The price of carbon has never been higher. In April, a metric ton of carbon in Europe traded above $50 for the first time—and then kept rising, smashing through the ceiling set over the last decade. Global carbon prices have followed suit, breaking national records from the US to China.
While efforts to fix a cost to carbon emissions have been around for more than a decade, carbon prices have remained persistently low—ranging from a few cents per ton to a few dollars in most cases. That meant businesses and governments could ignore them when making long-term investment decisions. Emissions, meanwhile, continued their inexorable global rise.
But carbon prices, in both taxes and trading schemes, are now crossing the threshold analysts say are needed to trigger sustained reductions in greenhouse gas (GHG) emissions. While those prices are still the exception, rather than the rule, they are the bellwether of what’s to come.