State and Trends of Carbon Pricing 2025

\State and Trends of Carbon Pricing 2025 : Recently, the World Bank's State and Trends of Carbon Pricing 2025 report highlighted a global surge in the adoption of carbon pricing instruments. About Carbon Pricing : A cost on GHG emissions, internalizing the environmental and health costs of climate change. It works through three main tools:

o Emissions Trading Systems (ETS): Also known as cap-and-trade systems where governments set emission limits, and companies can trade emission allowances.

o Carbon Taxes: Governments impose a direct tax on the carbon content of fossil fuels or on total GHG emissions

o Carbon Credit Trading Mechanisms: Credits are earned from projects that reduce or remove emissions (e.g., afforestation, clean cookstoves).

• Key Findings: Global Growth: Carbon pricing instruments have expanded to 80 systems globally (up from 5 in 2005), including 43 carbon taxes and 37 Emissions Trading Systems (ETS), generating over $100 billion in revenue in 2024.

o Sectoral Coverage: The power sector has the highest coverage, followed by industry, mining, buildings, and transport, while waste and agriculture remain largely uncovered.

o India’s Carbon Market Progress: India is developing a rate-based ETS focused on emissions intensity, with performance benchmarks for heavy industries.