Higher carbon prices: is speculation truly to blame?

The document addresses the rise in EU ETS carbon prices, which reached €98.49 on 8 February 2022. It refutes claims from energy-intensive industries and countries like Poland and Spain that speculative trading is causing price spikes, noting that speculative activity accounts for only about 4% of ETS activity. The author opposes a proposal by MEP Peter Liese to release 100 million additional allowances if prices remain high for six months, arguing this would undermine emission reduction goals. Instead, the document advocates for reducing the oversupply of credits, ending free allowances, and aiming for a 70% reduction in ETS emissions by 2030 to provide a stable price signal for industrial decarbonisation.

• Carbon prices in the EU ETS experienced significant growth between 2020 and early 2022, reaching a peak of €98.49 on 8 February 2022, which represents an increase of over 200% since early 2020.
• Financial speculation is not the main cause of carbon price increases in the EU ETS, as it represents only approximately 4% of market activity according to a preliminary report by the European Securities and Markets Authority (ESMA).
• A proposal by MEP Peter Liese to amend the EU ETS would allow 100 million allowances to be released into the market if average prices exceed double the average of the preceding two years for more than six consecutive months.
• The document argues that increasing the supply of allowances to appease concerns over speculation would jeopardize the EU's ability to meet its 55% emissions reduction target by 2030 and recommends instead a target of at least 70% reduction in ETS emissions by 2030.
• The current EU ETS framework lacks mechanisms to prevent significant price drops, as evidenced by a price plummet of €30 in less than one week in early March.

APA

Ruggiero, A. (2022). Higher carbon prices: is speculation truly to blame? Carbon Market Watch. https://carbonmarketwatch.org/2022/03/02/higher-carbon-prices-is-speculation-truly-to-blame/

Chicago

Ruggiero, Agnese. Higher carbon prices: is speculation truly to blame? Carbon Market Watch, 2022. https://carbonmarketwatch.org/2022/03/02/higher-carbon-prices-is-speculation-truly-to-blame/.

Wikipedia

{{cite press release |last1=Ruggiero |first1=Agnese |title=Higher carbon prices: is speculation truly to blame? |publisher=Carbon Market Watch |date=2 March 2022 |url=https://carbonmarketwatch.org/2022/03/02/higher-carbon-prices-is-speculation-truly-to-blame/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{ruggiero2022higher, author = {Ruggiero, Agnese}, title = {{Higher carbon prices: is speculation truly to blame?}}, publisher = {Carbon Market Watch}, year = {2022}, month = mar, url = {https://carbonmarketwatch.org/2022/03/02/higher-carbon-prices-is-speculation-truly-to-blame/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }