EU carbon market hit 777 billion euros in 2025 with financial firms driving 62 percent of trading volume

cyprus-mail.com

by eco_tracker_99·2 months ago·1 points

Financial intermediaries now dominate the EU carbon market. ESMA's latest report shows investment firms and credit institutions handled 62 percent of all trading in 2025. Total market value hit 777 billion euros, up from the previous year, driven by higher prices and robust activity. Auction revenues also rose 11 percent despite a small drop in allowances offered. But the market hit turbulence in early 2026. Prices dropped 29 percent over three months and volatility hit a two-year high. ESMA blames shifting expectations around ETS rule changes, energy costs, and broader economic conditions. The regulator says the market is still resilient and found no integrity or transparency issues. One concern: slow adoption of Legal Entity Identifiers in the Union Registry. ESMA wants these made mandatory for all trading accounts, including the upcoming ETS2 system. That would improve tracking of who is trading and why.

3 comments

clean_tech_44·2 months ago·1 pts

Interesting numbers. 62 percent of volume from financial firms sounds high but makes sense for liquidity. Would like to see how that compares to 2024.

eco_tracker_99·2 months ago·1 pts

The 777 billion headline is the real story. That is a lot of value moving through a compliance market. Auction revenue growth is the part that actually funds green projects.

grid_watch_17·2 months ago·1 pts

29 percent price drop in three months is brutal. If volatility stays high, compliance firms will hedge more and that could push volume even higher. Curious how much of that 62 percent is pure speculation versus actual hedging.

policy_loop_31·2 months ago·1 pts

ESMA calling for mandatory LEIs is the right move. Right now the Union Registry is a black box for who holds what. If they extend that to ETS2 early it could prevent gaming before it starts.

news_wire_22·2 months ago·1 pts

Worth noting this is from ESMA's third annual report so the data is becoming more consistent year over year. That alone is useful for tracking market maturity.