Did you know that the price per tonne of carbon could double over the next 3 years? In fact, this price is having a high impact on the historical record of electricity costs that we are experiencing these days. But it’s not all bad news: you can monetise your company’s carbon footprint.
Monetise your carbon footprint, yes, you read that right. The carbon dioxide emissions your company produces can help you make a profit, and we explain how in this article.
CO₂ Emission Regulations in Europe
High carbon dioxide (CO₂) emissions are one of the causes of rising temperatures and thus climate change. Almost every human activity generates CO₂ emissions. From going to work to go on holiday: everything has a ‘carbon footprint’.
To try to encourage companies to reduce their emissions, the European Union launched a “CO₂ emissions trading system”. This particular mechanism imposes a fixed cap or a legally binding GHG reduction target, for heavy energy-using installations such as power plants, factories, industrial plants and chemical plants.
If you don’t know it accurately, or you don’t have up-to-date data on your carbon footprint, you could end up paying extra! So, the first tip for monetising your carbon emissions is to be able to calculate your company’s carbon footprint. Only then you will know if you are in line with the European target: emissions cuts of at least 40% by 2030. The European Green Deal will raise the target to 55% in accordance with the 2021 regulatory updates on greenhouse gas emissions.
How the CO2 Emissions Market Works
This mechanism is a kind of carbon emissions “stock exchange” where the CO2 emission allowances granted to each company are traded. The rate or value of these allowances is known as EUAS (European Emission Allowances).
This market is regulated by the EU, which allocates allowances through the EU ETS (EU Emissions Trading Scheme).
In the context created by Brexit, a UK Emissions Trading Scheme (UK ETS) replaced the UK’s participation in the EU ETS on 1 January 2021. The 4 governments of the UK established the scheme to increase the climate ambition of the UK’s carbon pricing policy, whilst also protecting the competitiveness of UK businesses.
This market for “CO2 emission values” is just another speculative market, which works on the basis of the golden rule of capitalism, that is supply and demand.
This has led to the emergence of a market to buy and sell emissions allowances. This trading scheme is known as the ETS (Emissions Trading Scheme) and has been in place since 2005.
The CO2 Price Situation
A report published in 2018 by the Carbon Tracker organisation predicted that the price of carbon allowances could reach €25 – €30 by 2020-21. But these numbers have fallen short. It is now 2021 and the price is already over €40/t, a price much higher than expected.
In fact, the EUAs price has risen from €4.38/t in May 2017 to €42.15/t at the end of March 2021, reaching record highs since 2005. And the trend is on the rise and is likely to continue.
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