The World Bank's annual State and Trends of Carbon Pricing report, published on 10 June 2025, counts 80 carbon pricing instruments in operation around the world, covering about 28% of global greenhouse gas emissions. The instruments include both carbon taxes and emissions trading systems at national and subnational levels.
Carbon pricing mobilised just over $100 billion for public budgets in 2024, according to the report. Emissions trading systems supplied about two-thirds of that revenue and carbon taxes about one-third. Revenue from emissions trading fell by about 10% in real terms, while carbon tax revenue rose by about 10%.
Why coverage has risen
Coverage has grown mainly through the expansion of large emissions trading systems in emerging economies. China's national carbon market, which until 2025 covered only the power sector, is the largest by covered emissions, and its expansion to steel, cement and aluminium, announced in March 2025, will add about 3 billion tonnes a year of covered emissions. Coverage figures in the World Bank report reflect instruments in operation, so the full effect of China's expansion will appear in later editions.
Several other emerging economies are developing or launching carbon markets. India has adopted a carbon credit trading scheme with emissions intensity targets for energy-intensive industries. Brazil passed a law in late 2024 to create a regulated emissions trading system, to be phased in over several years. Indonesia has launched an emissions trading system for power plants and is developing broader coverage. Türkiye has announced plans for an emissions trading system, partly in response to the EU's carbon border adjustment mechanism.
Why revenue fell in emissions trading
The fall in emissions trading revenue reflects lower allowance prices in some major systems, particularly the EU emissions trading system, where prices in 2024 were below their 2023 levels. Lower power sector emissions, weaker industrial output and the operation of the market stability reserve all affected the EU price. Because the EU system generates the largest share of global carbon pricing revenue, its price movements have a large effect on the global total.
Carbon tax revenue rose as several countries increased tax rates. Carbon taxes provide more predictable revenue than emissions trading, because the price is fixed rather than set by the market.
Prices remain uneven
The World Bank's reports have consistently found that most carbon prices are below the levels that modelling studies associate with meeting the Paris Agreement temperature goals. Prices vary widely: the EU and UK systems and some European carbon taxes have prices many times higher than those in most emerging economy systems, many of which also allocate most allowances free.
The coverage figure of 28% also needs context. Coverage measures the share of emissions subject to a price, not the strength of the price. An intensity-based system with free allocation, like China's, covers a large volume of emissions but imposes a much lower marginal cost on most covered firms than the EU system does.
How revenue is used
Governments use carbon pricing revenue in different ways. Some return it to households or businesses through rebates or tax cuts. Others direct it to climate and energy programmes, such as building renovation, public transport or support for clean technologies. EU rules require member states to use their emissions trading revenue for climate and energy purposes, and part of the revenue funds the EU's Innovation Fund and Modernisation Fund.
In emerging economies, carbon pricing revenue is generally smaller relative to the size of the economy, but it can still be significant for specific programmes. Revenue use is often central to the political acceptability of carbon pricing.
The border adjustment effect
The EU carbon border adjustment mechanism, which enters its definitive phase in January 2026, is influencing carbon pricing decisions elsewhere. CBAM allows importers to deduct carbon prices effectively paid in the country of origin. That gives exporting countries an incentive to introduce their own carbon pricing, so that revenue is collected domestically rather than at the EU border.
Countries with significant exports of steel, aluminium, cement and fertilisers to the EU, including Türkiye, India, Ukraine and several Western Balkan states, have cited CBAM in discussions of domestic carbon pricing. The UK will introduce its own border adjustment in 2027.
Compliance and voluntary markets
The report also covers carbon crediting. The voluntary carbon market has faced questions about the quality of some credits, particularly forestry credits, and transaction volumes have fallen from their 2021 peak. At the same time, new rules under Article 6 of the Paris Agreement, finalised at COP29, create a framework for international trading of emissions reductions between countries and through a UN-supervised mechanism. Several compliance systems, including those in Singapore and some other jurisdictions, allow limited use of international credits.
What it means for energy markets
Carbon prices affect energy markets mainly through the power sector and heavy industry. In systems with meaningful prices, such as the EU and UK, the carbon price is a major factor in the relative cost of coal, gas and low-carbon generation. In systems with low prices or free allocation, the effect is smaller and works mainly through efficiency incentives.
As coverage expands in large emerging economies, particularly China, India, Indonesia and Brazil, the share of global coal and gas consumption subject to some form of carbon price will rise. The strength of the price signal will depend on how quickly those systems move to absolute caps and auctioning.
Subnational systems
Not all carbon pricing is national. California's cap-and-trade programme, linked with Québec, and the Regional Greenhouse Gas Initiative in the north-eastern United States are long-running subnational systems, and Washington state launched its own cap-and-invest programme in 2023. In China, regional pilot markets continue alongside the national system. Canada's federal framework sets minimum standards that provinces meet through their own systems or the federal backstop, although the consumer fuel charge was removed in April 2025 while industrial pricing remains. These systems add to the coverage figures and are often the main carbon price signal for power and industry in their regions.
What to watch
The next milestones include the start of the EU CBAM definitive phase, China's first compliance cycle for its new sectors, India's first trading under its credit scheme, and Brazil's implementing regulations. For global revenue, the EU allowance price will remain the single largest factor.