ICAP 2025 Report Shows 38 Emissions Trading Systems Cover 23% of Global Emissions as Emerging Economies Shape the Next Phase

The latest global picture of emissions trading shows that carbon markets are expanding in both scale and policy relevance. The ICAP 2025 status report identifies 38 emissions trading systems currently in force worldwide, with 20 more under development or under consideration. Together, operating systems now cover 23% of global greenhouse gas emissions, showing how emissions trading is moving from a regional policy instrument toward a more widely used element of national climate strategy.

This matters because the expansion is not only happening in long-established carbon markets. The next phase of growth is increasingly being shaped by emerging economies, where governments are designing systems that reflect domestic industrial structures, development needs, and transition pathways. That change is making emissions trading more globally relevant, while also making the design of new markets more diverse and strategically important.

 

Emerging markets are changing how ETS design evolves

 

A major theme in the report is that newer systems are no longer simply copying older models. Countries such as Brazil, India, Indonesia, Türkiye, and Vietnam are playing a larger role in shaping the next generation of emissions trading frameworks. These markets are exploring structures that incorporate domestic offsetting provisions, local crediting systems, and policy features suited to their economic realities.

That is significant for investors and multinational companies because it means carbon pricing signals are spreading into faster-growing economies with rising industrial demand and expanding climate policy ambitions. It also means carbon markets are becoming more closely linked to industrial policy, transition finance, and competitiveness in regions that will shape a larger share of future emissions growth and reduction. This interpretation is an inference based on the report’s focus on emerging economy design trends.

 

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Existing carbon markets are also becoming broader and more influential

 

While new systems gain momentum, established markets are expanding in scope as well. The report highlights continued broadening of major systems, especially in China, where the national emissions trading scheme is extending beyond power into additional sectors such as steel, cement, and aluminum. That expansion adds enormous scale to the global ETS landscape and reinforces the role of emissions trading as a core instrument in industrial decarbonisation.

This wider sectoral coverage is important because it shows emissions trading is moving beyond early-stage applications and deeper into heavy industry. As that happens, carbon pricing becomes more relevant to manufacturing strategy, capital allocation, and long-term competitiveness in sectors where emissions intensity increasingly affects investment and trade exposure. This is an inference based on the report’s discussion of expanding sector coverage in large systems.

 

Revenue and policy relevance are increasing together

 

The rise in the number and reach of ETS frameworks is also being matched by stronger economic weight. Recent reporting on the same ICAP dataset shows that emissions trading systems generated record revenues in 2025, reinforcing the view that carbon markets are not only climate tools but also increasingly important fiscal and transition-finance instruments.

That matters because revenue recycling is becoming more central to how these systems are judged politically and socially. Carbon market revenues can help governments fund clean energy investment, industrial transition, and support measures for affected households or sectors. In practice, that means the future success of ETS design may depend not only on environmental effectiveness, but also on whether governments can use carbon revenues in ways that improve public acceptance and economic resilience. This is an inference based on the revenue trend and the broader role of ETS proceeds in climate policy.

 

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Carbon pricing is becoming a bigger business and trade issue

 

The broader implication for companies is clear. As emissions trading expands, carbon costs are becoming more embedded in long-term planning, cross-border competitiveness, and supply chain strategy. Businesses will increasingly need to account for carbon pricing exposure not only in current markets, but also in emerging jurisdictions where new systems may introduce compliance obligations and carbon-linked strategic risks.

This becomes even more relevant as carbon pricing interacts with border adjustment mechanisms and other trade-related climate measures. A wider ETS footprint means carbon policy is no longer only a domestic compliance issue. It is increasingly part of how trade, procurement, and industrial investment decisions are made across markets. This conclusion is an inference based on the growth in ETS coverage and the broader policy direction described in the ICAP material.

 

What the report signals

 

The biggest takeaway from the ICAP 2025 report is that emissions trading is becoming more global, more economically significant, and more diverse in design. With 38 systems now operating and 23% of global emissions covered, carbon markets are clearly no longer limited to a small set of advanced economies. The center of gravity is widening, and with it the strategic importance of carbon pricing as a driver of investment, industrial transition, and climate governance.

The next phase will likely be defined by how effectively emerging systems are implemented, how existing systems expand into harder-to-abate sectors, and how governments balance environmental ambition with political and economic feasibility. If that process continues, emissions trading will play an even larger role in shaping not only emissions outcomes, but also the future structure of global industry and climate finance. This final point is an inference based on the report’s global expansion trends.