The global carbon market value saw a 164% rise in 2021, bringing the total value to a record breaking $851 billion.
Most of this dramatic increase can be attributed to the European Union’s Emissions Trading System (EU ETS), which is today considered to be the most well-established and sophisticated carbon market.
Namely, its value is estimated to be 683 billion euros (~$770 billion), accounting for 90% of the global market value.
The prices on carbon in the EU ETS soared almost as rapidly throughout the year, seeing a near 100% increase and reaching 80 euros ($90) per metric ton of CO2.
And expectations are for prices to keep on climbing further throughout 2022, as well.
One of the contributing factors for the price hikes was the sky-rocketing price on natural gas in Q4 of 2021, which brought about more coal power generation and galvanized demand for permits while making them more costly.
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Carbon markets, or emissions trading schemes (ETS), are used as tools to help curb CO2 emissions.
Essentially, they put a limit on the amount of carbon dioxide that businesses, organizations and even entire countries can emit, whereas if they go over that limit, they can purchase permits from others.
The total value of the two regional carbon markets in North America saw much humbler growth – by 6% in 2021.
However, the price for permits in those schemes rose much more significantly – by 70%, while trading volume soared to record highs.
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Last year also saw the launch of two entirely new emissions trading schemes – China’s national ETS and, following its exit from the EU, the UK also launched its own separate ETS.
Last but not least, the voluntary carbon market (VCM), where individuals on par with companies and large organizations can trade carbon credits, clocked up $1 billion turnover in November 2021.
And interest in the VCM is only expected to pick up, as an ever growing number of businesses around the world are seeking to reduce their carbon footprints and reach carbon neutrality goals.
