The upward price trend of the Emission Trading Scheme () credits or the European Union Allowances (EUAs) over the last three months has been reversed as The carbon market to a great extent is contingent upon the fuel prices – the EUA prices rose steadily in April, May and June as more and more power generators were compelled to switch to coal in the face of rising gas prices. Since coal’s carbon emissions are higher than that of gas, an increase in the usage of coal led to a greater demand and hence price of EUAs.
But now with price of gas going down and coal becoming more expensive, the former has become the preferred fuel which has caused EUA prices to go down as it is a cleaner fuel. The rise in their supply as a result of France issuing 130 million EUAs may have also acted as a contributory factor.
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