#Europe carbon prices expected to soar amid tougher climate goals

Steam rises from the cooling towers of the coal power plant of RWE, one of Europe’s biggest electricity and gas companies in Niederaussem, Germany, March 3, 2016.
Reuters

LONDON – Carbon prices in the European Union’s emissions trading system are expected to rise significantly in the next decade due to tougher climate goals, market participants said in an industry survey published on Monday.

The EU’s emissions trading system (ETS) is the largest carbon market in the world, covering around 45% of the bloc’s output of greenhouse gases and charging emitters for every tonne of carbon dioxide they emit.

The survey by the International Emissions Trading Association (IETA) found members expect carbon prices in the EU ETS to average $57 a tonne between 2021 and 2025 and $71.06 a tonne between 2026 and 2030.

This is mainly due to a tougher EU goal of cutting emissions by at least 55% by 2030, compared to 1990 levels.

Last year’s survey predicted an average price of 31.71 euros a tonne for the third phase of the ETS which runs from 2021 to 2030. Benchmark prices in the ETS currently trade around $64.24 a tonne.

Britain’s domestic emissions trading scheme started trading in May this year. The majority of survey respondents expect it will link with the EU scheme by 2023.

Participants anticipate that the average global carbon price needed by 2030 to put the world on track to meet goals to curb global temperature rise is $76.61 a tonne, up from last year’s expectation of $67.84 a tonne.

IETA’s members include banks, exchanges and energy and industrial firms. The association received responses from 158 member representatives for the survey.