According to analysts at Refinitiv, the value of traded global markets for carbon permits experienced an astounding 164% growth, reaching a record high of 760 billion euros last year. The European Union Emissions Trading System (EU ETS) played a significant role, accounting for 90% of this remarkable increase.
In addition to the EU ETS, the two regional carbon markets in North America, namely the Western Climate Initiative and the Regional Greenhouse Gas Initiative, collectively witnessed a 6% growth, reaching approximately 49 billion euros.
However, China's newly introduced Emissions Trading Scheme (ETS) lagged behind other schemes, with a trading volume of only 179 million metric tons. It is important to note that China's ETS employs a different approach, as its emissions cap is based on emissions intensity rather than an absolute cap.
The remarkable growth in the global carbon permit markets signifies a growing recognition of the importance of addressing climate change and reducing greenhouse gas emissions. The EU ETS, as the largest contributor to this expansion, reflects the European Union's commitment to leading the fight against climate change and fostering a low-carbon economy.
The growth of regional carbon markets in North America further demonstrates the increasing awareness and action taken by subnational governments to combat climate change. The Western Climate Initiative and the Regional Greenhouse Gas Initiative's combined growth indicates the commitment of these regions to implement effective carbon pricing mechanisms and incentivise emission reductions.
While China's ETS traded a relatively smaller volume compared to other schemes, its unique approach of focusing on emissions intensity provides an alternative perspective. By targeting emissions intensity rather than an absolute cap, China aims to encourage efficiency improvements and emission reductions while supporting economic growth.
The significant growth in global carbon permit markets reflects a collective effort to address climate change and transition to a low-carbon future. It underscores the increasing importance of carbon pricing and market-based mechanisms in driving emission reductions and facilitating the transition to sustainable economies.
As the world continues to grapple with the challenges posed by climate change, the growth of global carbon permit markets offers hope and indicates a shift towards more comprehensive and robust climate action. The continued expansion and evolution of these markets will play a crucial role in achieving the necessary emissions reductions to mitigate the impacts of climate change and create a sustainable future for generations to come.