Opinion by Mathew Carr
Jan. 23-24, 2024 — EU carbon traders seem to have lost sight of reality, of the big picture.
Looking at the price of EU CO2 futures, you’d think the climate was saved. Nothing could be further from the truth (notwithstanding some positive technological developments).
The futures have dropped to around a two-year low, with traders apparently (and strangely) panicking to a similar extent now as they did right after the start of Russia’s main invasion of Ukraine.
Traders seem to be forgetting that the reason for carbon prices is to slow temperature rises … but those gains are speeding up.
Based on global sea-surface temperature gains at the start of this year, the world could breach the 2C limit as early as 2024 …yes … this year.
Note the following chart does not include the 1850-1900 mean but the much warmer 1982-2011 mean.
Global average temperatures in 2023 were about 1.5C above the 1850-1900 mean. Based on the beginning of 2024, they could be 0.5C above 2023’s level … this year.
Reuters:
https://apple.news/AwNGNNCk8S6-v6TvHckLoRA
Longer term, natural gas prices are not the crucial factor when determining EUA prices, temperature rise (climate chaos) is.
Maybe traders need to think a bit forward with their auction-bidding strategies, or miss out on lower prices.
Comments my way to mathew@carrzee.net, especially if you disagree.