European carbon prices jumped to an all-time peak above €66 a tonne on Monday as traders bet that the outcome of the COP26 climate talks was likely to strengthen emissions markets that are seen as a key tool of decarbonisation.

The EU Emissions Trading System, which sets the price for utilities and industry for emitting one tonne of carbon in the bloc, climbed 5.5 per cent to €66.74 a tonne, more than double the level at the beginning of the year and up from €55 a tonne a month ago.

Traders and analysts said the outcome of the COP talks, while not as strong as some had hoped, still pointed to a trajectory whereby governments will need to see the cost of carbon rise to help push heavily polluting fuels like coal off the grid, while encouraging industry to invest in cleaner technologies.