Carbon pricing around the world

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

Global carbon price picture in August 2022

Source: I4CE, Global Carbon Accounts, 2022

Two instruments give an explicit price to carbon: the carbon tax sets a price per ton of CO2 and the Emissions Trading Scheme (ETS) sets a maximum amount of permitted emissions

As of August 1, 2022, 48 jurisdictions, representing 70% of the world's GDP, had a carbon price (tax or allowance market) that generates revenue for the controlling jurisdictions. In total, 68 regulatory initiatives that put a price on carbon are being implemented around the world, either raising revenue or not. In July 2022, Austria launched a national emissions trading scheme for transportation and space heating, modeled on the German scheme.

Carbon pricing revenues around the world

Carbon pricing instruments generated nearly $100 billion in revenue in 2021, up from $53 billion in 2020, an increase of more than 80 percent. In 2021, 70% of carbon revenues are generated by allowance markets, or about $68 billion, and 30% by taxes, or nearly $30 billion. The European Union contributes 62% of carbon market revenues through the EU ETS and nearly 52% of carbon pricing revenues.

Changes in revenue by carbon pricing instrument

Note: ETS is the Emissions Trading System.
Source: I4CE, Global Carbon Accounts, 2022

Explicit carbon prices as of August 1, 2022 range from 1 US cent to 134 US dollars per ton of CO2e. However, more than 60% of the emissions regulated by carbon pricing are covered by a price below 10 US dollars per ton of CO2e. The international scientific consensus estimates that the full incentive effect of these mechanisms would be achieved for prices between US$ 40 and US$ 80 per ton of CO2 eq in 2020 and US$ 50 to US$ 100 per ton of CO2 eq in 2030 (Report of the High-Level Commission on Carbon Prices, 2017).