- Energy surge, value of permits driven by EU reforms
- Next year will see a one-off drop in the number of EU permits
- Trading on China’s market limited by the epidemic
LONDON, Feb 7 (Reuters) – The value of global markets traded for carbon dioxide (CO2) permits reached a record 850 billion euros ($909 billion) last year, analysts at Refinitiv said on Tuesday.
Around 12.5 billion tonnes of carbon permits were exchanged in the world’s emissions markets – 20% less than the previous year – but the value of the markets increased by 14% as the permit prices were much higher.
Emissions trading schemes are market-based instruments to limit greenhouse gas emissions. They put a limit on the amount countries or companies can emit, and if they exceed that limit, they can buy permits from others.
The world’s largest carbon market, the EU’s Emissions Trading System (EU ETS), launched in 2005, was worth around 751 billion euros last year, up 10% from the previous year and accounting for 87% of the global total. was representing
The price of carbon permits on the EU ETS averaged over 80 euros per tonne last year, up 50% from the previous year due to a rise in energy prices following the war in Ukraine.
Prices in the British and North American markets were also higher than in 2021.
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Last year, EU lawmakers also worked to reform the EU ETS as part of their efforts to tighten climate policies and agreed to cut the number of permits in the system, which also lowers prices. It was fast.
“All eyes will be on the implementation of this law in 2023, with a steep cut in allowances for 2024,” said analysts at Refinitiv.
“On the flipside, the sale of additional allowances to finance the REPowerEU scheme will inject additional supply and thus weigh on prices. Gas prices will continue to be an important driver for EU ETS prices in 2023,” he added.
The REPowerEU plan aims to reduce the bloc’s dependence on Russian energy supplies and involves selling additional EU carbon permits to fund itself.
The report said two regional carbon markets in North America – the Western Climate Initiative and the Regional Greenhouse Gas Initiative – were worth more than 60 billion euros combined last year.
China’s national emissions trading plan is set to be launched in mid-2021. Unlike other schemes, China’s emissions cap is based on emissions intensity.
Last year it was valued at 504 million euros, down 61% from the previous year. The scheme saw limited trade as its development was slowed by other priorities, such as the COVID-19 pandemic, and the government not issuing a new permit allocation scheme.
($1 = 0.9349 Euro)
Reporting by Swati Verma and Nina Chestney; Editing by Barbara Lewis
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