Carbon pollution price in Europe nears key 30 euros threshold

Bloomberg

Europe’s carbon market is nearing the psychologically important threshold of 30 euros ($33.70) a ton after signs the region will tighten rules on polluters and curtail supplies of allowances.
The value of the securities that cover greenhouse gas emissions from industry and utilities has almost doubled in the past year, finishing at their strongest weekly close since 2006. That followed comments from the designated European Commission President Ursula von der Leyen placing green issues at the heart of the political agenda.
The surge in the cost of pollution along with a plunge in natural gas prices has prompted some power generators to switch away from coal to the cleaner fuel.
It’s also starting to revive debate about carbon pricing as a tool for combating climate change, eliminating years of malaise in the market that finally passed in 2018.
“People thought the market might take a breather in July, but they were wrong,” said Ingo Ramming, head of corporate and investor solutions at Commerzbank AG. “The rally through Monday appeared to be driven by financial investors — everyone is waiting for the market to crack 30 euros.”
Crossing 30 euros would be a crucial milestone for the market, since that is the floor price economists and experts have suggested as a minimum needed to prod industry away from the most polluting fuels. Without putting a cost on pollution, big energy users are apt to opt for the cheapest fuel possible, which often is coal.