Although progress with carbon pricing has been swift in recent years, the actual prices of carbon are still insufficient if we are to achieve the Paris Agreement goals.

Executive Summary

• Carbon pricing, primarily in the form of a carbon tax or an Emissions Trading System (ETS) is utilised as a cost-effective way of encouraging green innovation, emissions reductions, and the global transition to a low-carbon economy

• As of 2025, there are 113 active carbon pricing instruments globally, comprising 43 carbon taxes, 37 ETS. The remaining 33 are governmental carbon crediting mechanisms.

• These instruments cover 28% of global GHG emissions, a substantial rise from 24% in 2023

• Countries with carbon pricing mechanisms in place now represent nearly two-thirds of global GDP.

• Although progress with carbon pricing has been swift in recent years, the actual prices of carbon are still insufficient if we are to achieve the Paris Agreement goals

2025 Update – the Role of Carbon Pricing in Combating Climate Change