Countries raised a record $95 billion last year by charging firms for emitting carbon dioxide, but prices are still too low to drive changes needed to meet Paris climate accord targets, the World Bank said in a recent report.
“Even in difficult economic times, governments are prioritising 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,” Jennifer Sara, global director for climate change at the World Bank said.
Several countries are charging a price on carbon emissions to help meet their climate goals in the form of a tax, or under an emissions trading (ETS), or cap-and-trade system.
There are presently 73 global carbon pricing instruments in operation, compared with 68 when the World Bank issued its 2022 report last May, covering around 23% of global greenhouse gas emissions.
In a 2017 report, the High-Level Commission on Carbon Prices indicated carbon prices need to be in the $50-100 per ton range by 2030 to keep a rise in global temperatures below 2 degrees Celsius, the upper end of the limit agreed upon in the 2015 Paris agreement.
“As of April 1, 2023 less than 5% of global greenhouse gas emissions are covered by a direct carbon price at or above the range recommended by 2030,” the report said.