In this May 07, 2019 photo, steam rises from towers of the coal-fired power plant of Moorburg in Hamburg, northern Germany. (PHOTO / AFP)
LONDON – Governments globally raised a record $63 billion from the sale of carbon allowances in emission trading systems in 2022, as many countries increased ambitions to cut pollution despite record high energy prices following Russia’s special military operation in Ukraine, according to a report released on Wednesday.
Many countries and regions have launched emissions trading systems (ETS) to put a price on carbon dioxide (CO2) emissions and incentivize companies to invest in low carbon technology and help meet climate targets.
The $63 billion raised from allowance auctions in 2022 was up from $59 billion in 2021, according to the report
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"Instead of weakening climate ambitions, the energy crisis pushed governments towards ending their fossil fuel dependency quicker, supported by policies like emissions trading," said Stefano De Clara, head of intergovernmental forum International Carbon Action Partnership (ICAP).
As of 2023 some 28 ETSs are in operation globally, covering around 17 percent of global emissions, according to the report.
Under an ETS, governments set a gradually decreasing cap on the amount of emissions that a sector, or group of sectors, can produce. They create carbon allowances for those emissions, which are auctioned, and companies must buy one for each tonne of CO2 they emit.
The $63 billion raised from allowance auctions in 2022 was up from $59 billion in 2021, according to the report.
Prices in the EU ETS, the world’s most established scheme, rose to an average of $83 a tonne, up from $65 in 2021, the report showed.
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EU countries and lawmakers agreed reforms to the EU carbon market last year which will cut emissions faster and start to phase down free allowances given to industry.
The allowance price in California and Quebec, which have linked schemes, grew to $28 in 2022 up from $22 in 2021.