Following the COP26 climate summit, the European price of carbon has risen to a record high of €66 (£55) per tonne.
Estimating that the climate talks would see emissions markets rise, as they are a crucial tool in the net zero journey, traders have contributed to the huge hike.
The price of carbon has climbed by 5.5% according to the EU Emissions Trading System, which is more than double the amount it was at the start of the year and a heavy jump from €55 (£46) just one month ago.
Traders and market leaders predicted that governments would need to see the price of carbon rise to try and rid the global energy mix of pollutants such as coal and encourage industry to invest in cleaner technologies such as hydrogen or renewables.
Due to the anticipation surrounding the Glasgow climate summit in recent months, many investors have banked on the price of carbon rising, with the impending need to mitigate its output from governments.
Mark Lewis, Andurand Capital hedge fund, said to the Financial Times: “while the outcome [at COP26] wasn’t perhaps as strong as some had hoped, there was still a clear signal that policymakers need to get serious about carbon pricing if we’re going to see emissions fall.”
“There is a general feeling that carbon markets come out of the COP process reinforced, as what has become clear is there’s now an acceptance among policymakers that the limited amount of space left for carbon in the atmosphere is the scarcest resource of all.”