One of the favorite climate policy prescriptions is to apply carbon pricing either by a direct tax or by requiring purchase of carbon credits or offsets. Now comes a report of unintended consequences, namely that rising prices for carbon credits have increased the demand for coal, the most disliked of all fossil fuels.
From Bloomberg Why Higher Pollution Costs Aren’t Denting Coal Demand in EU Excerpts in italics with my bolds.
If you thought the surging price of fossil-fuel emissions in Europe would hurt coal demand, think again.
The highest prices for carbon credits in a decade have also lifted natural gas, discouraging power stations from making the switch away from coal. As a result, demand remains strong for the dirtiest fossil fuel in the continent that’s doing the most to clean up its economy. Coal prices as a result reached their highest in five years on Tuesday.
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