- Carbon pricing schemes generated a record $107 billion in revenue in 2025, up 2% from 2024, with new ETS and carbon taxes launched in Asia reflecting growing global uptake.
- Average carbon prices have more than doubled since 2016, reaching $21 per tonne of CO₂ equivalent.
- The growth highlights how carbon markets are maturing, but most prices remain far below levels needed to drive deep decarbonisation.
Carbon pricing – once dismissed as a marginal policy – is now a mainstream tool of climate policy worldwide.
The latest “State and Trends of Carbon Pricing” report from the World Bank shows that carbon taxes and emissions trading systems together raised a record $107 billion in revenues during 2025. The revenues help fund green investments and signal that governments are increasingly willing to make polluters pay for emissions.
The report tallies 87 carbon pricing instruments operating worldwide. Collectively, they cover nearly 30% of global greenhouse‑gas emissions, a major expansion from a decade ago.
Europe remains the largest carbon market bloc, but significant growth is now coming from Asia and developing countries. In 2025, India launched a pilot carbon trading scheme; Japan introduced a revamped ETS; and Mauritania, Serbia and Vietnam implemented new carbon taxes.
Average carbon prices across the various schemes rose to $21 per tonne, more than double the 2016 level. However, the report notes that only 17 % of global emissions are priced above $40 per tonne – a level still too low to drive transformative investments in heavy industry, shipping or aviation.
To meet the Paris Agreement’s 1.5°C target, economists estimate carbon prices would need to reach $75-150 by 2030.
The report identifies key trends. First, governments are increasingly ringfencing carbon revenues for climate projects, social transfers or tax cuts. Second, linkages between ETSs are expanding: the EU and Switzerland have integrated their systems, while California and Quebec operate a joint market.
Third, policymakers are adding complementary measures such as carbon border adjustments (e.g. the EU’s CBAM) and sector‑specific intensity standards.
The opportunity
The growing coverage and higher prices in global carbon markets have several implications. Companies exporting to Europe will face compliance costs under the EU’s carbon border adjustment, which will gradually impose carbon prices on imports of steel, cement and fertilisers.
Those operating in jurisdictions without carbon pricing risk being caught off guard by sudden policy shifts as governments scramble to meet emissions‑reduction targets.
The record revenues also underscore the opportunity: carbon pricing is becoming a significant source of public finance for the energy transition. The UK is expanding its own ETS and exploring a potential link with the EU scheme post‑2027.
However, there remains a gap between current carbon prices and the levels required for deep decarbonisation. For investors, the trajectory is clear: carbon prices will likely rise, and companies with high emissions intensity will face growing liabilities.
