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World Bank report highlights carbon pricing's role in climate solutions

A new report from the World Bank Group shows that carbon markets and pricing have evolved significantly in the past decade, covering a larger share of global emissions. The growth of carbon taxes and emissions trading systems (ETSs) has increased from 7% to around 23%. Governments are introducing new carbon pricing instruments and expanding coverage to new emission sources like aviation. Revenues from carbon taxes and ETSs have nearly quintupled as policies become more ambitious, with corporations leading voluntary action in carbon markets, becoming the largest demand generators for carbon credits.

World Bank report highlights carbon pricings role in climate solutions_sprout of new leaves emerging_visual 1Close up at a sprout of new leaves emerging.

The State and Trends of Carbon Pricing 2023 report and Carbon Pricing Dashboard provide objective information to guide policymakers, academia, the private sector, and NGOs.

Amid economic challenges, governments continue to prioritise direct carbon pricing policies. ETSs and carbon taxes have proven resilient, with many jurisdictions delivering on plans, increasing ambition, and proposing new initiatives. Progress on Article 6 of the Paris Agreement suggests a pathway for international carbon markets, but more administrative capacity is needed.

Carbon markets and pricing are now viewed as tools for revenue generation, innovation, and broader sustainability goals. The World Bank's Country Change and Development Report highlights the potential of direct carbon pricing policies to support countries in their development journeys.

Climate disasters and the Sixth Assessment Report emphasise the urgency for action. Introducing a price signal is critical for investment and behaviour change. Carbon pricing must expand in coverage and price to meet the Paris Agreement goals. Governments must consider trade-offs between ETSs, carbon taxes, carbon crediting, and international carbon markets.

The World Bank supports countries through the Partnership for Market Implementation, offering technical assistance for carbon pricing and implementing the Paris Agreement's Article 6.

The State and Trends of Carbon Pricing 2023 report reinforces the World Bank's commitment to collaborate and accelerate climate action through carbon pricing.

Governments worldwide are recognising the urgency to combat climatic instability and implementing innovative carbon pricing instruments. The introduction of Indonesia's trailblazing ETS stands as a testament to this growing momentum.

Read more: EU to upgrade carbon market and introduce carbon import tax

Carbon pricing has also evolved beyond emission reduction; it has become a multifaceted tool driving revenue generation, innovation, and broader sustainability goals.

Read more: Carbon capture and storage market projected to exceed $10.2 billion

In the face of escalating climate-related disasters and the pressing need for action, transitioning to a low-carbon future is imperative. Governments must carefully evaluate carbon pricing approaches to maximise impact and achieve the Paris Agreement's goals.

At DGB Group, we are committed to supporting companies transition towards net zero. Through our carbon projects, we effect traceable and long-lasting change. Contact our team of experts to explore how large-scale afforestation and reforestation projects can pave the way for your net-zero future. Let's forge a path towards a greener, more resilient planet. Together, we can unleash the power of carbon markets and accelerate the transition to a sustainable future.

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