Financial firms keep EU carbon markets moving
The European Securities and Markets Authority (ESMA), the EU financial market regulator and supervisor, has published its third annual market report on EU carbon markets.
The report shows that financial intermediaries are central to the functioning of the EU carbon market. They provide liquidity, act as counterparties to non-financial firms, and help compliance entities access allowances and manage price risk. Investment firms and credit institutions accounted for around 62% of overall trading volumes in 2025.
EU carbon markets rose to €777 billion in 2025, supported by strong trading activity and higher prices. In early 2026, prices fell 29% over three months and volatility reached a two-year high, reflecting different expectations over future EU ETS rules, energy costs and broader market conditions.
Despite this, ESMA finds that the market remains resilient, with no major concerns identified on transparency or market integrity. The annual average price of EU emission allowances was up 13% from 2024, and auction revenues rose by 11% despite a slight decrease in the volume of allowances auctioned.
Progress on the availability of Legal Entity Identifiers (LEIs) in the Union Registry remains limited. ESMA recommends making LEIs mandatory for all trading accounts, including for the upcoming ETS2.
Next steps
ESMA will continue to monitor the carbon markets and stands ready to support the legislators.
Further information:
Ana Dilaverakis
Communications Officer
press@esma.europa.eu