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ECB: required carbon price increase of 247% in 2030

Updated: Aug 9, 2022

A European carbon price of around €295 per tonne in 2030, is required to remain on an ‘orderly’ pathway to a Paris Agreement-aligned warming target, according to modeling in the European Central Bank’s first climate stress test that said stringent policy measures are urgently required to avoid billions of financial losses coming from climate related natural disasters.



The ECB flagged a €70 billion risk to euro zone banks from rising natural disasters, particularly from droughts, heat and floods, that would lead to credit and market losses in the institution’s worst case scenario, based on delayed policy and a low 2030 carbon price. This figure is even a low estimation as it doesn’t take into account a likely economic downturn caused by such disasters.


To mitigate the risk of European banks incurring such significant financial loss in its so-called “orderly” scenario, the ECB, calculated that a steady carbon price rise from now €85 to around €295 in 2030, €595 in 2040, and €890 by mid-century, would ensure Europe moves towards net zero emissions by 2050 and minimises the financial losses incurred from climate shocks.


“Euro area banks must urgently step up efforts to measure and manage climate risk, closing the current data gaps and adopting good practices that are already present in the sector,” said Andrea Enria, chair of the ECB’s supervisory board in a statement.


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