World Bank reports record $104 billion raised in global carbon emissions pricing in 2023

The European Union’s Emissions Trading System (ETS) has emerged as the largest single contributor to global carbon revenue, according to a recent report by the World Bank. In 2023, countries worldwide raised a record $104 billion by charging firms for emitting carbon dioxide. Despite this significant milestone, the prices for carbon emissions remain too low to drive the necessary changes to meet the targets set by the Paris climate accord.

Carbon pricing has become a crucial tool for countries looking to reduce greenhouse gas emissions and combat climate change. By making polluters pay through taxes or under cap-and-trade systems, governments aim to incentivize companies to reduce their carbon footprint. Currently, there are 75 carbon pricing instruments in operation, covering approximately 24% of global emissions.

However, the report highlights that less than 1% of global greenhouse gas emissions are covered by a carbon price that meets the recommended range to limit temperature rise to well below 2 degrees Celsius. The High-Level Commission on Carbon Prices suggested that prices should be in the $50-100 per ton range by 2030, but current prices fall short of this target.

The EU’s ETS stands out as the leading contributor to global carbon revenue, but recent price drops in the system suggest that overall carbon pricing revenues may decline in 2024. Despite these challenges, carbon pricing remains a critical component of the policy mix needed to achieve the goals of the Paris Agreement and support low emissions growth.