With almost every nation endorsing the Paris Agreement, the goal is to limit global warming to below 2°C by reducing greenhouse gas (GHG) emissions. However, a significant amount of carbon dioxide has already been accumulated in the atmosphere since the Industrial Revolution. Merely halting emissions would not be enough to reverse climate change. 

Climate scientists suggest to remove 10 gigatons of CO2 annually by 2050 and 20 gigatons thereafter to meet the climate target. 

In response, professionals and researchers worldwide are actively exploring carbon removal technologies to mitigate the impact of accelerating climate change. Research institutions, in particular, are focusing on curbing their GHG emissions and developing technologies for carbon capture and storage (CCS).

READ MORE: Carbon Dioxide Removal (CDR) and Carbon Capture and Storage (CCS): A Primer

Negative emissions solutions like CCS or carbon capture utilization and storage (CCUS) are gaining importance. Top universities worldwide are actively contributing to this effort, each with specialized research groups focusing on various aspects of carbon capture and utilization. These ranges from capturing CO2 from smokestacks to developing innovative products that use atmospheric CO2 in beneficial ways.

Other top universities are implementing ways on how to directly curb their own carbon emissions and footprint to reach Net Zero goals. Here are the top six universities in the United States and what they’re doing to help in this fight.

Harvard University and Its Zero Goal

Faculty and students from across the Harvard community are working on ways to address climate change and its effects. The university has implemented various sustainability and climate initiatives. Here are some of them:

Salata Institute for Climate and Sustainability: Established in fall 2022 with a generous $200 million gift from Melanie and Jean Salata, the institute serves as a hub for interdisciplinary collaboration, research, and engagement aimed at addressing the climate crisis.
Sustainability Management Council (SMC): Senior leaders in operations, facilities, and administration convene regularly to facilitate the sharing of best practices and achieve the University’s sustainability and energy management objectives.
Council of Student Sustainability Leaders (CSSL): Comprising graduate and undergraduate students involved in sustainability-related groups, the CSSL fosters collaboration, networking, and feedback on Harvard’s sustainability initiatives.
Climate Solutions Living Lab: This initiative combines pedagogy and applied research to advance climate goals through interdisciplinary student projects focused on solutions for the building and energy sectors.
Harvard Green Office Program: This program guides staff in creating sustainable workspaces, promoting environmental stewardship across the University.
Resource Efficiency Program (REPs): Founded in 2002, REPs promotes sustainability within undergraduate housing through peer-driven educational initiatives.

Harvard’s Sustainability Action Plan underscored the university’s unwavering commitment to environmental stewardship and its relentless pursuit of sustainability initiatives both on campus and in broader contexts. 

Central to Harvard’s agenda is the acceleration of clean energy adoption and the complete transition away from fossil fuels. Through these efforts, Harvard aims to establish a blueprint for a decarbonized world as shown by its decreasing carbon footprint.

Harvard University Carbon Emissions, 2006-2022

Goal Zero: A Fossil Fuel-Free Harvard  

Harvard has set a bold objective to achieve fossil fuel-free status by 2050, surpassing the benchmark of merely attaining “carbon neutrality.”

While carbon neutrality typically involves offsetting emissions through initiatives like renewable energy procurement and tree planting, Goal Zero, as embraced by Harvard, aims for the complete elimination of fossil fuel usage. This approach acknowledges the comprehensive spectrum of harms stemming from fossil fuel consumption, going beyond carbon emissions alone.

Recognizing the manifold negative impacts of fossil fuels, which extend to their role as key components in plastics and toxic chemicals, Harvard also endeavors to curb these dependencies. This multifaceted approach aligns with the university’s broader mission to mitigate waste and foster a healthier, more sustainable value chain.

As an interim measure to progress towards Goal Zero, Harvard has established a short-term target to achieve fossil fuel neutrality by 2026. This entails eliminating campus emissions (both Scope 1 and Scope 2) and investing in initiatives that not only neutralize GHG emissions but also mitigate the adverse health effects of fossil fuel usage, such as air pollution.

By prioritizing human health, social equity, and slashing carbon footprint, Harvard aims to generate positive impacts through its transition to fossil fuel neutrality.

