At the end of last year, the world’s average price to emit one tonne of greenhouse gases was around US$5.29 (AU$7.77). For pricing to work as we want – to wean us off fossil fuels – it needs to be around $75 by the end of the decade, according to the International Monetary Fund.

Why is the price still so low? Because even in 2023, close to 80% of the world’s emissions from land clearing, power plants, cars and industry are pumped into the atmosphere without any cost to the polluter.

Carbon prices have long been favoured by economists and experts as a way to drive faster change. If you want to discourage something, the easiest way is to make it cost more. Pricing the three main greenhouse gases – carbon dioxide, methane and nitrous oxide – is an elegant and effective way to force polluters to find alternative ways of producing power or creating forms of transport. (Carbon price refers to pricing a tonne of carbon dioxide equivalent, CO₂-e, which covers all three gases).

There’s long been a strange disconnect between the minute-by-minute updates on financial asset prices and the the lack of information on carbon prices. In 2023, as extreme weather, droughts and floods propel climate change to the front of our minds, it’s far easier to access streams of data on share markets, commodities, foreign exchange than it is to find data on the measure most critical to global survival – the price of carbon. That’s why our research team worked to produce the first global carbon price index as a way to easily track changes in pricing globally – and see change over time.

How did we determine the true price of carbon?

To nail down the global price of carbon, we took into account every national or supranational scheme as well as the price of carbon traded through emissions trading schemes. We did not use carbon credits or offsets, as these tend to lack transparency, be rubbery and often questionable.

Different countries and jurisdictions have come at the problem of atmospheric pollution from different directions.

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