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EMISSIONS: European CCfD Demand Increases

EMISSIONS
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Demand for carbon contracts for difference (CCfD) is increasing in Europe with carbon prices remaining too low and volatile to encourage a green transition according to BNEF. 

  • Taking the cement sector as an example, BNEF estimates that the sector’s marginal cost of abatement is €105/ton CO2e. This compares to an average EU ETS price of around €65/tCO2e in 2024.
  • Due to free allocation, however, producers paid almost no effective carbon prices, which shows, until free allocation is phased out, the cement sector requires an incentive that fills the gap between the effective carbon price and the marginal abatement cost – or the required carbon price, to incentivize decarbonization. 
     
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Demand for carbon contracts for difference (CCfD) is increasing in Europe with carbon prices remaining too low and volatile to encourage a green transition according to BNEF. 

  • Taking the cement sector as an example, BNEF estimates that the sector’s marginal cost of abatement is €105/ton CO2e. This compares to an average EU ETS price of around €65/tCO2e in 2024.
  • Due to free allocation, however, producers paid almost no effective carbon prices, which shows, until free allocation is phased out, the cement sector requires an incentive that fills the gap between the effective carbon price and the marginal abatement cost – or the required carbon price, to incentivize decarbonization. 
     
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