MIT’s Plan for Action on Climate Change

Since the announcement of Massachusetts Institute of Technology’s Plan for Action on Climate Change in October 2015, MIT Energy Initiative (MITEI) has made significant strides in research, education, outreach, and engagement efforts aimed at combating climate change and advancing clean energy solutions.

MITEI established its Carbon Capture, Utilization, and Storage (CCUS) Center in 2006 as part of its commitment to addressing climate change through innovative energy solutions. The center brings together faculty members focused on research in 3 key areas: capture, utilization, and geologic storage of CO2.

Within the CCUS Center, researchers explore a range of technologies and methods, including molecular simulation, materials design, catalytic processes, fluid mechanics, and advanced imaging techniques. They are developing emerging technologies for gas storage and separation. 

Geologic storage research investigates the behavior of CO2 in underground reservoirs, including its interactions with pore fluids, and employs advanced imaging techniques to better understand the opportunities and risks associated with storing carbon dioxide underground. 

Through these efforts, MIT is contributing to the development of innovative solutions for carbon capture and storage, essential for mitigating climate change. Here are the other key achievements of the university in various aspects of its efforts in cutting carbon emissions:

Research:

MITEI’s research portfolio focuses on deep decarbonization across four major energy sectors—power, transportation, industry, and buildings—to address climate change and expand access to clean energy.
The establishment of Low-Carbon Energy Centers has facilitated collaborative research efforts with industry partners to tackle pressing energy challenges. These centers help in advancing projects related to mobility systems, energy storage, carbon capture, and more.
Major studies and reports, such as “Insights into Future Mobility” and “The Future of Nuclear Energy in a Carbon-Constrained World,” have provided comprehensive analyses of key technologies and sectors, informing policy and business decisions.

Education and Outreach:

MITEI has been actively involved in educating students and the public about climate change and clean energy solutions through various initiatives, including workshops, seminars, and educational programs.
The Mobility Systems Center, established as part of MITEI’s research efforts, has contributed to the understanding of individual travel decisions and the importance of sustainable mobility.

Engagement and Collaboration:

Collaboration with industry partners, including global engineering and energy companies like IHI, Iberdrola, Eni S.p.A., and ExxonMobil, has led to significant advancements in clean energy technologies and policies.

A new study [by Joel Jean, a former MIT postdoc, MITEI Energy Fellow, and CEO of startup company Swift Solar; Vladimir Bulović (Electrical Engineering and Computer Science; MIT.nano); and Michael Woodhouse (NREL)] shows that replacing new solar panels after just 10 or 15 years, using the existing mountings and control systems, can make economic sense, contrary to industry expectations that a 25-year lifetime is necessary. Credit: MIT

Membership agreements and collaborations with companies have resulted in substantial financial support for research projects, professorships, and technology development initiatives.

MIT is also joining the race to zero by aiming to eliminate direct emissions by 2050, with a near term milestone of net zero carbon campus emissions by 2026.

The university takes a multifaceted approach to achieve such climate goal. In general, the school will focus on:

Decarbonizing its on-campus energy systems,
Enabling large-scale clean energy generation on- and off-campus, and
Embracing new decarbonization solutions.

These efforts underscore MIT’s commitment to addressing climate change and accelerating the transition to a sustainable energy future.

Yale University’s Center for Natural CO2 Capture 

Founded with a transformative donation from FedEx and as a part of Yale’s Planetary Solutions Project, the Yale Center for Natural Carbon Capture is dedicated to exploring the science of natural carbon capture. Its mission is to develop solutions that contribute to addressing some of the most pressing challenges of our time.

The Center introduces fresh and innovative research and researchers to the Yale community, forging connections with relevant research laboratories both on and off-campus. Through funding research projects, workshops, and fellowships, the Center supports initiatives at the University and invests in training the next generation of scientists and practitioners. These efforts revolve around three primary Focus Areas:

Ecosystem & Biological Capture,
Geological & Ocean Capture, and
Industrial Carbon Utilization.

Over the past year, the Center has achieved several notable milestones. Among these, two standout initiatives have emerged: the Yale Applied Science Synthesis Program (YASSP) and significant advancements in enhanced rock weathering (ERW).

YASSP connects academic researchers, policymakers, and those managing lands to answer applied questions about how land management decisions affect the services provided by forests, croplands, wetlands, rangelands, and grasslands. 

