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(Bloomberg) — European Union carbon futures rose through a key technical level of €80 on Monday, after Germany announced new support for energy-intensive industries that is expected to lift emissions.
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German Economy Minister Katherina Reiche said Monday that a new government mechanism for subsidizing electricity costs for heavy industrial users through 2029 can be rolled out at the start of next year. The plan is meant to spur production in Europe’s largest economy, boosting demand for carbon permits that companies need to surrender for each metric ton of CO2 they release into the atmosphere.
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Benchmark carbon permits for December surged as much as 4.1% to €81.75 a metric ton as of 2:55 p.m. in London on ICE Endex, the highest since February.
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“This morning’s German press conference on industrial power prices was the main catalyst to push buying pressure,” said Henry Lush, carbon analyst at at Oslo-based Veyt.
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Traders are also keeping an eye on a meeting Tuesday of European climate ministers trying to agree on the bloc’s 2040 climate target.
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The gathering of ministers follows an agreement last month to support automakers and other energy-intensive industries that have struggled in recent years. The European Commission, the bloc’s executive arm, proposed earlier this year a goal to cut emissions by 90% by 2040. Even if a deal is struck this week, the final shape of the bill will still need to be negotiated with the European Parliament.
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Lush said a carbon price closing above €80 per ton would open a “new technical level” that could be a more important driver for the market than “ongoing EU policy ambiguity.”
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