Countries collected a record US$95 billion last year by charging companies to emit carbon dioxide, but the prices are still too low to make the changes needed to meet the goals of the Paris climate agreement, the World Bank said in a report on Tuesday.
“Even in tough economic times, governments are prioritizing direct carbon pricing policies to reduce emissions. But to make change on the scale needed, we need to see big progress in both coverage and price,” said Jennifer Sarah, World Bank’s Global Director for Climate Change.
Several countries use a price on carbon emissions to help meet their climate goals, either in the form of a tax or under an emissions trading (ETS) or cap-and-trade system.
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There are currently 73 carbon pricing instruments in place, compared with 68 when the World Bank published its 2022 report last May, covering around 23 percent of global greenhouse gas emissions.
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The increase in carbon revenues in 2022 is up from around US$84 billion collected in 2021.
In 2017, a report by the High Level Commission on Carbon Pricing stated that carbon prices would need to be in the range of US$50-100 per tonne by 2030 to keep global temperature increases below 2 degrees Celsius, the upper end of the agreed limit. In the Paris Agreement of 2015
“As of April 1, 2023, less than five percent of global greenhouse gas emissions are covered by a direct carbon price at or above the proposed range by 2030,” the report said.
Adjusted for inflation, those prices should now be in the range of US$61-122 a tonne, the World Bank report said.