CO2 Emissions Are Rising Again
This week, we talk about how carbon-dioxide emissions are on the rise after stalling as a result of the pandemic and how investors can profit from Europe’s green ambitions.
Welcome to our weekly chat about the environmental and social issues that influence the way we work, spend our money and live our lives. We're your hosts, Maitane Sardon and Dieter Holger. Want to get our newsletter every Wednesday? Hit the subscribe button in the upper right corner and please share with your friends.
Hi, Maitane. Carbon-dioxide emissions are on the rise again after a lull as a result of the pandemic last year. The global shutdowns weren't enough to permanently slow the rise in emissions from increasing human activity.
The International Energy Agency says emissions are expected to climb 4.8% this year, the biggest gain since 2010.
Much of the new emissions come from developing economies. China and other developing nations will help drive global energy demand above 2019 levels, the IEA says.
Some companies are seeing dollar signs. Oil-and-gas giants Royal Dutch Shell and Exxon Mobil both want to use carbon capture and storage technology to profit from helping customers sock away carbon-dioxide emissions.
That is an interesting pitch to come from oil companies, which are responsible for a large share of CO2 emissions globally. The IEA says getting oil and gas out of the ground and to consumers generates 15% of the world’s energy-related greenhouse-gas emissions.
Speaking of greenhouse gas, carbon credits on the European Union’s emissions-trading system have been one of the best-performing commodities of 2021. Their price rose to a record high of more than 44 euros, equivalent to $53, for a metric ton of CO2 on Tuesday.
The bloc launched the Emission Trading System in 2005 as a tool to curb pollution. It is a cap-and-trade system of emissions allowances that puts a price on carbon. Investors can buy futures that anticipate this price, which has been rising since the bloc announced a more ambitious climate target. The EU aims to cut emissions by 55% by 2030 compared with 1990 levels.
The current ETS mainly covers the power and aviation industries. Once a year, big polluters have to buy a permit for each ton of CO2 they emit or pay a hefty fine.
European Commission President Ursula von der Leyen says she wants to include other sectors such as transport and construction in the ETS. These and other changes officials plan to propose in June could make carbon credits more expensive for companies but more profitable for investors, and increase demand for allowances.
We’ll keep an eye on the EU’s carbon price as the bloc continues decarbonizing its economy.
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Elevate the Conversation is produced by the editorial teams of The Wall Street Journal and Dow Jones Newswires. Here's a little bit more about us, along with our contact information. We'd love to hear from you.
Dieter Holger, Reporter: I have a knack for uncovering values-based investing trends and I’m obsessed with spreadsheets and charts. I really enjoy ‘80s music and skateboarding (but I suck). dieter.holger@wsj.com @dieterholger
Maitane Sardon, Reporter: I have a passion for amplifying the voices of those at the center of stories. I love running on Barcelona’s beaches and binging on chocolate ice-cream to compensate (it’s all about balance). maitane.sardon@wsj.com @sardonmaitane
Catherine Lindsay, Editor: I like breaking down complex ideas and explaining them. On the weekend, you’ll find me wandering the city with my film camera at the ready. catherine.lindsay@wsj.com @CathsLindsay
Tammy Lian, Designer: As a visual producer, I'm always excited by the challenge of creative problem solving. In my spare time, you can usually find me taking care of my ever-growing collection of plants and drinking tea. tammy.lian@wsj.com @violian.tammy