This article was written before the coronavirus pandemic .
The price of European carbon quotas is finally taking off. After having stagnated around 5 euros for a long time, the ton of CO2 jumped to 25 euros in 2018 and it has remained close to this level for two years. Experts from the ICIS design office even estimate that it could exceed 40 euros in 2023, which would encourage European electricity producers to accelerate the exit of coal.
Called EU ETS (for European Union Emissions Trading System), the carbon emission rights market constitutes the "cornerstone of European energy-climate policy" , recalls the Ministry of Ecological and Inclusive Transition. The principle is simple: manufacturers who release CO2 into the atmosphere must acquire emission rights, the total of which decreases by 38 million tonnes each year, and by 48 million per year from 2021. The system allows partially “compensate” States for the environmental cost of these activities, while encouraging companies to reduce their carbon intensity.
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The carbon market operates on the cap and trade principle . Each European State limits emissions by creating a limited number ( cap ) of emission permits which are distributed or sold to manufacturers. They can then trade them when they have too much or not enough, on platforms like EEX (European Energy Exchange) - the European Energy Exchange.
If all industrial installations plan to issue more than the annual quota ceiling, there are more buyers than sellers, so the price of the quota increases. This is all the more incentive to invest in clean technologies: energy efficiency, renewable energies or carbon capture.
Around 13,000 industrial sites in Europe, representing half of the region's CO2 emissions, are affected by these "rights to pollute". A big thousand are in France. They are above all electricity producers like EDF, steelmakers like ArcelorMittal, cement manufacturers like LafargeHolcim, refineries (Total, Esso…), chemists like Solvay but also airlines - only for flights within the European Economic Area. To which are added smaller producers, including ceramic, glass or paper. "Certain sectors such as agriculture are exempt ," explains Raphaël Trotignon, researcher in energy and climate economics at Paris-Dauphine University. The quotas also do not cover transport and residential heating, which are subject in France to the carbon tax of 44.60 euros per tonne. ”
A windfall for the state
In order not to penalize companies exposed to international competition such as cement manufacturers, steelmakers or petroleum refiners, the State distributes quotas to them each year free of charge. The allocation is made on the basis of their production volume and a benchmark of the best students in the sector, in terms of carbon intensity. Electricity producers, on the other hand, have to buy their quotas well, at auctions that take place every week. All of these manufacturers can sell and buy on the secondary market, over the counter or via a platform such as EEX. They can also hoard their quotas for future use.
The factories subject to emission rights have an account in a community register, which is kept in France by the Caisse des Dépôts. They have until the end of March to report their CO2 emissions from last year. “An independent private auditor like PwC, Deloitte or SGS delivers an official report of emissions, decrypts Raphaël Trotignon. To do this, he consults the invoices for the purchase of fossil fuels and estimates, from the volumes produced, the number of tonnes of emissions linked to the manufacturing processes. ”
The industrialist then had until the end of April to return to the State the quotas corresponding to the emissions of 2019. "There is in particular exchanges in April when certain installations realize that they lack quotas by compared to what they issued the previous year , notes Charlotte Vailles, climate project manager at the I4CE design office. If the quotas returned do not cover actual emissions, the manufacturer must pay a fine of more than 100 euros per tonne. ”
The recent rise in carbon prices is further encouraging manufacturers to green their processes. It is also a welcome windfall for the state. "Auction revenues increased significantly in 2018, the State received 830 million euros," said Charlotte Vailles. Two-thirds of this amount was transferred to the National Housing Agency to finance renovation works.