Climate Progress Dashboard update: Soaring carbon prices in Europe not enough to offset pace of global warming

The highest carbon prices in Europe for almost a decade have not been enough to slow the pace of global warming, Schroders Climate Progress Dashboard has found.

The cost of carbon credits in Europe has soared threefold from €8 per tonne a year ago to €24 per tonne[1] by the end of September 2018 - a level not seen since 2009.

But a pick up in investment in oil and gas industries - which has reached close to 8% of the value of the industry’s assets during Q3[2] - means global temperatures are still on course to rise 4°C.  

The findings come as the Intergovernmental Panel on Climate Change also warned that the world’s current temperature rise trajectory is 3°C.  

Schroders Climate Progress Dashboard – launched last year - is designed to give investors an insight into the progress governments and industries are making towards meeting the 2°C temperature rise target agreed under the Paris accord in 2015 and the transition to a low-carbon economy.

All of the 12 indicators identified by Schroders as the key drivers and controls of climate change are still exceeding the international target to limit global warming to below 2°C.

Andrew Howard, Head of Sustainable Research, Schroders, said:

“The rise in carbon prices has given the carbon credit market more teeth in its intended purpose to incentivise efficiencies and investment in clean technologies. Carbon prices are on the agenda of many of the discussions our analysts and fund managers are having.

“There remains much further to go - we estimate prices will need to rise as far as $100 per tonne to meet long-term emissions reduction targets – and carbon pricing represents one piece in the puzzle of climate action.

“But for these steps forward, there has also been a fall backward. Last quarter, we highlighted the importance of continued discipline in capital investment across the oil and gas industry as prices rise.

“And unfortunately investment data from the latest quarter indicates that this has tempted producers into opening their wallets as the oil price has recovered. Investment discipline lies at the heart of fossil fuel producers’ ability to decarbonise and will be a key focus going forward.” 

The dashboard - updated quarterly - identifies the long-term temperature rise the world is on course for, according to a range of indicators spanning politics, business, technological progress and energy.

To read Andrew’s more detailed Climate Progress Dashboard analysis, please click here.


[2] Source: Thomson Reuters data


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