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Writer's picturesebmanhart

šŸ’„ European #carbon price hits ā‚¬100 for the first time šŸ’„


Crossing this symbolic threshold is huge news - letĀ“s unpack it:


šŸ‡ŖšŸ‡ŗ Launched in 2005, the EU #ETS is the largest emission trading system in the world and covers 45% of the EUĀ“s #ghgemissions.


šŸ”Ž Under the EU ETS, companies are allocated a certain number of carbon allowances, which represent their allowed level of emissions. The so called cap and trade system incentivises companies to reduce their emissions through a gradually decreasing amount of emission allowances.


šŸ’¶ Naturally, the price of such allowances goes up over time. It has now reached ā‚¬100.


Why does this matter?


šŸ’” Carbon dioxide removal (#CDR) currently only exist in the voluntary carbon market (#VCM). In the medium to long-term, it will hopefully transition to being a tool in compliance markets, especially for hard to abate emissions, most likely starting with the EU ETS (after 2030). This would provide a demand multiplier for CDR.


šŸ’Ŗ ā‚¬100 per tonne is a realistic price for many high-quality/novel CDR solutions, e.g. #biochar. Allowances reaching this price point is a good indication that CDR might become financially sustainable within a compliance market within specific industries in the future.



There are many other impacts of this historic moment - well captured in the Financial Times article linked in the comments.

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