Factory chimneys, smoke, emissions, air – illustrative photo.
London – Today, for the first time in history, the price of emission allowances in the European Union rose to 100 euros (roughly 2400 CZK) per ton. This was reported by the Reuters agency. According to traders, demand for allowances has been supported in recent days by, among other things, the prospect of colder weather and lower production from wind farms. The price of allowances is also pushed up by speculative purchases.
The price of the main futures contract for allowances rose to a record high of 100.70 euros per ton today, writes Reuters. The rising price of emission allowances is now holding back further declines in energy prices, analysts say, as it makes it more expensive to produce electricity from fossil fuels.
Last year, demand for allowances in Europe's power sector increased as cuts in natural gas supplies from Russia led to increase in energy production from coal. It produces twice as much carbon dioxide emissions as gas production, so it requires more emission allowances.
The European Emissions Trading System ETS is the EU's main tool for reducing greenhouse gas emissions. It sets limits on the total amount of greenhouse gases that can be emitted by sectors within its scope, while allowing businesses to obtain or purchase emission allowances that can be traded as needed. When the price of allowances increases, the motivation of companies to try to reduce emissions also increases.