The price per ton of CO2 emission allowances last superseded the €80-mark at the end of last year and by mid-January this year had fallen below €70.

The figure has mostly been below €60 so far this month, with renewable energy development and low natural gas prices also playing their part, Kasparov went on.

Speaking to ERR; Kasparov said: "The fall in price is the result of the downturn in industry and in the economy in Europe – a fall in industrial production leads to lower industrial emissions, while the sale of quotas is often used to finesse economic results," Kasparov said.

"Further supply on the market in turn leads to a lower quota price," he explained.

Demand, supply and therefore prices has also been influenced by the rapid development of renewable energy sources and by the reduction of emissions at power stations burning fossil fuels, he added.

"In addition, the situation is exacerbated by a low price for natural gas, which allows power stations using natural gas to generate electricity to enter the market ahead of the more carbon-intensive coal and oil shale plants."

Estonia has power stations which use both of these fossil fuel sources, with oil shale the more predominant.

Downward pressure on CO2 quotas also derives from a European Commission sale of surplus quotas to offset against the cost of replacing Russian fuel imports, the head of energy trading at Eesti Energia went on.

"To sum up with regard to the quota market, demand has risen, as has supply, leading to a drop in the CO2 quota price on the market."

The fall in quota prices also hits the Estonian state in the pocket.

Every year, the state auctions off a certain amount of excess CO2 emission quotas, mostly to private sector European firms, while quantity depends on how many tonnes of greenhouse gases they emit.

Last year, Estonia earned €358 million in this way, at a time when quota prices were €90-€100, off 4.3 million tonnes of emission quotas sold.

Not only will the price be lower this year, however, so too will be the volume sold, at 3.9 million tonnes, falling to a little over 3.4 million tonnes next year.

Furthermore, in the past, half of these revenues had to be spent on achieving climate goals, while the other half went to the state purse, but starting from this year, a new regulation requires all revenues go to the first of these destinations.

--

Follow ERR News on Facebook and Twitter and never miss an update!