Going by an analysis of a model created by the European Commission, carbon costs for Europe’s businesses is likely to double this decade under EU plans to deliver steep emissions cuts by 2030.
On Thursday, the European Commission laid out an analysis of how its 27 member states could slash carbon emissions by at least 55% by 2030, against 1990 levels.
To deliver on this target, which incidentally will need approval from member states as well as from the European Parliament, the European Commission aims to beef up the bloc’s emissions trading system (ETS), which essentially streamlines factories, power plants and airlines which runs flights within Europe, to buy permits to cover their emissions.
In a statement the Commission said, its main policy scenarios for meeting the new climate target could result in a carbon price in Europe of 32 euros to 44 euros in 2030, measured in 2015 prices. When measured in 2030 prices, the top end of this range could touch 59 euros by 2030, assuming an inflation rate of 2% per annum from 2015 to 2030.
Countries, including Poland, have warned, higher carbon costs could act as a burden to businesses which are already straddled with COVID-19-induced business losses.
Extra revenues from pricing pollution could help fund economic recovery of member states, said the EU.
In order to drive deeper emission cuts, the cap on the number of permits in the scheme needs to fall at a faster rate than earlier planned, said the EC. New sectors could also be added to the ETS, including shipping and possibly even transport and buildings.