Global carbon markets value hit record $949 bln last year

The global market for carbon dioxide (CO2) permits achieved a historic milestone in 2023, with a total value of 881 billion euros ($948.75 billion), indicating a 2% rise compared to the preceding year, as reported by analysts from LSEG on Monday. Numerous countries and regions have implemented emissions trading systems (ETS) to assign a monetary value to CO2 emissions, encouraging companies to invest in low-carbon technology and contribute to climate objectives.

The volume of carbon permits traded worldwide remained at approximately 12.5 billion metric tons, mirroring the figures from 2022. However, elevated prices in key markets like Europe and North America resulted in an overall increase in value, according to the LSEG Carbon Market Year in Review 2023. The European Union's ETS, recognized as the most valuable carbon market globally, reached a value of about 770 billion euros in the past year, marking a 2% uptick from the previous year and constituting 87% of the total global value.

Although the price of carbon permits in the EU ETS reached a record peak exceeding 100 euros in February of the previous year, it experienced a decline towards the end of 2023 due to diminished demand from industrial and power sector buyers. This downward trend has persisted into 2024, with the benchmark contract dropping below 60 euros/ton. The UK's ETS witnessed a 22% decrease in value, amounting to 36.4 billion euros, and the average prices were around 65 euros/ton, representing a 34% decrease compared to the 2022 average, as outlined in the report.

In North America, record-high prices were observed in the primary compliance markets during the previous year, reaching $39/ton in the Western Climate Initiative and exceeding $15/ton in the Regional Greenhouse Gas Initiative.

The European Union has stirred discontent among certain nations by announcing its intention to extend the scope of its carbon pricing initiatives globally.