The Price of Carbon Emissions Plunged in 2022, and That’s Not Good

This chart, which hasn’t been published elsewhere, is disappointing. It shows a steep drop in 2022 in the global weighted average price per metric ton of carbon dioxide emissions:

Making it more expensive to put greenhouse gases into the atmosphere is the market-oriented way to keep the planet from overheating. A high price tag on emissions gives emitters the incentive to switch to cleaner energy sources. It also raises the prices of energy-intensive products, encouraging consumers to choose ones that are friendlier to the environment. And so on.

From a low in 2012, the world was making steady progress toward raising the price of emissions — still low, but at least headed in the right direction. Then came 2022. Energy prices soared, partly because of Russia’s invasion of Ukraine. Governments scrambled to protect their citizens from the price spikes. European nations, for example, shielded citizens from the rising cost of electricity and natural gas. So that year, the global average carbon price tumbled to $4.08 a ton from $18.97 in 2021.

A subsidy for consumption of fossil fuels is actually a negative price for carbon dioxide. The way for a country to make its price positive is to tax fossil fuels, or tax carbon dioxide in general, or enact an emissions trading system in which there’s a cap on total emissions and those who want to emit more have to buy a permit from someone who agrees to emit less.

The above chart’s data come from Gro Intelligence, which gathers and analyzes agricultural, climate and economic data. Gro just completed work on 2022 data for the Gro-Kepos Carbon Barometer — a measure of the price of carbon dioxide emissions by metric ton across countries — and gave me an early look at the results.