Yale’s Net Zero Goal

Yale University is dedicated to achieving zero actual carbon emissions by 2050, with an interim objective of reaching net zero emissions by 2035. This goal will primarily be accomplished by reducing campus emissions by 65% below 2015 levels and, if needed, utilizing high-quality, verifiable carbon offsets.

The ultimate aim of zero actual carbon emissions will involve minimizing campus emissions entirely and implementing clean energy technology. The university managed to cut emissions by 28% since 2015, as seen below, despite a huge increase in campus size. 

The university’s approach to climate action is comprehensive and encompasses all aspects of its operations. Yale is expanding its educational offerings to address the complexity and magnitude of global climate challenges.

Additionally, investments are being made in campus infrastructure and emerging technologies to mitigate the university’s environmental impact. Yale has also adopted fossil fuel investment principles to facilitate a transition towards a decarbonized energy future.

Yale’s efforts to reduce carbon emissions include:

Responsible energy use through conservation, efficiency upgrades, and innovative approaches to campus operations.
Ensuring that energy generation on campus is efficient and environmentally friendly.
Implementing a greenhouse gas emissions reduction strategy to steadily progress towards zero emissions targets.
Purchasing and retiring high-quality, verified carbon offsets when necessary to meet emissions goals.

Stanford University Center For Carbon Storage

Stanford University leads global research on carbon sequestration, tackling critical questions on flow physics, monitoring, geochemistry, and more. They study CO2 storage in depleted oil and gas fields, saline reservoirs, and explore policies and techno-economics.

Stanford also focuses on capturing CO2 with engineered and natural applications, and combines bioenergy production with carbon capture to achieve net-negative emissions. Additionally, they research the impact of carbon taxes and cap-and-trade systems on CO2 capture and storage implementation.

The Stanford Center for Carbon Storage (SCCS)

The Stanford Center for Carbon Storage is focused on advancing crucial Carbon Capture and Storage (CCS) technologies aimed at capturing greenhouse gas emissions from smokestacks and securely storing them. Their research efforts are directed towards developing cost-effective methods for permanent storage on an industrial scale.

Visit this link to get to know more about the university’s CCS research highlights.

The center is actively addressing fundamental questions related to flow physics, monitoring techniques, geochemistry, and simulation of CO2 transport and behavior once stored underground. Their storage research encompasses a variety of geological formations, including fully-depleted oil fields, saline aquifers, and other unconventional reservoirs.

Stanford’s Path to Net Zero 

The university also aims to reach net zero emissions by 2050, following this pathway:

After completing the full year of 100% renewable electricity, Stanford University revealed new goals to get rid of construction and food-related emissions by 2030.

The university is currently monitoring Scope 3 emissions across eight categories, including business and student travel, fuel and energy activities, waste, employee commute, construction, purchased goods and services, leases, and food purchases.

There’s still much work to be done to decrease Stanford’s scope 3 emissions. But with the two emission reduction goals revealed last year, they represent significant progress in the university’s understanding of and ability to reduce these emissions.

These goals underscore climate action as a fundamental value for the departments involved and showcase close collaboration on sustainability initiatives across the university.

Arizona State University: The Center For Negative Carbon Emissions

Arizona State University’s Center for Negative Carbon Emissions is at the forefront of advancing direct air capture (DAC) technologies, crucial for achieving a carbon-negative economy. The center has developed an innovative carbon management cycle focused on capturing carbon dioxide directly from the air.

Their goal is to demonstrate a system that enhances the efficiency and scalability of DAC while reducing costs. Currently, they are testing a prototype technology utilizing “mechanical trees” to extract CO2 from the air. These 10-meter-high structures employ a sorbent, an anionic exchange resin, which absorbs CO2 when dry and releases it when exposed to moisture.

ASU “mechanical tree”

Within just 20 minutes, these “mechanical trees” can capture greenhouse gases brought by the wind. The collected CO2 is then converted into a liquid that can be used to produce carbon-neutral fuel, other products, or sequestered for permanent disposal.

The research on mechanical trees has been ongoing for two decades and was pioneered by Dr. Klaus Lackner, the director of the Center for Negative Carbon Emissions. These trees are remarkably efficient, being a thousand times more effective than natural trees at removing CO2 from the atmosphere.

