HomeFutures and CommoditiesIn 2020, the global value of carbon markets reached a record $949...

In 2020, the global value of carbon markets reached a record $949 billion.

Global Carbon Markets Value Reaches Record $949 Billion in 2023

Record-breaking Year for Carbon Markets

Analysts at LSEG reported that the value of traded global markets for carbon dioxide (CO2) permits reached a record 881 billion euros ($948.75 billion) in 2023, marking a 2% increase on the previous year. This surge in value signifies a growing focus on addressing climate change and reducing carbon emissions worldwide.

Impact of Emissions Trading Systems (ETS)

Many countries and regions have implemented emissions trading systems (ETS) to put a price on carbon dioxide (CO2) emissions. These systems aim to incentivize companies to invest in low carbon technology and help meet climate targets. The success of these initiatives is reflected in the significant increase in the value of traded carbon permits.

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Market Trends and Performance

Around 12.5 billion metric tons of carbon permits changed hands in the world’s emissions markets in 2023, similar to the previous year. However, record prices in several markets, such as Europe and North America, drove up the overall value. The EU’s ETS, the world’s most valuable carbon market, accounted for 87% of the global total, reaching approximately 770 billion euros last year.

Price Fluctuations and Economic Impact

The price of carbon permits in the EU ETS reached a record high of over 100 euros in February 2023 but experienced a decline towards the end of the year. This trend has continued into 2024, with prices falling below 60 euros/ton. The report highlighted the impact of sluggish economic growth in Europe, leading to further demand destruction from industrial sectors covered by the EU ETS.

Regional Market Performance

The value of the UK’s ETS dropped by 22% to 36.4 billion euros in 2023, with prices averaging around 65 euros/ton, a significant decrease from the previous year. In North America, prices reached record highs in major compliance markets, with the Western Climate Initiative hitting $39/ton and the Regional Greenhouse Gas Initiative exceeding $15/ton. China’s national ETS also saw a record high in 2023, reaching 80.51 yuan ($11.19) in October.

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Global Market Value

The North American markets combined were worth 71.4 billion euros, while the Chinese market reached 2.3 billion euros. These figures demonstrate the increasing global focus on carbon trading and emissions reduction, with markets across different regions playing a significant role in driving the value of traded carbon permits.

($1 = 0.9286 euros)

($1 = 7.1929 renminbi)

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