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Carbon pricing delivered $107bn to government budgets in 2025. That's a 2% increase on 2024, according to World Bank Group research. The figure matters because it shows something specific: carbon pricing is no longer marginal. It's now a material revenue stream for states that have adopted it.
But the growth rate itself is the real story. Two per cent year-on-year is flat. It suggests that carbon pricing hasn't scaled as rapidly as emissions reduction timelines require – and that most jurisdictions with active schemes are holding steady rather than expanding them.
The World Bank's tracking doesn't isolate which mechanisms drove the 2025 revenue. EU Emissions Trading System (ETS) performance, the expanding voluntary carbon market, and regional schemes in Asia all contributed, but the breakdown matters for policy design. Are revenues rising because carbon prices are climbing? Because participation is widening? Or because baseline emissions are static?
Governments face a clear tension now. Carbon pricing revenue funds climate programmes. Higher carbon prices drive behaviour change but risk political backlash and competitiveness concerns. Lower prices are politically easier but generate less cash for transition.
The $107bn figure also masks geography. OECD nations capture the majority of carbon pricing revenue. Developing economies generate far less, despite facing greater climate exposure. That asymmetry will shape every global climate finance negotiation ahead.
So the question isn't whether $107bn is enough – it isn't. The question is whether governments are willing to deepen carbon pricing, expand it to new sectors, or combine it with mechanisms that actually move the emissions needle fast enough.
