The European Union (EU) carbon market grew to €777 billion ($887 billion) in 2025, driven by strong trading activity and higher carbon prices, according to the European Securities and Markets Authority (ESMA).

Financial intermediaries, including investment firms and banks, accounted for 62 per cent of trading volumes, supporting market liquidity and risk management.

Although carbon prices fell 29 per cent in early 2026 and volatility hit a two-year high amid uncertainty over emissions trading rules and energy costs, ESMA said the market remains resilient with no major concerns over transparency or integrity.

The regulator also called for mandatory Legal Entity Identifiers for all trading accounts, including under the upcoming ETS2. -OGN/TradeArabia News Service