In addition to technological advancements, the center also examines the economic, political, and social implications of widespread implementation of affordable DAC technology, aiming to lead the way in the field of direct air capture.

ASU Climate Positive Pledge

Since fiscal year 2019, the university has been carbon neutral for scope 1 and 2 emissions through energy efficiency measures, green construction, offsetting, and renewable energy acquisition. The university is working toward achieving the same for its Scope 3 emissions by 2035.

ASU emphasizes energy efficiency and conservation through various initiatives. The university also promotes low-carbon energy sources, with 43% of energy in 2022 coming from such sources.

The school further aims for carbon-neutral transportation by 2035, achieving a milestone with single-occupancy vehicle travel reduced to 59% in 2022. Initiatives include bike parking expansion, ride-sharing incentives, electrification of fleet vehicles, and free intercampus shuttles. ASU also imposes a carbon price on air travel to mitigate emissions.

ASU climate positive commitments are as follows:

Achieve carbon neutrality for Scope 1 and 2 emissions by FY 2025.

Update: achieved carbon neutrality for Scope 1 and 2 emissions in FY 2019.

Achieve carbon neutrality for Scope 3 emissions by FY 2035.

Update: in progress, reduced 69% since FY 2007.

According to its recent sustainability report, ASU cut net emissions for Scopes 1, 2 and 3 by 91% per 1,000 square feet of building space and 90% per student.

1. Scope 1 emissions result primarily from combusting natural gas to generate heat and electricity for university buildings and from university vehicles. Scope 2 emissions come from external utility providers that supply ASU with electricity and chilled water.
2. Scope 3 emissions primarily occur in third-party commuting and air travel associated with ASU operations.

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C-Capture, the UK-based pioneer in carbon capture solutions, has initiated testing on a novel technology to reduce carbon emissions from cement production. This is undoubtedly an exciting development for the cement industry marking their ongoing efforts to mitigate its environmental impact and contribute to global decarbonization.

Notably, as part of the XLR8 CCS project, C-Capture, and Wood, a top-tier engineering firm in the UK, have designed and installed a new Carbon Capture solvent compatibility unit (CCSCU). XLR8 CCS project exclusively targets the “hard to abate” industries. Currently, it is operating at the Heidelberg Materials cement plant at Ketton, Lincolnshire, UK.

Unleashing C-Capture’s Next-Gen Carbon Capture Technology for Cement

C-Capture mentions concrete as the second most used material on Earth after water. Three tonnes of concrete are used annually per person worldwide. Cement, made from clinker and gypsum is the main component of all construction works. 

Tom White, CEO of C-Capture said: 

“Decarbonising industry is one of the most pressing global issues. C-Capture’s XLR8 CCS project is a critical step in the race to net zero as we work with our innovative technology and leading industry partners to demonstrate that an affordable carbon capture solution is a reality – even for industries that are difficult to decarbonize.”

The cement industry produces 4 Gt of cement annually, generating 1.5-2.2 Gt of CO2 emissions, about 5% of the global total.

It needs to decarbonize because: Clinker manufacturing uses coal or natural gas-fired kilns to heat limestone (CaCO3), emitting large volumes of CO2 to form lime (CaO). 

The World Business Council for Sustainable Development estimates that by 2050, the cement industry must reduce CO2 emissions by 0.5 Gt annually to keep global warming within 2 °C above pre-industrial levels.

Subsequently, C-Capture’s hallmark CC technology, now being tested will effectively remove CO2 from the flue gas emissions produced during cement manufacturing. This unit will illustrate the effectiveness and durability of the technology in practical scenarios.

(*Flue gases are the gases released to the atmosphere from exhaust pipes of heavy industries.)

Innovative Chemistry for a Greener Solution

C-Capture’s technology utilizes a fundamentally different chemistry, unlike other commercially available carbon capture methods. It does not rely on amines and is nitrogen-free. This technology offers a lower-cost and environment-friendly solution, the end product can be renewable fuel like biomethane. Additionally, it is extremely robust and capable of withstanding the challenging flue gases produced by the heavy sectors.

