According to analysts at LSEG reported by Reuters on Monday, the value of traded global markets for carbon dioxide (CO2) permits reached a new high in 2023, totaling €881 billion ($948.75 billion), marking a 2% increase from the previous year.
Various countries and regions have implemented emissions trading systems (ETS) to incentivize low-carbon technology investment and meet climate targets. These systems establish a pricing mechanism for carbon dioxide emissions, providing a financial incentive for companies to reduce their carbon footprint.
The LSEG Carbon Market Year in Review 2023 revealed that approximately 12.5 billion metric tons of carbon permits were traded globally, matching the volume traded in 2022. However, the total value increased due to record-breaking prices in markets such as Europe and North America.
In 2023, the European Union’s ETS, recognized as the world’s most valuable carbon market, achieved a value of approximately €770 billion, representing a 2% increase from the previous year and accounting for 87% of the global total.
While the EU ETS experienced record-high carbon permit prices in February last year, reaching over 100 euros, prices declined by the end of 2023 due to reduced demand from the industrial and power sectors. This trend continued into 2024, with benchmark contract prices falling below €60 per ton.
The report indicates that demand from various industrial sectors under the EU ETS is likely to further decrease due to anticipated sluggish economic growth across Europe.
The UK’s ETS value witnessed a 22% drop to €36.4 billion, with an average price of around €65 per ton, approximately 34% lower than the 2022 average.
In North America, compliance markets experienced record prices in 2023, with the Western Climate Initiative reaching $39 per ton and the Regional Greenhouse Gas Initiative exceeding $15 per ton.
China’s national ETS also reached a new high in October 2023, with prices hitting 80.51 yuan ($11.19). The combined value of the North American markets stood at €71.4 billion, while the Chinese market was valued at €2.3 billion.
