Carbon Markets Soar to New Heights: LSEG Reports Record Value of $949 Billion in 2023

In a groundbreaking revelation, LSEG analysts disclosed that the global market for carbon dioxide (CO2) permits reached an unprecedented value of 881 billion euros ($948.75 billion) in 2023, marking a significant 2% increase from the previous year. This surge reflects a growing commitment worldwide to address climate change, with many countries implementing emissions trading systems (ETS) to incentivize sustainable practices.

Key Highlights:

1. Record-Breaking Numbers: Approximately 12.5 billion metric tons of carbon permits were exchanged globally, maintaining a level similar to 2022. However, skyrocketing prices in key markets, such as Europe and North America, contributed to the remarkable 2% increase in overall market value.
2. EU's Dominance: The European Union's Emissions Trading System (EU ETS) emerged as the world's most valuable carbon market, reaching around 770 billion euros in 2023. This figure represents a 2% increase from the previous year and constitutes a staggering 87% of the global total.
3. Market Dynamics: The EU ETS witnessed a historic high in carbon permit prices, exceeding 100 euros in February. However, a shift occurred towards the end of 2023 as prices dipped below 60 euros/ton in 2024 due to sluggish economic growth and reduced demand from industrial sectors covered by the EU ETS.
4. UK's ETS Performance: The UK's Emissions Trading System (ETS) experienced a 22% decline in value, totaling 36.4 billion euros. Average prices stood at approximately 65 euros/ton, indicating a 34% decrease compared to 2022 averages.
5. North American Triumphs: North American markets, particularly in the Western Climate Initiative and the Regional Greenhouse Gas Initiative, witnessed record-high prices, reaching $39/ton and over $15/ton, respectively. The combined value of North American markets amounted to an impressive 71.4 billion euros.
6. China's Record: China's national ETS also achieved a record-high in 2023, with prices peaking at 80.51 yuan ($11.19) in October. Despite its enormous potential, the Chinese market's overall value was reported at 2.3 billion euros.

As we navigate through these remarkable developments, it's evident that carbon markets are playing a pivotal role in shaping a sustainable future. The surge in market value signifies a collective global effort to combat climate change and transition toward a low-carbon economy. Stay tuned for more updates as we continue to witness the evolution of carbon markets on a global scale.

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