Carbon markets, for years short of puff, have at last become one of the most widespread tools in the fight against climate change. By the end of 2021 more than 21% of the world’s emissions were covered by some form of carbon pricing, up from 15% in 2020. Ever more businesses have to pay regulators for the right to release a tonne of carbon dioxide into the atmosphere. Investors are getting interested too: trading on these markets grew by 164% last year, to €760bn ($897bn).
That is undoubtedly great news. Carbon prices ensure companies that burn more fossil fuels are at a competitive disadvantage while green innovation is rewarded.