L R AS Published on Sunday 8 October 2023 - n° 460 - Categories:power plants
The price of carbon in the short and medium term
The European Union has succeeded in introducing ambitious reforms during an energy crisis. The price of carbon allowances has stabilised at around €88.
per metric tonne ($93/t) this year. This resilience has reinforced the market's effectiveness as a policy tool for decarbonisation, tilting the economy in favour of low-carbon options in the absence of the Russian pipeline. BloombergNEF expects an average EUA price of €93/t in 2024. This price could rise to €149/t by the end of the decade.
The price of EU allowances over the period 2021-2030 is estimated to average €104/t. This reflects a moderate outlook for power sector emissions in the short term, as well as the latest proposals to provide allowances in cash.proposals to provide allowances early in the period to raise funds for the REPowerEU plan to move away from Russian fossil fuels.
BNEF still expects prices to rise steadily to €98/t in 2025
REPowerEU's fundraising target of €20 billion is expected to be met before the full amount of allowances is auctioned, exacerbating the short-term bearish effect of this measure.
Any market jitters that challenge power generation in favour of more emissions-intensive coal, or cold weather that halts the persistent reduction in gas demand, could increase emissions and therefore prices and demand for allowances.
https://about.bnef.com/blog/eu-ets-market-outlook-2h-2023-cleared-for-the-ascent/
BloombergNEF of 3 October 2023
