No major abnormalities in EU carbon market, says watchdog

(EurActiv, 28 Mar 2022) There are no major abnormalities in the European Union’s market for carbon emissions, but tighter controls could improve transparency and monitoring, the EU’s securities watchdog said on Monday (28 March).

Europe’s emissions trading scheme (ETS) puts a price on certain sectors, including energy producers and carbon-intensive industries, to incentivise emissions reductions. The system, made up of a primary market of allowances and a secondary market mainly of derivatives based on allowances, is a core element in Europe’s plan to cut its emissions.

However, the carbon price has been volatile over the past weeks. In February, the price of CO2 on the EU carbon market hit a record high of €98.49 per tonne, having risen around 150% in 2021. It then plummeted to just under €60 in early March as the war in Ukraine unfolded. As March progressed, it then stabilised at around €75.

The price spike prompted countries like Poland to call for the EU to restrict financial speculators’ participation in the market.

But a report by the European Securities and Markets Authority’s (ESMA), published on Monday found no major deficiencies in the carbon market.

“Based on the data set that we have available, we cannot certainly claim that we did see any cornering of the market,” Carsten Ostermann, head of ESMA’s trading unit, told a media call, according to Reuters.

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EurActiv, 28 Mar 2022: No major abnormalities in EU carbon market, says watchdog