Countries collected a record $95 billion last year by charging companies to emit carbon dioxide, but the prices are still too low to drive changes needed to meet Paris climate agreement goals, the World Bank said in a report on Tuesday.
“Even in difficult economic times, governments prioritize directly carbon pricing policy to reduce emissions. But to really drive change on the scale needed, we will need to see major advances in both coverage and price, says Jennifer Sara, global head of climate change at the World Bank said.
Several countries use a price on carbon dioxide emissions to help meet their climate goals in the form of a tax, or under an emissions trading system (ETS), or cap-and-trade.
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There are currently 73 global carbon pricing instruments in operation, compared to 68 when the World Bank published its 2022 report last May, covering about 23 percent of global greenhouse gas emissions.
The figure raised in 2022 in carbon revenue was up from about $84 billion collected in 2021.
In 2017, a report by the High-Level Commission on Carbon Prices indicated that coal prices would need to be in the range of US$50-100 per tonne by 2030 to keep an increase in global temperatures below 2 degrees Celsius, the upper end of the limit agreed in the 2015 Paris Agreement .
“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 range recommended by 2030,” the report said.
Adjusted for inflation, these prices would now need to be in a range of US$61-122 a tonne, the World Bank report said.