Carbon Match: The state of things
Wednesday 1 Jun 2022
Many commentators have noted the steep increase in carbon costs - NZUs have more than doubled in price since this time last year.
We are not alone - as highlighted in the World Bank's 2022 State and Trends of Carbon Pricing report, released yesterday, many schemes have experienced record prices, including the EU ETS, California, and South Korea, among others.
That report cites 68 carbon pricing instruments in operation around the globe - a mixture of taxes and emissions trading systems, with three more scheduled for implementation. While coverage of absolute emissions keeps on creeping north, it still remains relatively low - just 23% of total global greenhouse gas emissions are covered by such schemes.
And, despite increasing coverage, around the world, the "majority of carbon prices remain significantly below what is needed to achieve net zero by 2050 and meet the goals of the Paris Agreement", as shown in the figure below, from the same report.
NZU prices might feel confronting - now a serious line item for all compliance entities. But as you see in the chart (see link below), as at 1 April, the price level was only just squeaking into the price corridor thought to be required by the High Level Commission on Carbon Prices.
In its State and Trends report, the World Bank says that "prices must rise considerably more to meet the Paris Agreement temperature goals, as less than 4% of global emissions are currently covered by a direct carbon price within the range needed by 2030."
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