Originally published July 26, 2013. Updated September 28, 2026.
Carbon pricing puts a dollar cost on releasing carbon dioxide, and by 2026 the world had 87 of these programs running, either a straight tax on each ton or a cap-and-trade market where companies bid for a shrinking supply of permits. Together they cover more than 29% of global greenhouse gas emissions and raised more than $107 billion for public budgets in 2025.
The US still has no federal version of either tool. A cap-and-trade bill passed the House in 2009 and never got a Senate vote, so states set their own, and what you pay depends on where you live. California’s auction cleared at $32.48 per allowance in August 2026, while Washington’s cleared at $39.50 that September.
The two tools, in plain terms
A cap-and-trade program sets a hard limit on how much carbon dioxide big emitters can release, then lets them buy and sell a shrinking number of permits, called allowances, at auction. The government fixes the quantity of pollution allowed, and the market decides the price.
A carbon tax works the other way. The government sets a fixed price per ton of carbon dioxide, and the amount of pollution is whatever emitters choose to release at that price. Countries and states mostly pick one tool instead of running both at the same time. Worldwide in 2026, that split was 47 carbon taxes against 40 emissions trading systems, the World Bank’s term for cap-and-trade markets.
Which one applies to you depends on where you live. A flat carbon tax means a predictable price per ton. Cap-and-trade means a price that moves every quarter, based on what buyers bid at auction.
RGGI, the US’s oldest cap-and-trade market
The Regional Greenhouse Gas Initiative, known as RGGI, was the first mandatory cap-and-trade program in the US, covering power plants in 11 Northeast and Mid-Atlantic states as of 2026. Virginia left the program in 2023 and rejoined in 2026, which is why that state count has moved twice in three years.
RGGI holds quarterly allowance auctions, and the September 2026 sale cleared at $37.65 per allowance, a cost that can show up in your utility bill. The program has price floors and ceilings built in. Prices can’t clear below an Emissions Containment Reserve trigger of $8.41, and a Cost Containment Reserve releases more allowances if the price passes $18.22. The 2026 cap for the 11 states sits at a little more than 90 million allowances.
RGGI’s most recent monitoring report puts power-sector carbon dioxide across its states down 43% from the 2006-2008 baseline, through 2023.
California and Washington link their carbon markets
California runs the country’s other major cap-and-trade program, renamed Cap-and-Invest under a 2025 law that extends it through 2045. It covers about 80% of the state’s greenhouse gas emissions, and its August 2026 auction cleared at $32.48 per allowance, raising about $870 million for the state’s Greenhouse Gas Reduction Fund in that single sale.
Washington runs a newer version of the same idea, started January 1, 2023. Its September 2026 auction settled at $39.50 per allowance, down from $64.56 that June. California and Washington signed an agreement with Québec in September 2026 to link their markets, with Washington’s own rulemaking still finishing.
| Program | Allowance price | Auction date |
|---|---|---|
| California Cap-and-Invest | $32.48 | August 2026 |
| Washington Cap-and-Invest | $39.50 | September 2026 |
| RGGI | $37.65 | September 2026 |
Source: RGGI, Inc., EDF Climate 411 reporting California Air Resources Board data, and the Washington Department of Ecology. Read September 28, 2026.
Each of those prices comes from a different month’s auction, since the three markets don’t share one clearing price yet. Once Washington’s link to California and Québec is final, expect that gap to close instead of drifting further apart. Utilities already build costs like these into ordinary power bills, and how much of your bill is carbon pricing depends on where you live. See electricity prices by country for a sense of how much that already varies.
The EU’s carbon market is the world’s largest
The EU Emissions Trading System started in 2005 and is the oldest ETS in force and the largest by trading volume and value, now in its fourth phase, running from 2021 to 2030. EU allowances were trading at 86.78 euros per tonne of carbon dioxide on September 25, 2026, a single day’s price that moves constantly.
That price is in euros, not dollars like the other prices here, so it isn’t directly comparable to the North American numbers without a currency conversion. It converts to something you’d recognize at the pump. Burning a gallon of gasoline releases 8,887 grams of carbon dioxide, or about 0.009 tonnes. At €86.78 a tonne, that carbon adds roughly 77 euro cents to a gallon, about what you’d pay extra to fill up a car under the EU’s price.
The system is also expanding. A second trading system, called ETS2, brings home heating fuel and road transport under carbon pricing and becomes fully operational in 2028. ETS2 has its own price safety valve, a containment mechanism that triggers around 45 euros per tonne in 2020 prices. That’s a separate market from the original ETS, so the two prices aren’t meant to match.
How much of the world prices carbon
The World Bank’s tally spans programs at every level, from a single state’s cap-and-trade auction up to the EU’s supranational system. It counted 87 carbon-pricing policies worldwide in 2026, seven more than the year before. Carbon-pricing revenue has grown even faster, rising from under $30 billion in 2016 to more than $107 billion for public budgets in 2025, almost a tripling in a decade.
If you live somewhere one of these programs already applies, a small part of what you pay for fuel or power is a carbon price, whether or not it shows up as its own line.
Why the US still has no federal carbon price
Congress came close once. The House passed the Waxman-Markey bill, formally the American Clean Energy and Security Act, by a vote of 219 to 212 in June 2009, and it would have created a national cap-and-trade market for the first time. The bill never received a floor vote in the Senate. Congress hasn’t passed a replacement since.
That’s why RGGI and California run their own cap-and-trade programs, and Washington followed with one of its own in 2023. If you’re a US household, your carbon costs still depend on which state you live in. There’s still no national price to set a floor.
The next price change is Washington’s link to California
Washington’s own rulemaking on the link to California and Québec still isn’t finished. Once it closes and allowances can move between the two states, a linked market shares one clearing price, so the gap between California’s and Washington’s auctions should narrow instead of drifting apart every quarter. If you live in either state, that link is the one thing likely to move your carbon costs next.
RGGI’s own membership has shifted before. Virginia left the program in 2023 and rejoined in 2026, so its current lineup could shift again. The EU’s ETS2 system, which brings home heating fuel and road transport into carbon pricing, is still two years from full operation in 2028. And the €86.78 figure for EU allowances above came from a single trading day, so check back and it will likely have moved.
