The EU’s headline climate goals of more than halving emissions by 2030 and neutralising them by 2050 only work if the bloc’s carbon market is firing on all cylinders.
By charging emitters for every tonne of carbon emitted, the market creates an incentive for polluters to invest in green technology. If buying pollution permits is a bigger expense for a steel producer than purchasing next-generation blast furnaces, the decision is an easy one.
After many years of ineffective pricing, where the cost of pollution permits was a negligible cost that big companies simply put up with, the market has come into its own lately. The price has rocketed up towards €100, which cannot be ignored.
That is why officials call it the flagship policy of the Green Deal and have called for more firepower in recent years to reinforce its decarbonisation potential.
They got their wish last year, when the EU’s executive branch announced a big update to the emissions trading system...