Financial intermediaries accounted for about 62% of trading volumes in the EU’s carbon market in 2025.
EU carbon markets rose to €777 billion in 2025, driven by higher prices and strong trading activity, the European Securities and Markets Authority announced on Thursday.
The market centres on the EU Emissions Trading System (EU ETS), which requires some companies to buy emissions allowances — permits to emit carbon dioxide — to meet their climate obligations.
Investment firms and credit institutions were described as central to how the market works, providing liquidity, acting as counterparties to non-financial firms and helping companies that must comply with the EU ETS to access allowances and manage price risk.
Prices dropped sharply in early 2026, falling 29% over three months, while price swings reached a two-year high, reflecting differing expectations about future EU ETS rules, energy costs and wider market conditions.
Prices, auctions and oversight
No major concerns were identified on transparency or market integrity, according to the same report.
It said the annual average price of EU emission allowances rose 13% from 2024, and auction revenues increased 11% despite a slight fall in the volume of allowances auctioned.
Progress on the availability of Legal Entity Identifiers (LEIs) in the Union Registry was described as limited, with a recommendation to make LEIs mandatory for all trading accounts — including for the planned ETS2.
LEIs are standard identification codes used to help identify organisations involved in financial transactions.
ESMA said it would continue to monitor carbon markets and stand ready to support legislators.
