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Global ETS markets grew 17% in 2023

Global ETS markets

credits Marek Piwnicki su Unsplash

Today global ETS markets cover 58% of GDP and 18% of global greenhouse gases

It’s a new record for global ETS markets. Carbon trading systems in 2023 reached 74 billion dollars, of which almost 2/3 (47 billion) from the European ETS alone. The increase over 2022 is over 17% and is dictated by higher prices for allowances in some systems – particularly in the EU and the UK – and increased use of auctions to distribute allowances.

To date, 36 global ETS markets are in operation, of which 13 are at the national level and 1 – the European one – at the supranational level. To which could soon be added 22 other carbon trading systems, of which 14 are already in preparation today and another 8 are under assessment.

In all, ETS-covered economies make up 58% of global GDP – it was 55% in 2022 – covering 9.9 billion tons of CO2 equivalent, which is about 18% of greenhouse gases generated annually worldwide (it was 17% in 2022). This is underlined by the annual report of the ICAP, International Carbon Action Partnership.

Who accelerates more on global ETS markets?

The acceleration in global ETS markets is “particularly evident” in emerging economies. Especially in Latin America. Brazil has taken “significant steps” with a draft law for the implementation of an ETS system, Argentina is evaluating it limited to the energy sector, and Mexico is struggling with a pilot program that should have full implementation this year. Chile and Colombia are studying how to calibrate their ETS systems.

But the Asia-Pacific region is also moving. India has set the course to create the legislative framework for a national ETS, Indonesia has launched a system for the energy sector, and Vietnam is planning a similar one. These two countries are the world’s most dependent on coal generation beyond China. And more: Malaysia, Pakistan, the Philippines and Thailand are at different stages of consideration or development of an ETS.

“In 2023, governments committed themselves not only to introducing new ETS but also to strengthening existing ones, aligning them to achieve net zero by the middle of the century,” the report stresses. In addition to the reform of the European ETS, part of the Fit for 55 legislative package, China, Great Britain, and South Korea are also moving in this direction.

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