Carbon prices in the EU Emissions Trading Scheme, the largest carbon market in the world, exceeded 50 euros per metric ton for the first time on May 4. The cost of carbon pollution in Europe has increased more than 50% this year. Rising prices make it more expensive to release carbon dioxide and force industries to look for cleaner ways to operate, showing these carbon prices are working. 

What is Happening?

Ek said to Bloomberg, “The 50 euro-mark has some significance since it has been a target price for some investors for a number of years by now. Fundamentally, we believe prices can go higher than that, but also expect some tough political discussions on our way to 100+ prices which may turn sentiment at some point.”

You might also like: Carbon Taxes Tackle Climate Change and Create Jobs. Here’s How.

Emily Jackson, analyst at BloombergNEF, says, “If industry can’t decarbonise, it could just mean higher compliance bills for a while. They will likely start being more strategic about their purchasing and could start hedging in the way that the power sector does now.”