State and Trends of Carbon Pricing 2026: World Bank Findings
Why in the news
The World Bank Group’s annual carbon pricing report singled out India as a major new carbon market after the 2026 start of the Carbon Credit Trading Scheme (CCTS).
Key facts
| Indicator | Finding |
|---|---|
| Emissions covered by carbon pricing | 29% of global GHGs |
| Annual revenue from ETS and carbon taxes | Under USD 30 billion (2016) to over USD 107 billion (2025) |
| Average direct carbon price | About USD 10 per tCO2e (2016) to nearly USD 21 (2026); up 7% in the last year |
| Active carbon pricing policies | 87, up 7 since 2025 |
| Coverage by 2030 if planned policies go ahead | About one-third (33.33%) of emissions |
- Report: 13th edition, published by the World Bank Group.
India’s CCTS
- Launched in 2026; notified by the Ministry of Power in consultation with the environment ministry (MoEFCC).
- Administrator: Bureau of Energy Efficiency (BEE); the Grid Controller of India (formerly POSOCO) has a role as well.
- Builds on and replaces the earlier PAT (Perform, Achieve and Trade) scheme.
- Notified under the Energy Conservation (Amendment) Act, 2022.
- Two segments: a compliance market for obligated entities and an offset market for voluntary projects.
Significance
- Moves India from an energy-efficiency framework to a formal carbon market.
- Makes India a significant player in global carbon markets.
- Backs NDC and net-zero goals and rewards industries for cutting emissions and adopting clean technology.
India’s NDC targets
- Cut emissions intensity of GDP by 45% from 2005 levels by 2030.
- Reach 50% non-fossil installed power capacity by 2030.
- Net zero by 2070.
- Create an extra carbon sink of 2.5 to 3 billion tonnes CO2 equivalent through forests and trees by 2030.
Background
- Carbon pricing: puts a money cost on greenhouse gas emissions so their harm enters economic decisions.
- ETS (cap-and-trade): government caps total emissions and issues tradable permits; the market finds the price.
- Carbon tax: government fixes a charge per tonne of CO2 equivalent; the cap is left open.
- The two can coexist in one jurisdiction, as in hybrid systems or an ETS with a tax-based floor price.
- Paris Agreement: adopted at COP21 in 2015; aims to hold warming well below 2°C and pursue 1.5°C; countries file NDCs, updated every five years.
Exam angle
- Report: State and Trends of Carbon Pricing, by the World Bank Group; 2026 is the 13th edition.
- Key numbers: 29%, USD 107 billion, USD 21, 87 policies.
- India: CCTS replaces PAT; BEE is the administrator.