A new European Union carbon market for transportation and gas-fired heating is set to send household costs soaring by the end of the decade, according to researcher BloombergNEF.
The price of carbon dioxide under the new emissions trading system, set to open in two years’ time, may reach €149 a metric ton in 2029, BNEF’s analysis found. That’s more than double the current EU price for emissions from power plants and industry.
The increase would likely spur cuts to emissions as consumers shift to cleaner options such as heat pumps and electric cars, but at a cost that’s led some EU politicians to call for the new market to be delayed. While users won’t have to pay the price directly, the costs will likely be passed on by fuel suppliers.
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“Ambitious targets and high costs risk making households and small businesses the losers,” the report found.
For those who don’t opt to upgrade to lower-carbon technologies, the new carbon price could increase costs for road transportation by as much as 27%, while home heating bills may rise as much as 41%, BNEF said.
The planned expansion of the market underscores the challenges facing EU policymakers. It could be an effective tool to help drive the energy shift and meet the bloc’s climate goals, but it adds to expenses at a time when Europe is trying to revive an economy still reeling from the energy crisis.