According to LSEG analysts on Monday, the value of traded carbon dioxide (CO2) permits globally hit a record 881 billion euros ($948.75 billion) in 2023, up 2% from the year before.

Emissions trading systems (ETS) have been implemented in a number of nations and areas to help meet climate targets by placing a price on carbon dioxide (CO2) emissions and encouraging businesses to invest in low-carbon technology.

Similar to 2022, almost 12.5 billion metric tonnes of carbon permits were exchanged in global emissions markets; however, record prices in a number of markets, including North America and Europe, increased the total value, according to the LSEG Carbon Market Year in Review 2023.

The EU’s ETS, the most valuable carbon market globally, was valued at approximately 770 billion euros in 2018, up 2% from the year before and accounting for 87% of the total.

The price of carbon permits in the EU ETS decreased towards the end of 2023 due to a lacklustre demand from industrial purchasers and the power sector, after reaching a record high of over 100 euros in February of the previous year.

The benchmark contract dropped below 60 euros/ton in 2024, indicating that this adverse trend was still in effect.

“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.

According to the research, the value of the UK’s ETS dropped by 22% to 36.4 billion euros, with prices averaging about 65 euros per tonne, or 34% less than the average for 2022.

Last year, prices in North America’s primary compliance markets reached all-time highs, reaching over $15/ton in the Regional Greenhouse Gas Initiative and $39/ton in the Western Climate Initiative.

According to the research, in October of 2023, prices in China’s national ETS reached a record high of 80.51 yuan ($11.19).

The Chinese market was valued 2.3 billion euros, whereas the aggregate value of the North American markets was 71.4 billion euros.

(Adapted from EconomicTimes.com)

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