In 2023, global carbon pricing revenues reached a record $104 billion, according to a new report.
The World Bank’s annual “State and Trends of Carbon Pricing 2024” report found that there are now 75 carbon pricing instruments in operation worldwide. Over half of the collected revenue was used to fund climate and nature-related programs.
Axel van Trotsenburg, World Bank senior managing director, commented that carbon pricing can be one of the most powerful tools to help countries reduce emissions. He stated that it is good to see these instruments expand to new sectors, become more adaptable, and complement other measures. Trotsenburg also said that this report can help expand the knowledge base for policymakers to understand what is working and why both coverage and pricing need to go up for emissions to go down.
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The World Bank has been tracking carbon markets for around two decades and this is its eleventh annual carbon pricing report. When the first report was released, carbon taxes and Emission Trading Systems (ETS) covered only 7 percent of the world’s emissions. According to the 2024 report, 24 percent of global emissions are now covered.
Expanding carbon pricing to new sectors
The report findings show that large middle-income countries including Brazil, India, Chile, Colombia, and Türkiye are making strides in carbon pricing implementation. While traditional sectors like power and industry continue to dominate, carbon pricing is increasingly being considered in new sectors such as aviation, shipping and waste. The EU’s Carbon Border Adjustment Mechanism, currently in a transitional phase, is also encouraging governments to consider carbon pricing for sectors such as iron and steel, aluminum, cement, fertilizers, and electricity.
Governments are also increasingly using carbon crediting frameworks to attract more finance through voluntary carbon markets and facilitate participation in international compliance markets.
Insufficient carbon price coverage and levels
Despite record revenues and growth, the report notes that global carbon price coverage and levels remain too low to meet the Paris Agreement goals. Currently, less than 1 percent of global greenhouse emissions are covered by a direct carbon price at or above the range recommended by the High-level Commission on Carbon Prices to limit temperature rise to well below 2°C. The report emphasizes that closing the implementation gap between countries’ climate commitments and policies will require much greater political commitment.
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