Ahead of Climate Summit, EU Carbon Emission Allowances Reach 'All-Time High'

[Asia Economy Reporter Park Byung-hee] The price of European Union (EU) carbon emission allowances surpassed 45 euros per ton, breaking the all-time high, according to major foreign media reports on the 20th (local time).

According to the reports, the price of carbon emission allowances surged nearly 2% at one point, reaching 45.12 euros per ton. This is the highest level since the EU established the carbon emission allowance market in 2005.

This is due to expectations that the EU will raise its greenhouse gas reduction targets. At the summit in December last year, the EU approved the European Commission's proposal to reduce greenhouse gas emissions by at least 55% from 1990 levels by 2030. This is an upward revision from the previous 40% reduction target. The price of carbon emission allowances has risen about 45% since the EU summit in December last year.

In this situation, there are forecasts that the EU may further raise its greenhouse gas reduction targets at the climate change summit scheduled for the 22nd to 23rd.

U.S. President Joe Biden is expected to double the U.S. greenhouse gas reduction target and call on other countries to join.

Last year, the United Kingdom announced a target to reduce emissions by 68% by 2030 compared to 1990 levels. It was the most ambitious reduction target among the Group of 20 (G20) countries. However, there are forecasts that the UK will raise its reduction target at the climate change summit and officially set a goal to reduce emissions by 78% by 2035 compared to 1990 levels.

There is also analysis that the price of carbon emission allowances must rise further for the EU to achieve its 2050 carbon neutrality goal.

In a recent survey, analysts predicted that the price of carbon emission allowances would reach 46.28 euros per ton this year and 55.67 euros next year. These forecasts were revised upward by 17.9% and 20.4%, respectively, compared to the January survey. The expected price for 2023 was also revised upward by 22% to 56.20 euros per ton compared to the January survey.

The EU plans to reform the operation of the carbon emission allowance market to achieve its 2050 carbon neutrality goal. The reform is expected to reduce the greenhouse gas emission quotas allocated to companies, thereby increasing demand for carbon emission allowances. The European Commission is expected to disclose details related to this in June.

Carbon emission allowances are a system that allocates greenhouse gas emission quotas to each company. Companies that exceed their quotas must purchase additional allowances, increasing their costs, while companies that emit less than their quotas can sell their allowances for profit. In other words, companies benefit by emitting less greenhouse gas.

This content was produced with the assistance of AI translation services.