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Global carbon pricing revenues hit record level but ‘still too low’ says World Bank
29/5/2024
News
Carbon pricing revenues reached a record $104bn last year, up from $95bn in 2022, but prices remain too low to meet the Paris Agreement goals, according to a recent report from the World Bank.
The World Bank’s State and Trends of Carbon Pricing 2024 report finds that there are now 75 carbon pricing instruments in operation worldwide, up two from a year ago, covering 24% of global emissions. Over half of the collected revenue was used to fund climate and nature-related programmes.
Report findings show large middle-income countries including Brazil, India, Chile, Colombia and Türkiye are making progress 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.
‘Carbon pricing can be one of the most powerful tools to help countries reduce emissions. That’s why it is good to see these instruments expand to new sectors, become more adaptable and complement other measures,’ says Axel van Trotsenburg, Senior Managing Director, World Bank.
The European Union’s Carbon Border Adjustment Mechanism, currently in a transitional phase, is also encouraging governments to consider carbon pricing for sectors such iron and steel, aluminium, cement, fertilisers 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.
Yet despite record revenues and growth, the report finds that currently less than 1% of global greenhouse emissions are covered by a direct carbon price at or above the range recommended to limit the global temperature rise to well below 2ºC.
In 2017, the High-Level Commission on Carbon Prices concluded that carbon prices needed to be $40–80/tCO2e in 2020 and reach $50–100/tCO2e by 2030 to be on track to limit temperature rises to well below 2ºC.
Only seven carbon pricing instruments, covering less than 1% of global emissions, reached price levels at or above the inflation-adjusted minimum level of $63/tCO2e, the report finds.
