Carbon Prices in Europe fall

Carbon Pricing was a way for the market to deal with CO2 emissions.

Say Company A was energy intensive and was thus producing way more CO2 than legally permitted. Instead of forcing them out of business, they were permitted to buy carbon credits from Company B who was producing less CO2 than the guidelines.

The idea was that companies that could easily reduce their emissions would be incentivised to do so by being able to make some extra money by selling carbon credits. And energy-intensive businesses could still operate by paying a small amount to buy credits.

However, carbon prices in Europe have started to fall rapidly. Here is the chart:

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The reason for this is that industrial energy consumption across Europe has fallen dramatically. And the reason for that is that energy prices spiked so much after the Ukraine war, that it incentivised businesses to cut consumption any way they could. With some energy-intensive companies moving out of Europe entirely.

The upshot is that CO2 emissions have fallen in Europe, leading to a fall in Carbon prices.