Why is it important to purchase EUAs sooner rather than later?
Summary
Purchasing carbon allowances now is crucial because it immediately reduces the carbon budget, mitigating climate change impacts; delaying action leads to irreversible consequences and accelerates harm as CO2 accumulates in the atmosphere. Immediate action allows more time for adaptation and prevents the escalation of extreme climate events. This represents a form of ethical investment and impact investing into green finance.
Purchasing European Union Allowances (EUAs) today effectively reduces the carbon budget available for emissions right now. This is crucial for protecting the environment and mitigating the immediate, accumulative impacts of climate change.
Timing matters : the immediate impact on the carbon budget
Buying EUAs sooner rather than later has a direct effect on the carbon budget available to industries. By purchasing EUAs early, you effectively reduce the volume of carbon that could otherwise be emitted into the economy right now. And when it comes to carbon emissions, timing matters. The detrimental impact of the same quantity of CO2 molecules released into the atmosphere today or in a few years is not the same. This is what we call the “Time Value of Carbon” - cutting emissions today has greater value than doing so in the future.
The irreversible climate change consequences
We can't repair a shattered vase. Releasing carbon into the atmosphere accelerates temperature rise, leading to severe and often irreversible impacts on the economy, human health, and ecosystems. Even if we significantly cut CO2 emissions in the future, certain climate effects, like altered temperature and precipitation patterns, are irreversible. By reducing carbon emissions today, we help preserve the temporary state of our climate (or at least limit the damages).
The cumulative Impact of CO2
CO2 emissions persist in the atmosphere for centuries, meaning that today's emissions will affect future generations. Delaying action on reducing emissions complicates efforts to meet international climate targets, like those set in the Paris Agreement. Immediate purchase and use of EUAs contributes to a prompt emissions cut, supporting efforts to keep global warming well below 2°C.
The accelerating impact of carbon emissions
Not only is reducing emissions today more valuable than in the future, but once carbon concentrations surpass a certain threshold, each additional molecule of CO2 has increasingly severe effects. Crossing this limit can trigger accelerating negative impacts from climate change, with each additional unit causing disproportionately greater harm. Unfortunately, as past decisions to delay emission cuts have compounded the problem, we now face the necessity of achieving severe, sustained reductions in greenhouse gas emissions to mitigate these accelerating impacts.
Facilitating adaptation and smoothing the carbon budget
Earlier climate action provides more time for human societies to adapt to changing conditions and smooths out the release of carbon emissions. There are already ongoing extreme climate events such as heatwaves, droughts, and storms, forcing entire populations to change their lifestyles overnight. Being proactive and rapid through immediate emissions reductions helps prevent the escalation of such events and allows for more effective adaptation.
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