Better Than Tariffs: Buy Carbon Credits

If China and/or the U.S. wanted to shift production out of Europe, they could do worse than buying carbon credits.

Bloomberg: Europe's $38 Billion Carbon Market Is Finally Doing Its Job
Higher carbon prices drive up the cost of using hard coal and lignite to run power plants. It’s one of the mechanisms the 28-nation European Union is using to move industry away from the most polluting fuels and reaching the goals for curbing climate change set out in the 2015 Paris Agreement.

“Climate policy will drive accelerating coal phase-outs in the next few years,” said Phil MacDonald, an analyst at Sandbag, an environmental research group.

Jan Kresnik, a portfolio manager at broker Belektron, said prices of 30 euros a ton or more “could be reachable.” BNEF estimates it will reach 32 euros by 2023.

...Some of the biggest energy users remain concerned about the upward drift in prices. Steelmakers especially blame the carbon market for reducing their competitiveness. At Britain’s EEF group representing manufacturers, Roz Bulleid, who is head of climate policy, supports emissions trading but says her members are “increasingly jaded” about the impact.

“The original intention to deliver emissions reductions at least cost has been replaced by a focus on achieving a certain carbon price,” Bulleid said. “There are a number of overlapping policies in this area muddying investment signals. Overseas competitors are not facing the same policy costs.”
iPath® Global Carbon ETN

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