EMISSIONS
The EU coal phase out will not necessarily free up more carbon allowances if member states decide to cancel permits voluntarily such as in the case of Germany according to BNEF.
- Germany has voluntarily canceled 12 million allowances associated with two coal plant retirements, which could set a precedent for other member states, suggesting a tighter supply outlook in the long term.
- Less supply of emissions allowances could be supportive for EUA prices if coal plants are substituted with gas power plants.
- The cancellation of permits is not mandatory, however, encouraged by the bloc.
- Hard coal and lignite plants accounted for over a third of total power emissions covered by the EU carbon market last year,
- This is equal to around 170mn tons of emissions by the end of 2030, if the corresponding allowances would be cancelled.
- Ten countries in the EU are planning to phase out coal before 2030 with six countries committing to be coal-free by 2040.
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