Spiraling Oil prices
Carbon prices in Europe highest in two years
LEIGH PHILLIPS, EU Observer
Carbon prices in the European Union have hit their highest level in two years on the back of spiralling oil prices.
The benchmark EU carbon contract for December delivery of EU allowances climbed to €27.54 on the European Climate Exchange – Europe’s bourse for carbon credits - on Friday (6 June), according to Carbon Positive, a carbon offset management company.
The price is the highest carbon allowances have seen in 25 months, having risen some 40 percent in the last four months alone.
The rise is attributed by traders to the skyrocketing price for oil, which reached $139 a barrel before easing slightly Friday – jumping $10.75 in one day – the biggest single on-day price increase on record. The increase came atop a five percent rise the day before – totalling a $16-dollar hike in two days.
As oil prices escalate, power companies switch over to coal, which is cheaper but dirtier, requiring additional carbon allowances and pushing up the price of carbon.
The prices are a return to form for the European carbon market following the collapse of carbon prices after the over-allocation of credits in the first phase of the EU emissions trading scheme.
Carbon prices also dropped to €19 in February of this year on fears that a declining global economy would produce diminished demand for energy.
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