Europe turning away from coal will see carbon prices remain weak for at least 13 years.
That’s according to a new study by Thomson Reuters, which suggests the faster large European nations phase out the carbon-intensive fuel from their electricity mixes, the quicker demand will be reduced for carbon allowances.
Coal power represented 23% of the electricity mix in Europe in 2016 and the sector is responsible for almost 40% of total emissions.
Several EU member states have adopted policies to actively phase out coal to cut emissions, invest in cheaper alternatives and improve energy efficiency.
Jon Berntsen, Senior Analyst at Thomson Reuters, said: “In a scenario of accelerated phase-out we find that EU Allowances will follow a much lower price trajectory, staying below €14/tonne (£12.4/t) throughout the forth trading period ending in 2030.
“In the case of a full phase-out by 2030, we estimate that carbon prices will not rise above today’s level of €7/tonne (£6.2/t) within the forecast horizon.”