Coming into its own
Investors are paying attention; many see it as a one-way bet
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S FINANCIAL MARKETS become cheerier about the pace of vaccinations and the chances of a speedy economic recovery, the prices of stocks, commodities and all sorts of assets are rising. So too are carbon prices in Europe, home to the world’s largest emissions-trading system. Prices have surged by 60% since November; on February 12th they hit a record high of nearly €40 ($49) per tonne of carbon-dioxide equivalent (see chart).
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Last year the value of global carbon markets hit a record €229bn, a five-fold increase from 2017. The
(Bloomberg) Andurand Capital Management is among hedge funds betting the price of carbon can only go up.
Brussels is enacting plans to eliminate carbon emissions by the middle of the century in a massive shift in how the European Union powers its economy. Forcing up the bloc’s carbon price, one of the key tools of EU climate policy, may be crucial. The higher the price, the more incentive companies have to make the hard decisions needed to tackle global warming.
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Carbon Prices Jump Despite Record Drop in Emissions
European Union’s decision to curb greenhouse gases is driving the latest rally, putting carbon credits on par with gold
The European Union has decided to cut greenhouse-gas emissions by at least 55% of 1990 levels by 2030. Photo: Sean Gallup/Getty Images By Updated Dec. 24, 2020 12:35 pm ET
Credits tied to carbon emissions are having a banner year despite a record drop in output from the power plants and steel mills that need them to operate.
The price of carbon credits, used by governments in Europe to curb greenhouse gases and traded by hedge funds and other investors, has risen 31% this year, putting it ahead of gold as one of the best performing commodity-linked assets. Intercontinental Exchange carbon futures traded Thursday for €32.08 a ton, equivalent to $39.08, just below their record highs hit earlier this month.