Chart of the week | Higher or lower? Transitioning to the UK ETS

Carbon prices, especially the EU Emission Trading System (ETS), have experienced considerable volatility over the last year, influenced first by COVID-19, which saw prices crash, and more recently by expectations of increased EU climate ambitions, driving prices to record highs. In this Chart of the Week, we consider the potential scenarios for UK carbon prices as we transition to the new UK ETS, noting the role of market tools, policy, and recent pricing trends in determining these costs.

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