“The carbon market” is a single name for several different markets. In some, governments force big emitters to hold a permit for every tonne they emit. In others, companies and individuals buy credits by choice to compensate for emissions they haven’t yet cut. This page explains both, how big they are and who takes part.

For the basics behind it, start with what a carbon credit is or browse the Learn section.

What is the carbon market?

The carbon market puts a price on greenhouse gas emissions by letting people trade units that each stand for one tonne of carbon dioxide equivalent (CO₂e). It has two main parts:

  • Compliance markets. A government sets a limit on emissions from certain sectors and requires companies in them to hold an allowance for each tonne they emit. In the EU’s system, one allowance gives the right to emit one tonne of CO₂eSource 3.
  • The voluntary market. Companies and individuals buy carbon credits that projects generate, and retire them against their own emissions. Nobody is required to take part.

The two use similar units but different rules, buyers and prices. Our page on voluntary vs compliance markets compares them side by side.

How big is the compliance market?

The World Bank’s State and Trends of Carbon Pricing 2026 report found that:

  • just over 29% of global greenhouse gas emissions are now covered by direct carbon pricingSource 1;
  • there are 87 carbon pricing policies worldwide, seven more than a year earlierSource 1;
  • carbon pricing raised more than $107 billion for public budgets in 2025Source 1;
  • the average carbon price is now nearly $21 per tonne of CO₂eSource 1.

These figures cover both emissions trading systems and carbon taxes, so they describe carbon pricing as a whole rather than trading alone. Revenue raised by governments is also not the same measure as the value of trades, so don’t compare it directly with the voluntary figures below.

How big is the voluntary market?

Ecosystem Marketplace reported a total transaction value of $535 million in 2024, 29% lower than in 2023, from 84 million tonnes of CO₂e of credits soldSource 2.

Why these numbers are estimates

Ecosystem Marketplace builds its figures from the deals its survey respondents report, and describes them as lower bounds for the whole voluntary marketSource 2. Many trades are private, so nobody sees every sale.

Who takes part in the carbon market?

Several groups each play a different role:

  • Governments and regulators set caps, issue allowances and enforce compliance schemes.
  • Covered companies, such as power plants and factories in a compliance scheme, must hold enough allowances for their emissions.
  • Project developers run the forest, cookstove, renewable energy or removal projects that generate voluntary credits.
  • Standards and registries, such as Verra and Gold Standard, write the rules, issue credits and record every retirement.
  • Auditors (validation and verification bodies) check projects before credits are issued.
  • Sellers, from exchanges and brokers to online offset shops and resellers, connect projects with buyers.
  • Buyers, from large companies to individuals, retire credits to back a climate claim.

How are carbon prices set?

In a compliance market, the government’s cap sets the supply. In the EU, the cap is reduced every year, and allowances are sold in auctions and can then be tradedSource 3. Companies that don’t hand in enough allowances face heavy finesSource 3, which keeps demand steady.

In the voluntary market there is no single price. Each credit is priced by the seller and buyer, and the price depends on the type of project, its vintage (the year the reduction happened) and how much buyers trust its quality. The ICVCM’s Core Carbon Principles give buyers a common quality threshold to compare credits againstSource 4. For the latest published price ranges by project type, see our carbon credit price page, part of our prices section.

Where to go next

If you plan to buy credits yourself, you will be buying in the voluntary market. Our guide to buying carbon credits walks through the steps, starting with cutting your own emissions first.