CO2 emission fees have tripled over the past decade. The carbon pricing market is growing

Global revenue from carbon pricing has more than tripled over the past ten years. According to the latest World Bank report, emissions trading systems and carbon taxes are increasingly contributing to public budgets, supporting the financing of the energy transition and climate action.

Emissions in the Context of the Geopolitical Situation

_Carbon pricing is a mechanism that aims to incorporate the environmental and social costs of greenhouse gas emissions into the prices of products and services. It assigns a specific economic value to each ton of carbon dioxide equivalent emitted, thus enabling the implementation of the polluter pays principle.

The World Bank’s report , *State and Trends of Carbon Pricing 2026*, seeks to address the question of how the modern_CO2 emissions pricing market functions in the context of global changes. The authors note that the reduction in global oil supply in March 2026 represents the greatest shock to the fossil fuel market in history.

” For more than 20 years, our report has helped policymakers and the private sector better understand the evolution of markets and the opportunities presented by carbon pricing,” said Paschal Donohoe, Managing Director of the World Bank Group. In his view, setting prices for_CO2 emissions allows countries to shape their own energy mix and contributes to increased efficiency and innovation.

One-third of global emissions are covered by carbon pricing mechanisms

Between 2016 and early 2026, the mechanisms for setting the price of carbon emissions have expanded and diversified significantly. The main pillars remain unchanged: direct carbon pricing through carbon taxes and emissions trading systems (ETS), as well as indirect carbon pricing mechanisms, such as the phasing out of fossil fuel subsidies and energy taxes.

The report shows that direct carbon pricing already covers 29 percent of global greenhouse gas (GHG) emissions and is implemented through 87 climate policy instruments: 47 carbon taxes and 40 ETS systems. If additional policies are implemented, the global coverage of these mechanisms will increase to nearly one-third of global GHG emissions. The authors emphasize that this increase is primarily due to the launch of national ETS systems in India, Japan, and Vietnam.

Pollution, which is becoming increasingly expensive, is beneficial for the climate

The average price of carbon emissions in existing carbon pricing mechanisms rose from $10 per tCO2e in 2016 to $21 in 2026—more than double. Since April 2025 alone, this increase has been 7 percent, which, according to World Bank analysts, primarily reflects price changes in the ETS market—the average carbon tax rate remains stable.

Revenues from emissions trading are also growing year by year. In 2024, global revenues from these mechanisms totaled $105 billion, and a year later, $107 billion. By comparison, a decade ago, revenues from carbon pricing mechanisms amounted to less than $30 billion.

The vast majority of this revenue is generated in developed countries. This is due, among other things, to the fact that emission prices in developing countries are typically lower, and auctions of emission allowances are relatively rare. For comparison, the average emission prices are:

• Europe:_$68/tCO2e;
• North America:_$43/tCO2e;
• Sub-Saharan Africa:_$19/tCO2e;
• East Asia and the Pacific region:_$11/tCO2e;
• Latin America and the Caribbean: $4 per_{metric ton of CO2e}.

Revenues from carbon pricing are allocated to climate change mitigation efforts. One example is Japan’s new GX-ETS system, whose proceeds are intended to fund a national fund supporting energy transition projects. Similarly, in the European Union, 100 percent of the revenue from the EU ETS is allocated to financing climate and energy-related measures.

Carbon credits are a slightly different story

It appears that the coal credit market has already seen its boom. Although the total number of credits issued rose by 8 percent between 2024 and 2025, it remains 20 percent lower than in the record-breaking year of 2022. However, the number of government-backed carbon credit mechanisms has increased: from 24 to 34 over the past decade. As a result, the number of carbon credits issued under these mechanisms in 2025 was nearly 40 percent higher than the previous year.

As a point of interest, it is worth noting that the first carbon credits under the newly launched Paris Agreement Credit Mechanism (PACM) were awarded to a project promoting clean cooking stoves in Myanmar.

The number of coal credit redemptions—that is, instances in which credits purchased by a given entity to offset its own emissions are fully utilized—fell by 10 percent between 2024 and 2025. Nevertheless, World Bank experts suggest that there are signs of growing demand in the market.

The project’s rating determines the price

As for carbon credit prices, they show a slight downward trend with significant regional variations. For example, prices for forest conservation projects in Southeast Asia rose sharply in 2025 (due to limited supply). Prices for credits that meet the requirements of the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) are currently the highest. Their current price ranges from $15 to $22 per_tCO2e, which is significantly higher than the market average ($1–$14 per_tCO2e).

The authors of the report emphasize that the relationship between a project’s rating by credit rating agencies and its market price is becoming increasingly significant. In the case of afforestation projects, a one-notch upgrade in the rating was associated with an increase in the price of carbon credits of up to 87 percent. It is clear from this that, in the future, projects with high creditworthiness will be of the greatest importance in the carbon credit market.

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In writing the article, I used:

World Bank. 2026. State and Trends of Carbon Pricing 2026. Washington. World Bank, Washington, DC. doi: 10.1596/978-1-4648-2348-0. License: Creative Commons Attribution CC BY 3.0 IGO