More than a fifth of emissions now subject to CO2 price: World Bank

London, (Quantum Commodity Intelligence) – More than 20% of global emissions of greenhouse gases will be subject to a carbon price this year, according to a study by the World Bank, up from 15.1% a year earlier after China rolled out its emissions trading scheme.

In its annual State and Trends of Carbon Pricing, the Bank said that $53 billion was raised by the rollout of carbon pricing schemes – which include both policies to tax emission as well as emissions trading schemes -  a figure that is up 18% on the year.

The report, which has been running for more than 15 years, said there were 64 global carbon pricing instruments in 2021, up six on the year.

The rise in coverage is largely down to the rollout of China's domestic trading scheme, which covers more than 2,200 installations in the power sector and covers 4 billion tonnes of carbon dioxide.

"The national carbon market will be a tool to promote China's commitment to peak carbon before 2030 and achieve carbon neutrality before 2060," the Bank said.

But while the rise in coverage is due to expansion, the rise in revenue raised is due to higher prices, largely in the EU Emissions Trading System, where prices have spiked to above €50/mt in a move that sources say was driven by speculation ahead of a reform of the scheme this year.

However, prices remain way below where they need to be to deter combustion of and investment in fossil fuels.

"A majority of carbon prices still remain far below the $40–80/mt of CO2e range needed in 2020 to meet the 2C temperature goal of the Paris Agreement — only 3.76% of global emissions are covered by a carbon price at and above this range," the Bank said.

"Even higher prices will be needed over the next decade to reach the 1.5C target," it warned.

Earlier this year, oil consultants Woodmac estimated carbon prices would need to reach $160/mt of CO2e over the next decade to meet the Paris Agreement's goal to cap a rise in global emissions to 1.5C above the industrial age.

Last week, the IEA said that in order for the world to become carbon neutral by 2050, investment in all fossil fuels will need to cease this year.

Oil demand will need to be cut around 25% by 2030, half by 2040 and 75% by 2050 to meet this goal.