Following COP26, the price of carbon in Europe has reached an all-time high

Since the start of the year, the price of carbon has more than doubled, as countries seek to mitigate its effects through new accords.

Following the COP26 climate summit, the European carbon price has reached a new high of €66 (£55) per tonne.

Traders contributed to the massive increase by estimating that the climate negotiations would cause emissions markets to rise, since they are a critical instrument in the net zero journey.

According to the EU Emissions Trading System, the price of carbon has risen by 5.5 percent, which is more than double what it was at the start of the year and a significant increase from €55 (£46) only one month ago.

Traders and market professionals projected that governments would need to see carbon prices grow in order to clear the global energy mix of pollutants like coal and push business to invest in cleaner technologies like hydrogen or renewables.

Because of the buildup to the Glasgow climate conference in recent months, many investors have bet on the price of carbon rising, owing to the approaching requirement for governments to reduce their emissions.

“While the conclusion at COP26 was perhaps not as robust as some had anticipated,” said Mark Lewis of the Andurand Capital hedge fund, “there was still a clear signal that governments need to get serious about carbon pricing if we’re going to see emissions reduce.”

“There is a broad perception that the COP process has supported carbon markets, since it has become evident that politicians now agree that the limited amount of space available for carbon in the atmosphere is the scarcest resource of all.”

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