XLR8 CCS Project: A Multi-Industry Initiative

The XLR8 CCS project is showcasing the compatibility of C-Capture’s carbon capture technology across three difficult-to-decarbonize industries: energy from waste (EfW), cement, and glass. The project would conduct six carbon capture trials within these sectors.

Wide Deployment Across Industry Partners

CCSCUs are being deployed at sites owned by project partners including Heidelberg Materials, Energy Works Hull, Glass Futures, and Pilkington UK (part of NSG Group). The success of this project will position C-Capture and its partners to deploy commercial-scale carbon capture facilities across these industries by 2030, potentially capturing millions of tonnes of CO2 per year.

Major Funding Injection Supercharges C-Capture’s Carbon Capture Project

The UK Department of Energy Security and Net Zero awarded a £1.7 million grant to XLR8 CCS from its £1 billion Net Zero Innovation Portfolio. Private sector contributions brought the total funding to £2.7 million.

This funding comes from the £20 million Carbon Capture, Usage and Storage (CCUS) Innovation 2.0 program, which aims to accelerate the deployment of next-generation CCUS technology in the UK.

Simon Willis, CEO, of Heidelberg Materials UK has emphasized deeply the urgency to decarbonize the toughest sectors. He noted,

 “Carbon capture is a critical part of our strategy to decarbonize cement production and essential if we are to reach net zero and help our customers achieve their own decarbonization goals.”

He also envisions developing new technologies and partnerships, exemplifying C-Capture’s dedication. The Heidelberg group will roll out this technology at other sites if the first run becomes successful. 

Roadmap to 2030: Strategies for Curbing Cement Emissions

Reducing CO2 emissions while meeting cement demand will be challenging. Since 2015, the emissions from cement production surged to ~ 10%, primarily due to the high clinker-to-cement ratio within China. Therefore, curbing emissions approximately by 20% by 2030 will significantly depend on: 

Adopting CCUS technologies
Using environment-friendly raw materials
Improving energy and material efficiency 
Using low-emissions fuels 

source: IEA

Direct emissions intensity of cement production in the Net Zero Scenario, 2015-2030

Sources: IEA calculations, including inputs from GCCA Statistics and other sources.

Like C-Capture, many industries are also revolutionizing their cement production techniques. It distinctly shows a gradual decline in CO2 emissions from the cement industry in the coming years (2030), thus enhancing the net zero transition. 

FURTHER READING: Supercharging C-Crete’s Cement-Free, Carbon-Negative Concrete (carboncredits.com)

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Small Modular Reactors (SMRs) are emerging as a pivotal technology in the clean energy transition. These compact, scalable nuclear reactors offer a promising solution to meet growing energy demands while reducing greenhouse gas emissions. And this is what Sam Altman’s nuclear power startup company, Oklo, is developing. It recently debuted on the U.S. stock market alongside Nano Nuclear Energy. 

Oklo has gone public through a special-purpose acquisition company. The startup merged with AltC Acquisition Corp., Altman’s SPAC, and trades on the New York Stock Exchange under “OKLO.” The nuclear startup focuses on developing SMRs.

SMRs and Why They’re Important for Energy Transition

Small modular reactors (SMRs) are advanced nuclear reactors with up to 300 MW(e) capacity per unit, roughly one-third of traditional reactors’ capacity. These reactors are significantly smaller than those from competitors like NuScale and TerraPower, which have higher capacities. 

They offer numerous advantages due to their small size and modular nature. SMRs can be factory-assembled and transported to sites unsuitable for larger reactors, making them more affordable and quicker to construct. This modularity allows incremental deployment to match energy demand.

SMRs address energy access challenges, particularly in areas with limited grid coverage. They can be integrated into existing grids or operate off-grid, providing low-carbon power for industries and communities. Microreactors, a subset of SMRs producing up to 10 MW(e), are ideal for remote regions and as emergency backup power, replacing diesel generators.

SMRs also have reduced fuel requirements, needing refueling every 3 to 7 years, compared to 1 to 2 years for conventional reactors. Some designs can operate up to 30 years without refueling.

Per market projection, SMRs will be worth around $8.06 billion by 2032.

Advanced SMRs are central to the Department of Energy’s (DOE) strategy for safe, clean, and affordable nuclear power. These reactors, ranging from tens to hundreds of megawatts, are versatile for power generation, industrial processes, and desalination. 

