Global carbon markets value hit record $949bn in 2023

Image courtesy: Ralf Geithe/ Getty Images

The value of traded global markets for carbon dioxide (CO2) permits reached a record $948.75bn (EUR881bn) in 2023, marking a 2 per cent increase on the previous year, according to London Stock Exchange Group (LSEG) analysts.

Many countries and regions have launched emissions trading systems (ETS) to put a price on CO2 emissions and incentivise companies to invest in low-carbon technology and help meet climate targets.

Around 12.5 billion metric tonnes of carbon permits changed hands in the world’s emissions markets, similar to 2022, but record prices in several markets such as Europe and North America pushed up the overall value, according to the LSEG Carbon Market Year in Review 2023.

The world’s most valuable carbon market, the EU’s ETS, was worth around EUR770bn last year, up 2 per cent from the previous year and representing 87 per cent of the global total.

The price of carbon permits in the EU ETS hit a record high of over EUR100 In February last year but fell towards the end of 2023 amid weak demand from industrial buyers and the power sector.

This bearish trend has continued into 2024 with the benchmark contract falling below EUR60 per tonne.

“Economic growth is likely to remain sluggish in the near term across Europe and is expected to lead to further demand destruction from many of the industrial sectors covered by the EU ETS,” the report said.

The value of the UK’s ETS fell 22 per cent to EUR36.4bn with prices averaging around EUR65 per tonne, some 34 per cent lower than the 2022 average, the report said.

In North America prices hit record highs last year in the main compliance markets, hitting $39 per tonne in the Western Climate Initiative and over $15 per tonne in the Regional Greenhouse Gas Initiative.

Prices in China’s national ETS also hit a record high in 2023 of RMB80.51 ($11.19) in October, the report said.

The North American markets were worth a combined EUR71.4bn while the Chinese market was worth EUR2.3bn.

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