Fossil Fuel Subsidies increased substantially in 2022, resulting in a steep decrease in the Global Carbon Barometer Price to $4.08 per ton in 2022, down 78% from $18.97 per ton in 2021, according to the Carbon Barometer™. This lower price indicates a global shift away from policies that prioritize emission reductions. Although some countries have increased their emission reduction incentives, their contribution to the Carbon Barometer Price has been outweighed by the increase in Fossil Fuel Subsidies overall.
In ranking the constituent countries, Spain remains the country with the highest Carbon Barometer Price, with Germany moving up to second place in the rankings following increases in Emissions Trading Systems price contributions. The United Kingdom price per ton fell from $127.94 to $9.68, dropping from second place to 17th, driven by a 244% increase in subsidies.
For the largest emitters in the index, we observed positive changes in China, where the Carbon Barometer Price increased from $13.93 per ton to $18.87 per ton, due to the inclusion of a national Emissions Trading System in 2022. Meanwhile, the USA’s price remains relatively stable, shifting from $18.47 per ton to $17.85 per ton.
Launched in partnership with Kepos Capital in 2023, the Carbon Barometer™ tracks seven major CO2 emissions reduction policy categories for more than 25 countries that comprise over 83% of global emissions, using both public databases and government sources. It normalizes the price contributions from these policies into a “Carbon Barometer Price™” – the amount, in US dollars, that emitters must pay on average per ton of CO2 emissions as an incentive to develop and leverage low-carbon drivers of economic growth. This makes it simple to analyze the financial incentive for each country to comply with policies designed to reduce carbon emissions.
The Fossil Fuel Subsidies increase dominates the 2022 Carbon Barometer price per ton update, relative to 2021. As a result, the Carbon Policy Spend as a percentage of GDP has fallen by 80%, from 0.66% to 0.14%. As global emissions steadily increase – we saw a 1% increase in 2022 – countries are devoting more of their economic resources to Fossil Fuel Subsidies and proportionately less to emissions reduction incentives.
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