The price of carbon is increasing and that is a good thing.

As Nicolas Barré, deputy editor of Les Echos, explains, the polluter pays logic could be more effective than regulation.

This is what the Nobel laureate in economics Jean Tirole defends. 

It's a sign that the world is on the move!

Since the start of the year, the price of carbon has continued to increase.

And you explain to us, Nicolas Barré, that this is good news.

Yes, the price of a tonne of carbon has soared: + 40% since the start of the year.

Its price is approaching 50 dollars per tonne on the European market for CO2 emission allowances.

The rise accelerated when the European Union committed last week to reducing its greenhouse gas emissions by 55% by 2030. Why is this good news?

Because it shows that the good old polluter pays principle works.

It's effective.

Why

?

The idea pushed by many economists, including Jean Tirole, the Nobel Prize winner in economics, is that the best way to reduce CO2 emissions is through prices.

It is much simpler and more efficient than regulation.

Example: you are an electricity producer.

You can produce your electricity with a coal plant, with gas, with nuclear power, with the sun, etc.

You have the choice.

Except that if you choose the coal plant, you will have to pay for each tonne of CO2 emitted into the atmosphere.

If a ton of CO2 costs 1 or 2 euros, that's not too much of a problem.

But if it costs 50 euros, you will think twice and go to solar or wind.

And does it work for all activities?

Today, only the most polluting activities such as chemicals, iron and steel, air transport, etc. are subject to this system of pollution rights which increase costs. But yes, we could extend the mechanism to all sectors. Be careful though: if we were to be the only ones in Europe to do so, polluting industries would move elsewhere, in China or India. But more and more countries around the world are adopting this system.

As economist Jean Tirole often says, this is the surest way to achieve the goals of the Paris Agreement. At the time, countries could not agree on such a system. But since then we have progressed. Polluting, rejecting C02 is becoming more and more expensive, this is what we are witnessing at the moment. We can hope that the world enters a virtuous circle ...