The DOE supports the development of light water-cooled SMRs, which are under Nuclear Regulatory Commission review and expected to deploy in the late 2020s to early 2030s. The Advanced SMR R&D program, started in 2019, aims to accelerate SMR technology availability by partnering with NuScale Power and UAMPS to demonstrate new reactor technology at Idaho National Laboratory. 

Additionally, a 2018 funding opportunity supports innovative nuclear concepts to improve the economic viability of nuclear power, fostering U.S. energy independence and grid resilience.

RELEVANT: Funding Bill Grants $2.7B to American-Made Nuclear Reactor Fuel

Global Advancements in SMR Technology

Public and private institutions globally are actively advancing small modular reactor technology with the goal of deployment within this decade. Notably, Russia’s Akademik Lomonosov, the world’s first floating nuclear power plant, commenced commercial operation in May 2020, utilizing two 35 MW(e) SMRs.

Additionally, SMRs are under construction or in the licensing stage in various countries including Japan, Canada, China, Russia, UK, and the United States.

Image Credit: IEA

Over 80 commercial SMR designs worldwide target diverse outputs and applications such as electricity, hybrid energy systems, heating, water desalination, and industrial steam. While SMRs boast lower upfront capital costs per unit, their economic competitiveness remains to be proven upon deployment.

Oklo focuses on liquid-metal-cooled, metal-fueled fast reactors, which have over 400 reactor-years of operating experience and inherent safety features. The first power plant to produce electrical power from fission, EBR-I, and its successor, EBR-II, demonstrated the safety and efficacy of this technology. 

EBR-II operated for decades, proving it could safely shut down without damage during severe challenges, such as those similar to the Fukushima accident. Notably, fast reactors can use nuclear waste as fuel, a capability demonstrated by EBR-II.

EBR-II produced about 20 MW of electric power for 30 years, showcasing inherent safety, fuel recycling, and superior operational characteristics compared to commercial reactors.

Meet Oklo’s Nuclear Powerhouse: Aurora

Oklo collaborates with Idaho National Laboratory to use EBR-II’s waste fuel for its Aurora Powerhouse. Aurora is a liquid-metal-cooled, metal-fueled fast reactor using recycled waste fuel, providing 15 MW of power, scalable to 50 MWe, and operating up to 10 years without refueling.

Oklo received a site use permit from the U.S. Department of Energy in 2019, secured fuel from Idaho National Laboratory, and submitted a license application to build its first plant. Oklo aims to bring its first plant online before the decade’s end.

While Oklo is focusing on building its Aurora Powerhouse, Nano Nuclear Energy is developing two microreactors, Zeus and Odin. Each reactor is producing 1 to 2 MW of electricity and inspired by naval reactors. 

They plan to use IPO proceeds for further development and focus on nuclear fuel transportation and domestic production of High-Assay Low-Enriched Uranium (HALEU).

Nano aims to build a HALEU facility at Idaho National Laboratory, joining efforts to create a reliable U.S. HALEU source after Congress banned Russian uranium imports. 

Oklo has agreements to supply power to Equinix Data Centers and Diamondback Energy. Nano’s shares rose to $4.51, a 13% increase from its IPO price, while Oklo’s shares dropped to $8.45 from $15.50.

Unlike traditional large-scale nuclear plants, SMRs are designed for flexibility, safety, and cost-efficiency, making them an attractive option for integrating into modern energy grids. As the world seeks sustainable and reliable energy sources, SMRs stand out as a key component in achieving a low-carbon future.

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A World Bank report reveals that countries with carbon pricing mechanisms generated a record $104 billion in revenues last year. Over half of the funds were directed towards climate and nature-related programs. 

Carbon pricing, implemented through carbon taxes or emissions trading systems (ETS), is critical for reducing emissions and fostering low-emission growth.

Despite this achievement, the report emphasizes that current carbon taxes and emissions trading schemes remain insufficient to meet the Paris Agreement’s climate goals. Although 24% of global emissions are covered by some form of carbon pricing, less than 1% are subject to prices high enough to limit temperature increases to below 2°C.

The High-Level Commission on Carbon Prices recommended carbon prices be in the $50-100 per ton range by 2030. Adjusted for inflation, this range is now $63-127 per ton.

