The World Bank’s annual report takes a snapshot of the situation of carbon markets and CO2 taxes over the past 12 months. Expansion is slow and prices are almost never suitable to hit Paris targets
The carbon market must beat between 50 and 100$/t to hit 1.5 ºC
(Sustainabilityenvironmental.com) – In 2021, global carbon market revenues grew by 60% over the previous year, reaching a record $84 billion. A surge that depends in great part on the increase of the prices of the CO2, not from an expansion of the systems ETS. Instead proceeds very slowly.
The World Bank states this in its annual report on emission trading schemes, State and Trends of Carbon Pricing 2022.
In absolute numbers, last year’s active global carbon markets around the world rose to 34, 3 more than the previous year (one US state, Oregon, and two Canadian provinces, Ontario and New Brunswick), while countries implementing CO2 tax forms are 37, 1 more than 2020 (Uruguay). Coverage of total global emissions also grew slightly, rising by just 0.15% and still remaining below 25%.
“The rapid increase in CO2 prices of ETS systems, together with the launch of new ETS systems, has seen a surge in revenue from ETS systems, which for the first time have exceeded the revenue from the carbon tax”, reads the report. “However, prices in most jurisdictions remain below what is necessary to achieve the objectives of the Paris Agreement and “keep the 1.5 ºC within reach”. With a few new instruments or sectoral expansions this year, global coverage of carbon prices increased only marginally in the year preceding April 2022″.
Despite the historic rise in the price of CO2 in many regions, only 4% of global emissions are currently covered by a direct carbon price that follows the right path towards 2030. The voluntary carbon markets have also shown substantial growth. In 2021, these systems raised over $1 billion for the first time. A record that depends above all on the great interest of the private sector for this form of carbon pricing.
