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Trust in carbon market ‘undermined’ by EU’s Russia plans, analysts warn
(EurActiv, 19 May 2022) Analysts have slammed European Commission plans to raise €20 billion from the EU’s carbon market stability reserve as a way of financing a €300-billion effort to wean Europe off Russian fossil fuels.
The European Commission unveiled plans on Wednesday (18 May) to eliminate all imports of Russian fossil fuels by 2027, saying this will require a total investment of €300 billion by 2030.
To finance this, the EU executive proposed tapping into various budgetary sources, including the EU’s 800 €billion COVID-19 recovery fund and proceeds from the Emissions Trading Scheme (ETS), the EU’s flagship climate policy tool.
“We will bring €20 billion of grant money from the auction of allowances from the market stability reserve,” said a senior EU official who briefed the press yesterday about the Commission’s plans.
The reaction of the carbon market was immediate, with the price of EU emission allowances closing at €85 per tonne of CO2 on Wednesday (18 May), down from €92 the day before.
‘Supply-side shock’
Florian Rothenberg, a carbon market analyst at ICIS, a commodity intelligence services firm, said the Commission’s move had eroded trust in the ETS as a climate policy tool.
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EurActiv, 19 May 2022: Trust in carbon market ‘undermined’ by EU’s Russia plans, analysts warn
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