Carbon pricing constitutes over a fifth of greenhouse gases: Carbon prices now account for more than 20% of greenhouse gas emissions, having a total of 64 carbon pricing instruments now in service globally.
That’s reported from the newest statistics from the World Bank, it indicates carbon pricing instruments produce around $53 billion in revenue, comprising an increase of 17% from last year, even though, the full capability of carbon pricing stays largely untapped.
The increase in revenue is thought to be driven primarily by the growth in EU allowance prices, which is a programme that caps emissions, ordering countries that go over these limits to purchase additional allowances.
Key points in the report contain the operational introduction of China’s national Emissions Trading System (ETS) in January 2021 as well as the approaching changes to the EU ETS as part of the European Green Deal recovery package.
Originally involving emissions in the power sector, the market will control about 4,000MtCO2 or 30% of China’s national emissions.
Allowance prices have hit record highs in the EU as the bloc steps up both short & long term climate goals & the market predicts caps narrowing following the announcement of the Green Deal.
The UK & Germany also initiated national ETSs & carbon taxes in the Netherlands and Luxembourg came into action.
Regardless of the amount of carbon pricing instruments in operation, the World Bank says short term objective trails behind what is required to fulfil the temperature goals of the Paris Agreement.
The report discovers the majority of carbon prices stay far below the $40 – $80/tCO2e range suggested for 2020 to attain the goal of the Paris climate agreement and at this point, carbon prices in the suggested range cover under 5% of global emissions.
Bernice Van Bronkhorst, Global Director for Climate Change at the World Bank stated: “It is encouraging to see how governments and companies are integrating carbon pricing into their climate strategies. But the potential of carbon pricing is still largely untapped, despite the fact that it can be effective in driving decarbonisation for countries in all stages of development.
“If implemented carefully, these policies can also be redirected to support lower income communities, getting resources to those who need them the most.”
Raising price trajectories have also been established in countries like Canada, Germany & Ireland. Within the Pacific, New Zealand’s Climate Change Act also creates a national mitigation framework for its climate policies, together with its ETS, in agreement with a 2050 net zero target.
Carbon pricing constitutes over a fifth of greenhouse gases