Asia’s Carbon Markets Gather Momentum as Carbon Pricing Coverage Nears 30% Globally: World Bank

SINGAPORE, May 24, 2026 – Carbon pricing and carbon markets are rapidly evolving into a major global economic and investment framework, with nearly 30 per cent of global greenhouse gas emissions now covered under emissions trading systems or carbon taxes, according to the World Bank Group’s State and Trends of Carbon Pricing 2026 report.

The report signals growing momentum for carbon-linked financial markets and climate-focused infrastructure investments, particularly across Asia-Pacific, where governments are accelerating the rollout of emissions trading systems, carbon taxes and carbon market frameworks.

According to the report, 87 carbon pricing policies are currently implemented globally, with countries including India, Japan and Viet Nam launching new systems in 2026.

The World Bank said that if policies currently under development are fully implemented by 2030, nearly one-third of global greenhouse gas emissions could fall under carbon pricing frameworks.

Carbon Pricing Becomes an Economic and Trade Strategy

The report suggests carbon pricing is increasingly being viewed not just as a climate tool, but also as an industrial, fiscal and trade policy mechanism.

One major driver is the European Union’s Carbon Border Adjustment Mechanism (CBAM), which is pushing exporters and governments globally to strengthen domestic carbon accounting and pricing systems to maintain trade competitiveness.

Singapore, which increased its carbon tax rate by 80 per cent in 2026, was highlighted among jurisdictions implementing major pricing adjustments.

Globally, average carbon prices have nearly doubled over the past decade, increasing from US$10 per tonne of CO2 equivalent in 2016 to almost US$21 in 2026.

The report also noted that annual revenues generated from emissions trading systems and carbon taxes exceeded US$107 billion in 2025, continuing a trend of carbon pricing revenues surpassing the US$100 billion mark since 2021.

Most revenues continue to originate from developed markets, although middle-income economies are increasingly introducing their own pricing systems and transition-linked financing mechanisms.

Japan’s newly introduced GX-ETS framework was cited as an example of how governments are using carbon pricing revenues to fund national energy transition initiatives.

The report also highlighted growing volatility in ETS prices during 2026, driven partly by disruptions in global commodity and energy markets.

Carbon Credit Markets Attract Growing Investor Attention

Beyond compliance markets, carbon credit markets are continuing to mature as an increasingly important asset class and financing mechanism.

Global carbon credit issuances increased by 8 per cent between 2024 and 2025, although issuance levels remain below the 2022 peak.

The report highlighted strong growth in government-backed crediting systems, with governmental mechanisms rising from 24 to 34 over the past decade.

Voluntary carbon markets remain dominant, accounting for over 80 per cent of total retired credits in 2025.

At the same time, investor and buyer scrutiny around carbon credit integrity continues to intensify.

The report found that carbon credits eligible under the aviation industry’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) commanded substantial price premiums, trading between US$15 and US$22 per tonne compared with US$1 to US$14 for most other project categories.

There is also increasing evidence that highly rated carbon projects are attracting stronger market pricing, particularly for nature-based solutions and reforestation projects.

Southeast Asia emerged as a notable hotspot within the report, with forest conservation projects in the region experiencing price spikes during the second half of 2025 due to constrained supply conditions.

Meanwhile, long-term confidence in the sector appears to be strengthening, with US$12 billion worth of carbon credit offtake agreements signed during 2025, representing a threefold increase from the previous year.

As Asia-Pacific economies continue balancing industrial growth, energy transition and trade competitiveness, the World Bank report suggests carbon pricing and carbon markets are becoming increasingly embedded within broader economic and investment strategies across the region.