Global carbon pricing coverage hits 28% as compliance demand triples: World Bank

The total share of global greenhouse gas emissions covered by carbon pricing instruments has risen amid growing demand from carbon compliance markets, which almost tripled in 2024, the World Bank said June 10.

The share of global emissions covered by carbon taxes and emissions trading systems reached 28% in 2024, compared to 24% the previous year, the bank's annual State and Trends of Carbon Pricing report showed.

The increase was driven by the expansion of China's ETS to industrial sectors. Economies representing nearly two-thirds of global economic output, including around half of global emissions from the power and industrial sectors, are now covered by a carbon price. Coverage in other sectors is lower, with agricultural emissions not yet priced.

Government revenues from carbon pricing mechanisms such as carbon taxes and emission trading schemes dropped to $102 billion in 2024, down 1.9% compared to $104 billion the previous year, according to the report.

"Carbon pricing remains a powerful tool for advancing multiple policy goals," said Axel van Trotsenburg, World Bank senior managing director. "It helps countries cut emissions, raise domestic revenues in tight fiscal environments, and stimulate green growth and job creation."

The annual revenue drop was largely due to lower prices in large ETSs such as those of the European Union and the United Kingdom.

Over half of this revenue was used towards environment, infrastructure, and development projects, slightly increasing compared to previous years.

Last year's carbon revenues were derived from 80 carbon pricing schemes worldwide. Total carbon instruments in operation increased by five compared to 2023.

The report showed that all large middle-income economies have now either implemented or are considering direct carbon pricing, with ETSs accounting for most of the new and planned instruments.

"We've seen a number of important developments over the past 12 months, including the establishment of new taxes in Israel and subnational Mexican states, new ETSs in subnational US jurisdictions," said Joesph Pryor, senior climate change specialist at the World Bank, during the launch event of the report at the Innovate4Climate conference in Seville, Spain June 10.

"But we've also seen the removal of carbon taxes in various jurisdictions, most importantly, in Canada, the removal of the Canadian Federal fuel charter. We've also seen a number of developments that won't actually appear on the map. The passage of legislation in Brazil that establishes its ETS will commence in the next five years. We've also seen regulations in India that would make way for a rate-based emissions trading system, and legislation in Tokyo has been proposed establishing an overarching climate framework, which would make way for its emissions trading system," said Pryor.

Platts, part of S&P Global Commodity Insights, assessed EU Allowances for December 2025 at Eur74.07/mtCO2e ($84.61/mtCO2e) June 9.

Compliance demand supports credit retirements

Retirements of carbon credits in 2024 increased three times compared to 2023 levels, largely driven by companies looking to meet their multiyear compliance obligations under the California and Quebec ETSs.

Retirements for compliance purposes represented 24% of total credit retirements in 2024, compared to only 9% in 2023.

Meanwhile, growth from voluntary buyers has been negligible. Credit prices continue to vary across credit types, with nature-based removal credits attracting a premium relative to other types of projects, said the World Bank.

Retirements for voluntary purposes represented 76% of the total share in 2024, down from 91% the year before. Demand shifted towards nature-based removals and clean cooking projects, the report showed.

Global credit supply declined slightly, but the pool of unretired carbon credits from independent crediting mechanisms increased to almost 1 billion mt.

Most of these unretired credits are relatively older vintages, issued before 2022, and are from forestry and land use or renewable energy projects.

"We saw that there was an increase in demand for compliance purposes," said Pryor at the Innovate4Climate launch event. "We see an increasing pool of unretired credit globally and, while unclear, a potential reluctance for market participants to use these legacy credits."

Over 10% of total global credit issuance emanated from governmental crediting mechanisms, such as the Australian Carbon Credit Unit Scheme and the Kazakhstan Crediting Mechanism.

While credit prices dropped in 2024, specific project types, such as nature-based removals, carried premiums and high forward prices over other credits available in the market.

A positive correlation is also emerging between prices and carbon credit ratings from proprietary ratings providers, the report further showed.

Furthermore, credits eligible for use in international compliance markets command a price premium compared to credits eligible for use in voluntary markets.

Platts assesses a wide range of voluntary carbon credits that demonstrate additionality, permanence, exclusive claim, and co-benefits.

The value of these credits can vary from nature-based avoidance credits (Platts Nature-Based Avoidance Southeast Asia at $6.45/mtCO2e; Platts Nature-Based Avoidance South America at $5.80) to natural carbon capture (Platts Natural Carbon Capture at $14.90/mtCO2e) and tech carbon capture credits (Biochar US at $140/mtCO2e, Biochar India at $145), Commodity Insights data showed June 9.