The World Bank stresses the need for increased coverage and higher pricing to drive significant reductions in global emissions and support the transition to a low-carbon economy. Here are the key takeaways from the WB’s “State and Trends of Carbon Pricing 2024.”

Increasing Uptake of Middle-Income Countries But Carbon Prices Remain Insufficient

Over the past year, the adoption of carbon pricing has been limited, but there are promising signs of uptake in middle-income nations. 

Currently, there are 75 carbon taxes and emissions trading schemes in operation worldwide, reflecting a net gain of two carbon pricing instruments over the past 12 months. Notably, middle-income countries such as Brazil, India, and Turkey have made significant progress towards implementing carbon pricing mechanisms.

RELEVANT: Carbon Pricing Surge Sparks Climate Finance Boom with $100B Raise

Progress has also been seen at the subnational level, despite some setbacks. Additionally, sector-specific multilateral initiatives for international aviation and shipping have advanced. 

These developments indicate a growing global commitment to addressing climate change through economic incentives. 

Despite a decade of strong growth, carbon prices remain insufficient. There exists a notable implementation gap between countries’ commitments and the policies they have put into place. 

Currently, carbon pricing instruments cover around 24% of global emissions. While the consideration of new carbon taxes and emissions trading systems (ETSs) could potentially increase this coverage to almost 30%, achieving this will require strong political commitment. 

Over the past year, carbon tax rates have seen slight increases; however, price changes within ETSs have been mixed, with 10 systems experiencing price decreases, including long-standing ETSs in the European Union, New Zealand, and the Republic of Korea. As a result, current price levels continue to fall short of the ambition needed to achieve the goals of the Paris Agreement. 

Carbon Pricing Hit New Highs 

In 2023, carbon pricing revenues reached new highs, exceeding USD 100 billion for the first time. This milestone was driven by high prices in the EU and a temporary shift in some German ETS revenues from 2022 to 2023. 

ETS continued to account for the majority of these revenues. Notably, over half of the collected revenue was allocated to funding climate- and nature-related programs. Despite this record-breaking revenue, the overall contribution of carbon pricing to national budgets remains low. 

On a positive note, emerging flexible designs and approaches reflect the adaptability of carbon pricing to national circumstances. 

Governments are increasingly employing multiple carbon pricing instruments in parallel to expand both coverage and price levels. While carbon pricing has traditionally been applied in the power and industrial sectors, it is now being increasingly considered for other sectors such as maritime transport and waste management. 

Additionally, governments continue to permit regulated entities to use carbon credits to offset carbon pricing liabilities, enhancing flexibility, reducing compliance costs, and extending the carbon price signal to uncovered sectors. Beyond mitigation, carbon pricing also provides significant fiscal benefits, further demonstrating its multifaceted advantages.

Carbon Credit Markets Saw Mixed Movements: ET vs. OTC

Governments, particularly in middle-income countries, are increasingly incorporating crediting frameworks into their policy to support both compliance and voluntary carbon markets. Despite this, credit issuances fell for the second consecutive year, and retirements remained substantially below issuances, resulting in a growing pool of non-retired credits in the market. 

While compliance demand is building, voluntary demand continues to dominate. Prices declined across most project categories, with the exception of carbon removal projects, which saw increased interest. 

Prices also proved more resilient in over-the-counter transactions, where buyers can pursue specific purchasing strategies. Credits with specific attributes—such as co-benefits, corresponding adjustments, or recent vintages—traded at a premium, highlighting the additional value these characteristics offer to buyers.

Restoring the Integrity of Carbon Credits

The subdued market and reduced confidence underscore the importance of initiatives aimed at rebuilding the integrity and credibility of carbon credits. The integrity of these credits remains a critical concern for the market. 

To address this, the Integrity Council for the Voluntary Carbon Market has established a benchmark for credit quality, with the first tranche of approved credits anticipated in 2024. On the demand side, efforts have been directed towards emphasizing the reduction of operational and value chain emissions and exploring the potential role of carbon credits in addressing residual emissions. 

Additionally, the development and implementation of Paris Agreement Article 6 continues, despite facing setbacks and delays. These efforts are essential to restoring confidence and ensuring the effectiveness of carbon credit markets.

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