A European directive approved last May states that from 2027 oil producers will pay based on the carbon dioxide emitted. This will incur additional costs on the fuel price at the pump
As we discuss upcoming Euro 7 legislation and the high costs driving car prices, keeping in mind that it is another pillar on the sector side, a hook arrives in the chin from Brussels that risks dropping motorists. the new European directive 2023/959 of Parliament and Council of 10 May 2023 introducing deep reform of the ETS system (emissions trading system) that organizes it Trading carbon dioxide emissions, a market that since 2005 has mainly allowed companies in some specific energy and industry sectors to obtain permission to pollute. The new Directive extends to ship transport, but above all provides for the creation of a new emissions market for domestic heating and road transport. basically, The oil companies will have to pay for the carbon dioxide emitted in the manufacture of the fuel, but the additional cost will inevitably be funneled onto the final price of gasoline and diesel.. The system will become effective from 2027with alarming predictions. Hooks straight to the chin of European motorists who, in the controversy over Euro 7, have seen few pass by.
Give and take
The first step to understanding risks is simply explaining them Carbon dioxide credit mechanism, which is based on companies that invest in environmental protection projects and in capturing or reducing greenhouse gases, earning in exchange for securities, “green shares” that they regularly put up for sale. They are bought by companies that, due to the nature of the work they do, emit large amounts of carbon dioxide, and are therefore indebted to them. The one bought and paid in euros per ton of CO2 offsets it, and practically allows you to keep emitting. Underestimating the “bad guys” buy good stocks, but that doesn’t happen in a naive market.
Silence of the Lambs
The new EU Directive 959/2023 now also affects overall fuel consumption. It must be formally implemented by the Italian state (after parliamentary approval of a special empowerment law for the government and consequent passage to the Cabinet) and provide some protection for motorists and the most vulnerable groups in society, with Social Climate Fund (Social Climate Fund) for interventions aimed at controlling prices. Still very generic tools, like A ban on fuel suppliers transferring more than half of the costs to final consumers. In financial investments, what matters more than percentages are orders of magnitude, which are set to take off in the new separate market for ground transportation credits. The European institutions aim to limit the new price of CO2 quotas to a maximum of €45 per tonne, which equates to 10 cents of extra cost per liter of petrol, and 12 cents per liter of diesel. Consider the price development at the moment Ets market, the conclusions are depressing. European auctions saw the price of units rise from €8.34 in January 2018 to a projected average of €86.17 for 2023 and €96.19 for 2024, according to a Reuters analysis, while expectations for average prices in 2025 would be. It rises to 104.84 euros / ton. But unfortunately there are many more.
Trust the accounts
According to forecasts from the International Energy Agency, International Energy Agency, the price of quotas in the new market would include more operators of the existing system to increase demand and thus sell quota prices due to the lack of a corresponding amount of companies committed to generating from them, with environmental projects taking longer to complete. An exponential growth in demand can lead to a price of a ton of carbon dioxide equal to 200 euros, ie 53 cents per liter of diesel And 47 cents per liter of gasoline. So, assuming that increase is applied to current average fuel prices, The price of petrol will rise to 2,288 euros per liter, while the price of diesel will reach 2,191 euros per liter, after deducting any taxes.. or further. Analyzing the text of EU Directive 959/2023, we discover that the 45-euro-tonne cap is a detriment to EU institutions, and not an insurmountable limit, that exceeding it would lead to the release of an additional 20 million allowances, free of charge. A grain of sand in a sector that, when fully operational, is expected to consume 1,000 million tons of carbon dioxide annually. According to a study funded by the German Research Ministry, if EU countries do not take more climate policy measures, the price could reach 350 euros in the medium term.
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