Global carbon pricing schemes raised $84 billion in 2021, World Bank says

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Steam rises from the cooling towers of the coal-fired power station of RWE, one of Europe’s largest electricity and gas companies in Niederaussem, Germany, March 3, 2016. REUTERS/Wolfgang Rattay

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LONDON, May 24 (Reuters) – Countries around the world raised $84 billion by charging companies for their carbon dioxide emissions last year, up around 60% from 2020, as the prices of many systems have reached record highs and a handful of new carbon taxes have been launched. The World Bank said Tuesday in a report.

Several countries use a price on carbon emissions to help meet their climate goals in the form of a tax or an emissions trading system (ETS) or cap and trade.

“Such an impressive increase highlights the emerging potential of carbon pricing to reshape incentives and investments toward deep decarbonization,” the report said.

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There are currently 68 global carbon pricing instruments in force, up from 64 when the World Bank released its 2021 report in May that year, covering more than 23% of global greenhouse gas emissions, up from 21% previously.

A new carbon tax was launched in Uruguay in January 2022, while three new subnational trading systems were launched in North America, in Oregon, New Brunswick and Ontario.

“Record ETS (Emission Trading System) prices were seen in the European Union, California, New Zealand and the Republic of Korea, among other markets, while several carbon taxes also saw prices reach their highest levels to date,” the report said.

Despite the record highs, however, carbon prices in most parts of the world remained below the levels needed to drive the changes needed to meet the 2015 Paris climate accord, the World Bank said.

“Less than 4% of global emissions are currently covered by a direct carbon price within the range needed by 2030,” the report says.

A report by the High Level Carbon Pricing Commission says carbon prices need to be in the $50-$100 range by 2030 to keep global warming below 2 degrees Celsius, according to the Paris agreement.

The value of the voluntary carbon market, where companies buy carbon offsets to compensate for emissions they are unable to reduce themselves, topped $1 billion for the first time in the past year, according to the report.

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Reporting by Susanna Twidale Editing by Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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