Carbon pricing revenues reached a historic $104 billion in 2023, according to a World Bank report. More than half of this revenue was directed towards climate and nature-related programmes. Implemented through carbon taxes and emissions trading systems (ETS), carbon pricing is essential for reducing emissions and fostering low-emission growth. However, the report warns that current levels are insufficient to meet the Paris Agreement’s climate goals. Despite covering 24% of global emissions, less than 1% are priced high enough to limit temperature increases.
Young tree growing towards the sun, forest in the background. AI generated picture.
The High-Level Commission on Carbon Prices recommends prices between $50–$100 per tonne by 2030. Adjusted for inflation, this range is now $63–$127 per tonne. The past year saw limited but promising adoption of carbon pricing, particularly in middle-income countries like Brazil, India, and Turkey. Currently, 75 carbon pricing instruments are in operation globally, reflecting a net gain of two new schemes in the last 12 months.
Read more: Carbon pricing: global solutions for a global challenge
Despite some progress, carbon prices remain too low to achieve significant emissions reductions. While carbon pricing covers 24% of global emissions, strong political commitment is necessary to increase this to nearly 30%. Carbon tax rates have slightly increased, but ETS prices have been mixed, with declines in long-standing systems in the EU, New Zealand, and South Korea. High prices in the EU and a temporary shift in German ETS revenues contributed to the record $104 billion revenue.
Governments are expanding carbon pricing to new sectors, including maritime transport and waste management, and allowing regulated entities to use carbon credits to offset liabilities. This approach enhances flexibility and extends the carbon price signal to uncovered sectors. Middle-income countries are increasingly incorporating crediting frameworks, but credit issuances have declined for two consecutive years. Despite building compliance demand, voluntary demand continues to dominate, with prices declining in most categories except for carbon removal projects.
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Efforts are underway to restore the integrity of carbon credits. The Integrity Council for the Voluntary Carbon Market has established a benchmark for credit quality, with the first tranche of approved credits expected in 2024. These measures aim to rebuild confidence and ensure the effectiveness of carbon credit markets.
With the recent substantial changes and expansion in the carbon market, coupled with the innovative use of nature credits, now is an ideal time to seize these opportunities. With rising carbon prices and significant market growth, now is the prime time to capitalise on these opportunities. Whether you're an investor seeking to fund carbon projects through green bonds or an organisation aiming to measure and compensate for your carbon footprint with our verified carbon units, DGB Group offers the ideal solutions. Our range of green initiatives enables you to make an immediate positive environmental impact while taking advantage of the transformative growth in the carbon market.
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