2025 Global Carbon Market Progress Report: 38 Carbon Markets Cover 19% of Global Emissions; EU and China Expand Sector Coverage

The report highlights three major development trends in the global carbon market in 2024:

· Accelerated deployment in emerging economies: Middle-income countries such as Brazil and India are actively building carbon trading frameworks, advancing regional emission reduction processes.

· Continued expansion of sector coverage: Sectors such as transportation, construction, and waste management are gradually being incorporated into regulatory systems.

· Emerging systemic challenges: Issues such as price volatility, market stability, and institutional design urgently need to be addressed through international collaboration and technological innovation.

In terms of carbon price performance, average prices vary significantly across global markets. The EU Emissions Trading System (EU ETS) leads by a notable margin, while average prices in China's pilot markets remain below $20 per ton. Notably:

· One-sixth of global carbon markets have an average price below $10.

· More than half of markets are in the $10–70 range.

· One-sixth of markets (primarily the EU ETS) exceed the $70 threshold.

Regional Practices and Innovation Highlights

EU ETS

· Raised €183.6 billion for green transition financing in 2024 (a 322% increase compared to 2023).

· Annual emission cap reduction rate increased to 4.3%; coverage expanded to include maritime transport (effective 2025) and extended to additional aviation activities (covering 7% of new emissions).

· Free allowances reduced by 25%; municipal waste incineration facilities now included in the monitoring system.

China ETS

· The Interim Regulations on Carbon Emission Trading Management officially took effect, strengthening enforcement and penalty mechanisms for violations.

· Sectoral expansion is planned in two phases: by 2027, 1,500 enterprises in the cement, steel, and electrolytic aluminum sectors will be included, adding 3 billion tons of CO₂ equivalent in coverage.

· Allocation mechanism for the power sector optimized: updated emission benchmarks, elimination of cross-cycle allowance borrowing, and reduction of the compliance cycle to one year.

· Progress on resuming the China Certified Emission Reduction (CCER) mechanism: 63 projects submitted for registration in 2024, with the first project successfully registered.

The report emphasizes that carbon pricing, as a key tool for achieving net-zero goals, requires improvements in market integration, mutual recognition of carbon credits, and social equity to enhance its effectiveness. Data shows that global carbon markets have accumulated over $373 billion since 2007, providing sustained momentum for emission reduction technology innovation. As more economies refine their institutional designs, carbon markets will play an even more central role in global climate governance.

Source: 

Emissions Trading Worldwide: ICAP Status Report 2025