Carbon pricing around the world

Evolution of revenues by carbon pricing instrument

Source: World Bank, 2023

To encourage economic decision-makers to invest more in clean energy or low-carbon technologies and less in GHG-emitting technologies, some countries have decided to put an economic value on the emission of a tonne of CO₂ .

Two instruments put an explicit price on carbon: the carbon tax sets a price per tonne of CO₂, and the Emissions Trading System (ETS) sets a maximum quantity of allowable emissions.

Carbon pricing instruments generated $86 billion in revenues in 2022, compared with $11 billion in 2010, an increase of 657% in 12 years. In 2022, 76% of carbon revenues were generated by quota markets, i.e. $66 billion, and 24% by taxes.

Evolution of the share of global GHG emissions covered by a carbon pricing instrument

Note: coverage data come from governments or estimates. They are related to global GHG emissions in the EDGAR database. Data from the Chinese carbon market, which explains the sharp increase since 2021, are preliminary estimates.
Source: World Bank, 2023

With the exception of a few national carbon taxes in European countries, it wasn't until the introduction of the European Emissions Trading System in 2005 that the proportion of global GHG emissions covered by carbon pricing instruments exceeded 1%. It was then in North America and Asia that carbon taxes and quota markets multiplied, reaching 23% coverage by 2023. Africa had its first instrument in 2019, with the creation of a carbon tax in South Africa.

The European ETS covers 38% of the European Union's GHG emissions. In France, the carbon tax (€44.6/t CO₂ eq) covers 35% of emissions, mainly in the transport, residential, services and industrial sectors outside the ETS. A number of sectors and uses are exempt or benefit from reduced rates.