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Global Emissions Trading Expands with Strong Momentum from Emerging Economies

The International Carbon Action Partnership (ICAP) has released its "Emissions Trading Worldwide: Status Report 2025", showcasing the growing global adoption of Emissions Trading Schemes (ETS) as a powerful tool for cost-effective decarbonisation. The report highlights that ETS now covers 19% of global GHG emissions, with 38 schemes in operation and 20 more under development or consideration.

ETS mechanisms cap overall emissions and incentivize low-carbon innovation through market-based approaches, allowing entities to trade emission allowances. The 2025 report underscores the strong momentum in emerging economies, including India, Brazil, Indonesia, Türkiye, and Vietnam, where innovative system designs and domestic crediting mechanisms are being integrated to align with net-zero targets.

One of the most significant developments is China’s plan to expand its national ETS, which will increase its coverage by approximately 3 billion tonnes of CO?e, or nearly 5% of global emissions. Meanwhile, the European Union and United Kingdom are progressing with reforms to extend their ETS to additional sectors, bolstering their climate commitments.

The report also touches upon the evolving global approach to carbon leakage—where emissions-intensive industries move to countries with looser regulations. The introduction of Carbon Border Adjustment Mechanisms (CBAMs) by the EU and UK is becoming central to preserving industrial competitiveness while ensuring climate integrity.

As the world seeks to meet ambitious climate goals, ETSs are proving to be essential in delivering scalable and economically viable decarbonisation pathways. The next wave of ETS development—driven by emerging markets—is set to redefine how climate action is implemented globally, with flexibility, innovation, and regional cooperation at the forefront.