Rising carbon prices are accelerating the deployment of clean energy technologies around the world. As it works to increase the flow of revenues and encourages actors to pump more investments to reduce emissions.
According to a recent report – seen by the Energy Research Unit – the US market is leading the global carbon price hike, after it usually lagged behind many of its global counterparts. Which helps pump more dollars to invest in clean energy projects.
The report issued by the specialized Bloomberg New Energy Finance platform (BloombergNEF), the carbon market that it may be a catalyst, along with other policies such as the US inflation act, in the spread of clean technologies, including hydrogen and biofuels.
The carbon credits policy depends on the ability of companies to compensate for every ton of emissions they cause by contributing to a low-carbon project, or by paying a fee equivalent to the price of a ton of carbon. Others still release more emissions.
Carbon prices in the United States
Carbon prices rose in Washington, D.C., and the state of California, exceeding their counterparts in Europe and New Zealand this summer (2023), even with the momentum of green policies in the old continent.
The report shows that the price of carbon in Washington increased by 74% during the current year, to reach an all-time high of $73.05 per ton in late August 2023.
Carbon prices in California also rose to a record high in July at $37.49 a ton, an increase of 24% since the beginning of this year.
A pipe carrying carbon capture from emissions in Texas. Photo courtesy of Bloomberg
In the same context, the coastal states are working on the growth of carbon markets in the United States, including New York State, which is working on developing its own carbon market program.
The report believes that the multiplicity of carbon trading markets gives a signal to emitting facilities that prices may decline without interference from any party.
This means that emitting facilities may accelerate the reduction of their emissions – through the deployment of clean technologies – to make additional money from selling their surplus credits, before the multiplicity of carbon trading markets and a decline in prices.
Policy versatility is important for clean energy
In parallel with US policies to deploy clean technologies such as the Slow Inflation Act, the carbon market is helping the growth of clean energy projects; Including hydrogen and biofuels.
Bloomberg New Energy believes that US states need more than one policy to achieve their climate goals and reach carbon neutrality, as monitored by the Energy Research Unit.
She stresses that diversifying policies ensures higher returns with lower risks, noting that investors can reduce the risks that threaten their investment portfolio while hedging against inflation.
According to the report, carbon credit markets in Washington and California outperformed the Standard & Poor’s Index of the 500 largest US companies and most ESG investment funds in the US.
As carbon prices rise and thanks to revenue from market auctions, regulators get more money to help vulnerable groups meet their climate goals, support industries in transition and achieve environmental justice.
For example, Washington state’s revenue from carbon market auctions rose to $920 million for 2023, according to the Energy Research Unit.
There are currently around 35 markets committed to their climate targets globally, covering nearly 20% of global greenhouse gas emissions.
The following infographic, prepared by the Energy Research Unit, presents energy-related carbon emissions by source:
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2023-09-04 18:53:43
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