24th Jul 2021

Market reacts strongly to low EU carbon emissions

European carbon prices fell sharply on Thursday (27 April) after member states announced they had polluted less in 2005 than the allowed targets set by the bloc's emission trading scheme.

"We have noted the fall in the prices and we have also noted the claims that there have been over allocations of emission credits in particularly four countries," said a European Commission spokesperson.

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"I must say this is good news for the environment first of all," she said, adding that it was the first time the Commission had a real "understanding of what the actual emissions are in the European Union."

The price of emitting one tonne of CO2 fell to €16.50 on Thursday from €23.40 on Wednesday and €30 on Monday, according to FT Deutschland.

The EU's carbon emissions trade market is where permits to pollute one tonne of carbon dioxide can be bought and sold.

The European climate exchange was launched in January 2005 to put a ceiling on the total emissions by major industrial energy users and reduce carbon dioxide (CO2) emissions - widely blamed for climate change - under the international Kyoto commitment to tackle climate change.

Companies polluting less than the targeted levels can sell and make profit from their unused permits while companies polluting above the targeted levels may buy permits.

This week, France, Estonia, the Netherlands, the Czech Republic and the Walloon region of Belgium all announced a surplus of 2005 carbon credit allowed by the EU, leaving the market with more credits available for bigger European energy polluters, but pulling down prices.

The announcements surprised many carbon emissions investors who had been expecting EU members to pollute more than the allowed permits.

However, countries expected to not have enough carbon credits - Britain, Germany, Spain, Italy and Portugal - have yet to report on their emissions.

The spokesperson said it was too early to say how the market would be before all member states have announced their carbon emissions indicating that with all 25 results the emissions could be estimated much more accurately and the market might settle.

May 15 is the deadline for all member states to announce their emission levels.

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The EU's carbon trading scheme may fail to achieve its goal of cutting greenhouse gasses from Europe's heavy industry unless the European Commission clamps down on the member states' weak allocation plans, warns the environment group WWF.

EU tries to stop C02 credits market crash

The European Commission has asked member states not to announce what they have polluted in 2005 until the deadline of 15 May, in an attempt to calm the bloc's greenhouse gas emission trading market.

EU falls behind on green targets

New figures released on Thursday have revealed that the EU is falling far short of reaching its emissions targets under the international climate change treaty, the Kyoto Protocol.

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