Carbon Tracker finds carbon prices on course to reach €25 by the end of 2018, €10 higher than forecast in April. This accelerated rally in carbon prices anticipates EU-wide reductions of carbon allowances 2019-2023 that will leave the power and aviation sectors with a ~1.4 billion t carbon allowance deficit.
In reaction, carbon prices are likely to rise to levels that trigger fuel-switching from coal to gas in Germany, Italy, Spain and the Netherlands, following in the footsteps of the UK.
New analysis of the efficiency of coal and gas capacity on a national level sheds light on where the transition could take place. At a carbon price of €40, the EU could achieve emission savings of approximately 400 million t of carbon 2019 - 2023 due to fuel-switching.
