Tuesday, 26th May 2026

The World Bank Group

The World Bank’s State and Trends of Carbon Pricing 2026 paints a clear picture of a carbon market that is getting bigger, more complex, and more commercially relevant. Covering developments through April 1, 2026, the report looks at direct carbon pricing, border carbon adjustments, and carbon crediting mechanisms across domestic, international, compliance, and voluntary markets. It does not judge policy choices, but instead tracks what is changing, where momentum is building, and how governments and markets are responding. One of the report’s biggest takeaways is that direct carbon pricing now covers 29 percent of global greenhouse gas emissions through 87 implemented policies. That coverage comes from 47 carbon taxes and 40 emissions trading systems, with ETS coverage continuing to expand faster than carbon taxes. The report says global ETS coverage has tripled since 2016, while carbon taxes have stayed broadly stable at around four to five percent of global emissions. India, Japan, and Viet Nam were among the countries driving new ETS growth in 2026. Prices also moved higher. The report says average carbon prices across implemented instruments increased by seven percent since April 2025, and the average direct carbon price has nearly doubled over the past decade, from US$10 per tonne of CO2e in 2016 to nearly US$21 in 2026. ETS prices are now averaging around US$22 per tonne of CO2e, while carbon tax rates are around US$19.50. Singapore’s carbon tax increase, which rose by 80 percent, was one of the notable changes in 2026. Government revenues have also become a major part of the story. In 2025, ETSs and carbon taxes generated US$107 billion, up about two percent from 2024 in real terms. The report says ETS revenues now make up more than 70 percent of total carbon pricing revenues, reflecting the rising role of auctioning and stronger prices in trading systems. At the same time, the report notes that revenues are still concentrated in high-income economies, especially Europe and North America, while many middle- and lower-income countries generate far less revenue because of lower prices and limited auctioning. The report also shows how carbon pricing is being used beyond emissions reduction alone. Revenues are increasingly being directed to climate, energy, and social funds, such as the EU’s Social Climate Fund, the Innovation Fund, and modernisation funds, along with country-level transition funds in places such as Germany. The World Bank notes that carbon pricing is being used not only to reduce emissions, but also to support energy security, domestic investment, industrial reform, and broader development priorities. Border carbon adjustments are another growing theme. The EU CBAM now applies to less than 0.5 percent of global emissions, but the report says it is already influencing policy design elsewhere. The UK, Serbia, Thailand, California, Australia, Canada, and Taiwan, China are all cited as places where policymakers are considering or developing border carbon adjustment approaches. The report also says that if planned carbon pricing instruments come into force by 2030, nearly one-third of global emissions could be covered. On carbon credit markets, the report shows a market that is still growing, but with stronger quality signals. Carbon credit issuances rose by eight percent from 2024 to 2025, while retirements fell by about 11 percent. Voluntary retirements remained stable, but compliance retirements fell sharply, especially in California, after a 2024 spike. The first credits under the Paris Agreement Crediting Mechanism, or PACM, were provisionally issued to a clean cookstoves project in Myanmar, showing that Article 6 is moving from design into implementation. The report also says 108 bilateral agreements or memorandums of understanding now sit under Article 6.2, but actual ITMO transfers remain limited. Price signals in carbon credit markets are becoming more differentiated. CORSIA eligible credits traded between US$15 and US$22 per tonne of CO2e from September 2025 to April 2026, and the report says fully eligible credits still command a premium over partially eligible ones. The price gap narrowed somewhat in early 2026, but CORSIA approved credits remain above most other credit types.