Insight: EU carbon market stages comeback in 2018

The carbon market in Europe made a big comeback in 2018 after years of stagnation, with prices of European Union allowances more than quadrupling to above €20/mt ($23/mt) after lawmakers overhauled the system’s rules for the period after 2020. Higher carbon prices are likely to boost the profitability of companies operating nuclear, wind, solar and hydro-electric power plants, driving further growth in renewable energy capacity in Europe. They also signal a long-term drop in the use of the most emissions-intensive fuels for power generation, hard coal and lignite, and provide a stimulus for innovation in low-carbon industrial goods and processes. After years of being flooded with surplus carbon allowances, sharp supply cuts starting in 2019 look set to reposition the EU Emissions Trading System as the principal tool to decarbonise Europe’s economy over the long term. The overhaul of Europe’s carbon market not only tilts the economics of electricity generation away from fossil fuels and towards cleaner power, but it also puts wind in the sails of carbon markets in general. That sends a clear message to other regions grappling with the same pervasive energy trilemma: making energy secure, sustainable and affordable. The road to 2019 The road to 2019… continue reading

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Source: CTRM Center

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