In June 2025, Washington, DC (the United States of America, USA) based World Bank (WB) released its annual report titled ‘State & Trends of Carbon Pricing 2025’. As per the WB’s report, countries are increasingly adopting carbon pricing, which now covers nearly 28% of global Green House Gas (GHG) emissions, accounting for almost 2/3rd (66.66%) of global Gross Domestic Product (GDP).
- The report further revealed that the number of operational carbon pricing instruments has increased significantly, from 5 (in 2005) to 80 (in 2025), with India, Brazil, and Türkiye actively developing them.
- The report highlighted that there have been major changes in the last 10 years, i.e., average prices have approximately doubled, coverage emissions have increased from 12% to 28%, and revenue has tripled.
Note: Carbon Pricing instruments cover the external costs of GHG emissions, such as damage to crops, healthcare expenses from heat waves and droughts, and loss of property due to flooding and sea-level rise.
About State and Trends Report:
i.Since 2003, WB has been publishing the State and Trends Report, which aims to provide an up-to-date overview of existing as well as emerging carbon pricing instruments around the world.
ii.The report captures 3 types of carbon pricing instruments: The Emissions Trading System (ETS),carbon taxes, and carbon credit trading mechanisms.
iii.The 2025 edition of the report highlights how governments are using carbon pricing to support fiscal stability, promote innovation, and attract investment, especially in developing economies.
- The report has identified a total of 43 carbon taxes and 37 ETSs that are currently in operation.
Key Findings:
i.Globally, Carbon pricing, including carbon taxes and ETSs, generated over USD 100 billion in 2024.
- More than 50% of this revenue generated for public budgets in 2024 was allocated for environment infrastructure and development projects, representing a marginal increase compared to previous years.
ii.As per the report, carbon pricing coverage was highest in the power sector (over 50%), among all the other sectors. It is followed by industry, mining and extractives sector, buildings, land transport, and aviation.
- While waste and agriculture continue to be largely uncovered by carbon pricing.
iii.The report further revealed that carbon credit supply continued to outstrip demand, with around 1 billion tons of unretired credits in 2024 worldwide.
iv.The report showed that nature-based carbon removal projects received the highest share of the estimated USD 14 billion mobilized in Quarter 1 (Q1)-Q3 of 2024.
v.The report also noted that carbon credit markets saw an increase in retirements, mainly driven by the compliance market, which accounted for almost a quarter (25%) of all observed demand in 2023.
- In contrast to it, demand from the voluntary carbon market, which is operated by independent organisations like Verra’s Verified Carbon Standard (VCS) and Gold Standard, which involves private entities purchasing carbon credits to offset their emissions, showed a marginal decrease.
vi.Also, the nature-based carbon removal credits issued by independent crediting mechanisms increased by approximately 25%, supported by increased supply and buyer interest.
vii.As per the report, the year 2024 witnessed new purchasing commitments for engineered carbon removals, with an estimated 8 million tons purchased, of which only 318,000 tons have been delivered to buyers.
About World Bank (WB):
President- Ajay Banga
Headquarters-Washington, DC, the United States of America (USA)
Established-1944
