Europe’s carbon price has almost tripled in 2021

European carbon futures rose above EUR 80 a tonne on Friday for the first time, testing the resolve of politicians who are promising to act aggressively on climate change while grappling with inflation that’s tearing into economies across the globe.

Photo: Ina Fassbender/Reuters/Ritzau Scanpix

The cost of polluting has increased more than 140 percent this year after a stricter environmental agenda in Europe was laid out and a sweeping rally in natural gas prices made dirtier coal more economic to use for power generation. The futures price rose as much as 0.7 percent Friday to EUR 80.42 per tonne on ICE Endex in Amsterdam, before turning negative.

The fast-paced increase in carbon prices has taken policy makers by surprise. Making it expensive to pollute is meant to push dirty fuels out of the power generation and industrial processes. Right now, that’s not really happening. Soaring natural gas prices mean Europe will likely see emissions increase this year as coal plants burn profitably through the winter. That’s uncomfortable for many leaders that made loud pledges at the climate talks in Glasgow last month.

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