Losses & profits. Investors, here is an object of desire that is more virtuous than bitcoin and much less fickle. Light as air, carbon dioxide flies away. Its price too. On Tuesday April 27, the carbon price on the European market exceeded 47 euros per tonne, more than double its price in April 2020 (19 euros). And analysts are already projecting it in the 60 to 100 euros zone, perhaps by the end of the year.
This complex carbon emissions trading system (ETS), invented in 2005 by the Brussels bureaucracy to put CO emissions at a cost, has long been mocked.2, and therefore to global warming. Too weak and too limited, burdened by exceptions, it did not play the incentive role that was hoped for. But all this has changed at a rapid pace since the European Union (EU) decided to change gear with its ambitious Green Deal, aimed at achieving carbon neutrality by 2050.
And in its range of instruments prominently features a “border adjustment mechanism”. In other words, a carbon tax, at the limits of Europe, intended to limit CO imports as much as possible.2 and environmental relocations. Hence the renewed interest in ETS. For the moment, it only concerns industrialists who consume large amounts of energy, such as the steel industry, cement, chemicals or aluminum. These are set an emission ceiling, materialized by the allocation of quotas. If they get below this threshold, they can sell their quotas to those who have exceeded it. Initially, they were free, then they gradually became chargeable. The idea would be to use this system by applying it to imported products, unless they come from countries which have set up an equivalent system.
An additional inflation factor
In order to prepare the discussions, and the official meeting of May 25, the European Commission circulated a first draft to diplomats. This proposes to extend the ETS system to other sectors that emit large amounts of greenhouse gases, and in particular transport and construction. Scheduled to be adopted in June, all of this mechanism looks more and more like a real economic bomb. Its blast effect promises to be considerable.
First level, that of the perimeter. To go beyond the current sectors, which account for around 40% of the EU’s greenhouse gas emissions, it needs to be extended to sensitive sectors such as transport and construction. But for this, it must concern both imported products and those manufactured within the EU. In other words, the manufacture of cars in France or Germany will now also be subject to this quota system. We cannot tax Chinese cars in the name of the environment if our manufacturers escape it. This will not only increase the bill for manufacturers, but also for consumers. An additional inflation factor.
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