World Bank: Global Carbon Pricing Revenue Tops $100 Billion But Falls Short On Impact

World Bank: Global Carbon Pricing Revenue Tops a Record $100 Billion But Falls Short On Impact - Carbon Herald
Source: World Bank. 2024. State and Trends of Carbon Pricing 2024. Washington, DC: World Bank. DOI: 10.1596/978-1-4648-2127-1. License: Creative Commons Attribution CC BY 3.0 IGO.

According to the latest World Bank report on carbon pricing, revenues from compliance markets have reached a record $104 billion last year covering 24% of global emissions.

A total of 75 carbon pricing mechanisms are active in the world with over half of the revenue they generate being directed towards a broad voariety of climate and nature-related initiatives.

Despite unprecedented revenues and expansion, global carbon price coverage and levels are still insufficient to achieve the Paris Agreement objectives. At present, less than 1% of global greenhouse gas emissions are subject to a direct carbon price that meets or exceeds the range recommended by the High-level Commission on Carbon Prices to keep temperature rise well below 2ºC.

Source: World Bank. 2024. State and Trends of Carbon Pricing
Washington, DC: World Bank. DOI: 10.1596/978-1-4648-2127-1. License: Creative
Commons Attribution CC BY 3.0 IGO

“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,” said Axel van Trotsenburg, World Bank Senior Managing Director. “This report can help expand the knowledge base for policymakers to understand what is working and why both coverage and pricing need to go up for emissions to go down.”

Governments across the world are working on different approaches with some opting for direct taxation – like Canada – while others prefer a market-based approach like the EU, UK and some individual states in the U.S.

But no country relies completely on one approach and private actors continue exploring voluntary markets as well. According to the report this flexibility will enable carbon pricing to continue expanding in the best way possible for the respective economies without becoming a break on growth.

The EU’s Carbon Border Adjustment Mechanism, which is being rolled out, is one of the novel approaches aimed at governments across the world to begin working on carbon pricing for the hard-to-abate industries.

Relevant: Opinion: EU Should Use Carbon Credits As The Carrot To Counteract The Stick Of Carbon Border Tax

One of the highlights of the report is the shift in attitude towards carbon pricing schemes in the middle-income and developing countries. Three of the prime examples are Brazil, India and Turkey, where emission trading systems are being developed and are expected to come online in the next several years.

The report also highlights the importance of integrity and trust for carbon markets, following a year of intense scrutiny from media and a decline in voluntary market demand. Initiatives like the Integrity Council for the Voluntary Carbon Market (ICVCM) and VCMI are recognized as crucial for ensuring the quality of carbon credits.

Read more: World Bank Is Looking To Certify Carbon Credits For More Credibility

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