As part of their efforts to cut greenhouse gas (GHG) emissions, countries have increased their use of carbon pricing through taxes or emissions trading systems, with coverage increasing across countries and sectors in 2021.
A new OECD report on "Pricing Greenhouse Gas Emissions: Turning climate targets into climate action" finds that more than 40% of GHG emissions were covered by carbon prices in 2021, up from 32% in 2018, with average carbon prices higher in 47 of the 71 countries studied. Average explicit carbon prices from carbon taxes and emissions trading more than doubled over the period to reach EUR 4 per tonne of CO2 equivalent.
Carbon pricing provides incentives for households and businesses to reduce carbon-intensive energy use and shift to cleaner fuels, while also mobilising government revenue. Other policy instruments that can accelerate the shift to net zero include regulation, tax incentives and subsidies for clean technologies. Most countries employ a range of different policy approaches as part of their climate mitigation strategies.
The carbon prices recorded in the report take account of emissions trading systems, carbon taxes, fuel excise taxes and fossil fuel subsidies, which means that they are only a partial measure of the climate mitigation policies employed by governments. One of the objectives of the "Inclusive Forum on Carbon Mitigation Approaches" (click to know more "OECD Secretary-General Report to G20 Leaders on the Establishment of the Inclusive Forum on Carbon Mitigation Approaches" Indonesia, November 2022) is to develop tools to improve the measurement and comparability of a broader range of policy instruments.
Click here for a short 2 minutes video and on the image below to see the full report, data, and country notes from OECD published 3 November 2022. Table of contets include:
Foreword
Executive summary
Building a systematic stocktaking and mapping of mitigation policies
Pricing greenhouse gas emissions: What has changed? What needs to change?
Taxes and subsidies on energy use
