Carbon prices in the EU are set to soar by over 100% between 2019 and 2023, according to a new report by think-tank Carbon Tracker.
Prices will more than double to €40 per tonne within five years, which is even faster than previously anticipated. The report has stated that the price rise will render the majority of coal and lignite power plants in the European Union unprofitable.
The EU Emissions Trading System (ETS) cap-and-trade reforms have already promoted an increase in the price of carbon from €4.38 per tonne in May 2017 to €18.28 in August 2018. Prices are set to reach €25 per tonne by the end of this year.
Carbon Tracker’s Mark Lewis said: “Bullish as we remain about the prospect of further rises, we think prices are effectively capped around €50. At this price, a combination of fuel-switching, cheaper renewable energy, political pressure and the sale of surplus carbon allowances by speculators would limit the duration of excessive prices.”