Global carbon pricing revenues top US$107bn as ETS markets strengthen

Global carbon pricing revenues rose to US$107 billion in 2025, driven largely by the continued expansion and strengthening of emissions trading systems (ETSs), according to the latest State and Trends of Carbon Pricing 2026 report published by the World Bank.

The report found that revenues from carbon pricing mechanisms increased by around two per cent year-on-year in real terms, with emissions trading systems accounting for more than 70 per cent of total revenues globally. ETS revenues climbed 13 per cent to more than US$80 billion, while carbon tax revenues fell 20 per cent to US$27 billion, largely due to Canada eliminating its federal fuel charge from April 2025.

Europe and Central Asia continued to dominate global carbon pricing markets, accounting for more than 85 per cent of worldwide carbon pricing revenues and recording the highest average carbon price at US$68 per tonne of CO₂ equivalent. The report identified the EU ETS as the largest contributor to regional pricing levels, although several national systems and taxes exceeded EU pricing benchmarks.

Average carbon prices varied significantly across regions, with North America averaging US$43/tCO₂e, Sub-Saharan Africa US$19/tCO₂e and East Asia Pacific US$11/tCO₂e. In contrast, carbon pricing in Latin America and the Caribbean averaged US$4/tCO₂e, while the Middle East and North Africa region remained limited to Israel’s carbon tax at around US$2/tCO₂e.

The report also highlighted growing volatility across carbon markets. Prices in several European ETS systems rose sharply over the past year, including Switzerland’s ETS, which increased 32 per cent, while allowance prices in South Korea’s ETS surged 64 per cent. Meanwhile, California’s cap-and-invest market saw prices decline slightly and New Zealand’s ETS recorded a 26 per cent fall in allowance prices.

Governments are increasingly directing carbon pricing revenues toward industrial decarbonisation, clean energy investment and social transition programmes. The European Union now mandates that all EU ETS revenues be used for climate and energy-related purposes, while Germany’s Climate and Transformation Fund continues to channel revenues into renewable energy, electrification and industrial decarbonisation projects.

The report noted that emerging carbon pricing frameworks are also being designed to support wider economic transformation. Türkiye plans to dedicate ETS revenues to green transition programmes, while Japan’s GX-ETS system will use auction revenues to finance energy transition bonds supporting domestic decarbonisation projects.

At the same time, the World Bank observed that carbon credit markets remain under pressure, with voluntary credit retirements remaining relatively stable but compliance market demand weakening in some jurisdictions, particularly California. Despite this, credit issuance continued to rise, especially from industrial and forestry-based projects, reflecting ongoing investment in carbon reduction and removal activities.

The findings underline the growing role of carbon pricing as a central policy tool in global decarbonisation strategies, with governments increasingly using revenues not only to reduce emissions but also to fund industrial competitiveness, infrastructure investment and broader energy transition policies.