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EU CO2: soon a price floor and border tariff?

12/04/2018 - François-Xavier Branthôme - CO2 Emission Trading Systems (March 2018) - Read in french
EU CO2 allowance prices continue to climb, exceeding Eur14.0/ mT on 25 March

EU Allowance prices under the EU Emissions Trading System rose to a high of EUR 14.10/mT on 25 March, as markets reacted to more bullish signs from European policymakers. France calling for Europe to adopt a carbon price floor to drive the move toward cleaner energy sources was supporting the emissions market, a trader said.
France pushes for a carbon price floor at EU level, complete with a carbon tariff at Europe’s external border for countries that don’t sign up to the Paris Agreement.

With its Emissions Trading Scheme, Europe has created the world’s largest carbon market but the price of CO2 allowances is currently too low to drive investments into clean technologies.

France has set a minimum price of carbon of Euro 44 a tonne on its domestic market this year, a price floor that will be raised to Euro 84 a tonne effective from 2022. “But it won’t be sufficient,” the French President said, calling for more determined European action. “This is why at the European level we need a carbon price floor,” Macron stressed, saying “it is the only way” to reach Europe’s long-term objective of becoming carbon neutral.

The UK has led by example, by introducing a carbon price floor in 2013. But the idea is controversial in coal-dependent Poland and other countries in Central and Eastern Europe, which are likely to be hit hardest by the measure.

The system will also have to be complemented by “a border adjustment mechanism to avoid penalising our companies because of our climate commitments,” the French president added. “Which also means we have to put in place a taxation at the border for those who decide not to make the same environmental choice,” Macron said. 
 
Source: EC - Audiovisual Service, platts.com, markets.businessinsider.com
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