World Bank: Carbon markets are “one of the most powerful tools” to cut greenhouse gases
Last year, revenues from global carbon markets exceeded the $100 billion symbolic threshold for the first time, to $104 billion. More than half of this has been used to finance environmental and climate protection programs. Data shows that putting a carbon price is “one of the most powerful tools” to help countries reduce their emissions, says a World Bank report published on May 21.
Only 1% of greenhouse gases covered by global carbon markets are aligned in Paris
In the 11th edition of the global carbon market monitoring, the World Bank reported some very positive trends. About 10 years ago, carbon pricing tools active worldwide covered only 7% of global emissions. Today we have reached 24%. And global carbon markets have reached 75, with recent additions from Australia, Hungary, Slovenia, Taiwan, Mexico, and especially China.
The other very positive aspect is the ease with which these instruments can be – and indeed are – adapted to particular national and regional conditions. Advanced and industrialised economies still account for the largest share of carbon markets, but similar instruments are becoming increasingly popular in middle-income countries. Brazil, India, Chile, Colombia and Turkey are calibrating their carbon markets and should make them operational in a short time.
Record for carbon markets: in 2023 reached 881 billion euro
Then there is the question of the sectors covered by global carbon markets. The bulk are the industrial and energy sectors, but the carbon markets are also expanding to air traffic, maritime traffic, and waste.
The picture is not entirely positive, however. Global carbon markets are spreading and have set a new record for resources raised, but the price of carbon and its scope are still “too low to meet the goals of the Paris Agreement,” the report said. Today only 1% of emissions are regulated by a carbon price at levels compatible with the Paris Agreement.