The World Bank's State and Trends of Carbon Pricing 2024 report delivers an in-depth analysis of the global landscape of carbon pricing. With greenhouse gas emissions still on the rise, the urgency to mitigate climate change has never been clearer. This report outlines the progress and challenges in pricing emissions worldwide, advancing meaningful climate action.
📊 Key Takeaways:
Global Coverage: More countries are adopting carbon pricing instruments, with an increasing share of greenhouse gas (GHG) emissions now covered by taxes, trading systems, and credit markets. However, only about 30% of global emissions are covered by compliance schemes, leaving a significant 70% unaddressed by mandatory pricing schemes, which could potentially be tackled through voluntary markets.
Revenue Generation: Record revenues were generated from carbon pricing in 2023, reflecting the growing financial impact and potential for reinvestment in green initiatives. Carbon pricing instruments generated $104 billion in 2023, the highest annual revenue to date. These funds are increasingly directed toward renewable energy, sustainable infrastructure, and nature-based solutions
Regional and Sectoral Growth: Many countries and sectors have expanded carbon pricing measures, marking important milestones in their climate policies. Nations like Brazil, India, and Colombia are advancing carbon pricing initiatives
Carbon Credit Markets: The carbon credit market plays a crucial role, with issuance and retirement trends contributing significantly to global emissions reduction efforts. Voluntary markets, in particular, offer a way to address emissions not covered by compliance schemes.
Policy Innovations: New policies like the EU’s Carbon Border Adjustment Mechanism (CBAM) and Article 6 of the Paris Agreement are transforming the way carbon pricing impacts international trade and cooperation.
The journey toward limiting global warming to 1.5°C or 2°C continues to face challenges, as current efforts fall short of achieving these critical targets. Bridging this implementation gap requires more ambitious actions and collaborative solutions to secure a sustainable and resilient future for all.
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