducing the amount of allocations for all sectors, increased the intake rate to the stability reserv and increased the speed of reducing the cap. In fact these actions has already had effect and the price of allowances has gone from less than 5 EUR/ton CO2 emission to 21 EUR/ton CO2 emission in 1,5 year. See this print screen from EEX 2018-08-31:

This will of course affect our industrial clients. For instance, a tissue mill would increase it’s cost of combustion of fossil gas by 4 EUR on every MWh by the allowance increase alone.

EU-ETS was introduced in 2005, and more and more regions are creating policies on carbon pricing. China has recently initiated its large ETS system.

REN21 Renewables 2018 Global Status Report: Carbon Pricing Policies

 

EU-ETS explained by EU: