Originally published July 26, 2013. Updated September 25, 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 close to 30% of global emissions and raised more than $100 billion for public budgets in 2024. 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 prices instead, and those prices already differ a lot. California’s auction cleared at $32.48 per allowance in August 2026, while Washington’s cleared at $64.56 that June.
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.
The cap-and-trade programs covered later in this piece work the same basic way. A state sets the cap and holds a quarterly auction. The clearing price is whatever bidders are willing to pay for the allowances on offer that quarter.
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. 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.
Power-sector carbon dioxide across the RGGI states has fallen 43% since the 2006-2008 baseline period.
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 June 2026 auction cleared much higher, at $64.56 per allowance. 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 | $64.56 | June 2026 |
| RGGI | $37.65 | September 2026 |
Source: RGGI, Inc. and EDF Climate 411, reporting California Air Resources Board and Washington Department of Ecology auction data, read September 25, 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, the gap between the West Coast prices is the one to watch. Carbon costs like these also show up in ordinary power bills. For a sense of how those already vary by place, see electricity prices by country.
The EU’s carbon market is the world’s largest
The EU Emissions Trading System started in 2005 and is the world’s largest and oldest carbon market, now in its fourth phase, running from 2021 to 2030. EU allowances were trading at 86.96 euros per tonne of carbon dioxide on September 24, 2026, a single day’s price that moves constantly. That price is quoted in euros, while every other price in this piece is in dollars, so it isn’t directly comparable to the North American numbers without a currency conversion this piece doesn’t attempt. That euro price still converts to something concrete. Burning a gallon of gasoline releases 8,887 grams of carbon dioxide, or about 0.009 tonnes, so pricing that gallon’s carbon at €86.96 a tonne adds roughly 77 euro cents to it.
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. The 87 programs from the World Bank’s count, and the close to 30% of global emissions they cover, are a bigger share than a decade ago. Back in 2014, the World Bank counted jurisdictions responsible for about 25% of global emissions as having a carbon price in place or planned, using a broader and looser count than today’s figure. The two percentages measure different things, one counting plans and one counting programs already running, so they aren’t a clean before-and-after. Both figures move in the same direction, and the programs running today raised more than $100 billion for public budgets in 2024.
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 and died in 2010. Congress hasn’t passed a replacement since.
That’s why the carbon prices in this piece all come from individual states or other countries. RGGI and California each run their own cap-and-trade programs. Washington followed with one of its own in 2023. A US household’s carbon costs still depend entirely on which state it lives in, because the country still has no national price to set a floor.
What would move these prices next
A few pieces of this picture aren’t settled yet. Washington’s link to California and Québec still needs its rulemaking finished.
The EU’s ETS2 system for home heating and road transport is still two years from full operation in 2028. RGGI’s membership has already shifted twice this decade, with Virginia leaving in 2023 and rejoining in 2026, so the 11-state count here could change again. The EU allowance price quoted above is also a single trading day’s number, the kind of figure that moves before this page does.
