Limited quotas are available and their number is gradually decreasing, which raises their price and forces companies to cut back on their emissions. Until now, only power plants, large industrial companies and airlines have had to buy allowances. Now the European Commission wants them to be paid for in road and shipping transport or for heating buildings.
The price climbed to 61.01 euros per tonne on Monday morning, later fell back to 60 euros. Emission allowances are the Union’s main tool for reducing emissions. Since 2005, the so-called The European Emissions Trading Scheme (ETS), under which air polluters buy the opportunity to emit greenhouse gases.
According to Refinitiv analysts, lower auction volumes as well as rising oil prices could support the prices of emission allowances this week. Analyst firm S&P Global recently said that the primary supply of allowances from government auctions fell sharply in August, with a further decline expected this week. The reduction in the number of auctions from five to three due to the bank holidays in Britain and the closure of the European energy exchange EEX due to the annual meeting of the committee on 2 September will contribute to this. EEX organizes auctions. Allowance prices are also rising due to higher gas prices in Europe.
One of the main effects of rising emission allowances on households is rising electricity prices. Economists state that with the current share of dirty and clean energy sources and current prices of energy and allowances, quotas make up about ten percent of the price of energy. The increase in the price of allowances will also be reflected in higher prices of the stock exchange price of electricity, which will be reflected in the increase in final accounts for electricity consumption with a delay. For electricity, experts expect prices for non-fixed products to rise by the order of ten percent in the autumn at the latest due to high wholesale prices.
The European Commission said in May that the number of allowances in circulation increased last year as a pandemic led to lower emissions. At the end of last year, according to the commission, about 1.579 billion allowances were in circulation, 14 percent more than a year ago. The Commission has therefore decided to withdraw 378.9 million allowances from future auctions and place them in the market stabilization reserve.
The current rise in price is attributed by some analysts to panic and speculation. Brussels is considering taking action against speculators who hold large volumes of emission quotas. There are currently no limits to their holding. The reason is that the growth in the price of allowances is too fast and could jeopardize competitiveness