Carbon credits and allowances, 2005 / 2026: a review of the current situation and future prospects

21 years after the launch of the European carbon market (1 January 2005) and the issuance of the first UN credits (20 October 2005), direct carbon pricing covers over 29 per cent of global greenhouse gas emissions and generated more than $107 billion for public budgets in 2025, according to the World Bank (report ‘State and Trends of Carbon Pricing 2026’, 19 May 2026).

The two types of instrument have followed contrasting trajectories: emissions trading schemes have become established, whilst carbon credits - brought to market to offset buyers’ emissions - have seen their compliance and effectiveness regularly called into question.

In the European Union, the EU ETS generated €43.2 billion in auction revenue in 2025 (up 11 per cent year-on-year), with an average allowance price of €73.43…