The price of permits on the European Union carbon market has soared to record levels in the first trading days of the year, hiking costs for polluters as the EU prepares measures to enforce deeper emissions cuts.

The EU emissions trading system (ETS) is the 27-country bloc’s main tool to reduce the greenhouse gas emissions that cause climate change. It forces power plants, factories and airlines running European flights to buy a permit for each tonne of CO2 they emit, effectively putting a price on pollution.

EU carbon permits hit €34.25 per tonne of CO2 on Monday (4 January), the highest since the market launched in 2005. Prices decreased slightly on Tuesday, but remain around €33 per tonne.

Cold weather, which stokes demand for power and heating, and a delay to the start of this year’s carbon permit auctions helped to boost prices.

Analysts say carbon is on a long-term upward climb, as the EU toughens its climate change policies. The price of EU carbon permits has jumped by around 12% since a meeting in December where EU leaders agreed on a more ambitious target on cutting emissions this decade.

Guest post from EurActiv