State and Trends of Carbon Pricing 2025:
The World Bank released its State and Trends of Carbon Pricing 2025 at a time when carbon pricing mechanisms are covering nearly 28% of global GHG emissions and generating over $100 billion in revenue.
- Carbon pricing is an economic tool that attaches a cost to the emission of greenhouse gases, incentivizing emission reductions while internalizing climate-related externalities (e.g., floods, health costs).
Carbon Pricing in 2025:
- The number of carbon pricing tools has increased from 5 in 2005 to 80 in 2025, comprising 43 carbon taxes and 37 ETSs.
Coverage Growth: Carbon pricing now covers ~28% of global GHG emissions, up from earlier years. - India, Brazil, and Türkiye are developing domestic carbon pricing frameworks.
- India’s upcoming ETS (2024) uses benchmark-based intensity limits rather than a hard emission cap.
- Globally, carbon pricing generated $100+ billion in public revenues.
- Power sector has the highest coverage, followed by industry and aviation, with agriculture and waste largely uncovered.
- In Q1–Q3 2024, $14 billion was raised mainly through afforestation and land restoration projects.
- Technologies like Direct Air Capture and Enhanced Rock Weathering are gaining interest.
- Out of 8 million tons committed, only 318,000 tons of engineered removals were delivered.
