Carbon pricing revenues reached a record high of about $95 billion last year, as governments made polluters pay instead of allowing unfettered emissions of heat-trapping gas, according to a new report from the World Bank published Tuesday.
Carbon markets now cover almost a quarter (23%) of worldwide greenhouse-gas emissions, and governments are using the revenue from the sale of carbon allowances and climate taxes to raise finance at home and abroad — to boost the speed of the gradual pivot away from fossil fuels.
Gains in greenhouse gas markets were made despite the cost of living crisis, the Ukraine war and weak global political leadership on the climate crisis. Many companies are assuming the presence of carbon pricing, even when it’s not already there — see the shadow-pricing chart below and full report for download. More than 50 companies are assuming price levels well above most markets.
Yet, the overall gains were small versus the market for crude oil and well below those needed to protect the world’s increasingly fragile climate.
From the World Bank Global Director for Climate Change, Jennifer Sara: “Carbon pricing can be an effective way to incorporate the costs of climate change into economic decision making, thereby incentivizing climate action. The good news from this report is that even in difficult economic times, governments are prioritizing direct carbon pricing policies to reduce emissions. But to really drive change at the scale needed, we will need to see big advances both in terms of coverage and price.”