Carbon Risk

Carbon Risk

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Carbon Risk
Carbon Risk
Does a stable carbon market equilibrium exist?

Does a stable carbon market equilibrium exist?

Peter Sainsbury's avatar
Peter Sainsbury
Apr 21, 2022
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Carbon Risk
Carbon Risk
Does a stable carbon market equilibrium exist?
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EU carbon prices rose 4-fold between late 2020 and early 2022 to almost €100 per tonne, only to then crash 40% in the aftermath of Russia’s invasion of Ukraine to less than €60 per tonne. Following its subsequent rebound, the price of carbon has settled in a narrow trading range close to €80 per tonne for some five weeks.

It’s been a remarkable period of tranquillity given historical carbon market volatility, and the tumultuous geopolitical, economic and financial conditions that serve as the backdrop.

Is €80 a new stable market equilibrium for the EU carbon price, or is this a mere pause before the market finds new direction?

To understand what might be going on we turn to the world of ants.

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