Carbon massacre

In December 2022, the European Union hailed a reform in its carbon emissions market that featured much more stringent reduction targets than before. Another prominent feature of the reform was the most ambitious carbon price in the world.

“No other continent in the world has such an ambitious carbon price,” said the chairman of the EP’s environmental committee, Pascal Canfin, at the time. The figure? 100 euro per tonne.

High carbon dioxide prices are a key source of funding for the transition and a key element in the reduction mechanism the EU devised and approved in December 2022. I discussed it in more detail here in case anyone wants to do this to themselves.

The point of that post was that the EU is cementing the role of carbon permits as a source of revenue, to be used to invest in the energy transition because it will cost a lot and the money can’t all come from billionaire philanthropists and excise duties on fuel — especially in light of plans to ban cars running on liquid fuels.

The plan for these permits and the respective emissions was to make it as expensive as possible for businesses to emit CO2 and as they paid through the nose for the privilege to continue emitting, the EU transition coffers would fill up nicely.

Then, the plan continued, the money from those coffers was to be used to “incentivise” the expansion of wind and solar generation capacity because, after all, that’s what the transition is all about, along with EVs. It was a neat, relatively simple plan. Its authors only forgot one thing. That thing was the margin for self-sabotage inherent in their plan.