Abstract
The total value of carbon markets across the world has reached €881bn in 2023 ($948.75 bn) an historical high that is dominated at 87% by the European Emissions Trading System (EU-ETS). To put this in perspective, this is roughly 5% of EU GDP. These values are increasing and other international carbon markets are gaining traction. With the commitments of the Paris Agreement, carbon economics are set to become a pivotal part of the global economy. This raises a number of questions about the way these markets operate and are embedded in our economies. In a series of articles we will be discussing the economic reasoning underlying carbon markets, the actual organisation of these markets, the way States are extracting and recycling revenues from these markets and finally the future perspectives for market carbon pricing. In this first entry we discuss the economics of carbon pricing.