Price for a tonne of CO2 emissions climbs to record high

The price for 1 tonne of CO2 emissions has risen to a record high. On Tuesday, the price exceeded 50 euros for the first time. There is a lively trade in CO2 rights, which companies can buy if they exceed their own limits in terms of emissions.

Within Europe, there is a maximum for the amount of CO2 that can be emitted by companies. This is translated into emission rights, which can be traded. The number of available rights is being reduced further and further in order to encourage companies to produce more cleanly.

These sharpened ambitions of Europe to reduce CO2 emissions more quickly are contributing to the price rising faster. In the meantime, the rights have also become pure commodity, which also has a price-increasing effect.

According to the emissions authority, most companies that participate in the EU Emissions Trading System (EU ETS) are allocated a number of emission allowances for free every year. Every year companies have to surrender as many allowances as they have emitted in tons of greenhouse gas. “When a company emits more than they have in allowances, they can buy more through auctions or trade.”

If, on the other hand, less is emitted, then the company has left over rights and they can use it on the farmer. “Companies can therefore make their own assessment of what is most cost-effective: investing in cleaner technology or buying additional emission rights,” according to the Dutch Emissions Authority (NEA).

Last year the rights had become very cheap, because large parts of the production came to a standstill as a result of the corona crisis.


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