The Organisation for Economic Co-operation and Development (OECD) has released the first full analysis of the use of carbon pricing in 34 OECD member countries and seven partner countries.
The report titled, 'Effective Carbon Rates - Pricing CO2 through Taxes and Emissions Trading Systems,' considers a wide range of types of carbon prices, such as specific taxes on energy use, carbon taxes and tradable permits.
In all, the 41 countries analyzed separately and in aggregate for the report account for 80% of global energy use and carbon dioxide (CO2) emissions.
26 September 2016: The Organisation for Economic Co-operation and Development (OECD) has released the first full analysis of the use of carbon pricing in 34 OECD member countries and seven partner countries. The report titled, ‘Effective Carbon Rates – Pricing CO2 through Taxes and Emissions Trading Systems,’ considers a wide range of types of carbon prices, such as specific taxes on energy use, carbon taxes and tradable permits. In all, the 41 countries analyzed separately and in aggregate for the report account for 80% of global energy use and carbon dioxide (CO2) emissions.
Noting that carbon pricing is an effective, low-cost way to cut emissions, the OECD studied six economic sectors in each country, reporting the effective carbon rates (ECRs) and their composition by country and in aggregate. According to the OECD, while carbon pricing is quite low in general and falling short of the levels needed to meaningfully reduce greenhouse gas (GHG) emissions, some countries do tax a significant portion of their emissions. In addition, the findings indicate that even moderate carbon price increases could, collectively, significantly impact efforts to mitigate climate change.
On a range of estimates of real climate costs, the OECD uses the lower-end (€30/tonne of emissions) as a benchmark for determining the gap between current levels of carbon pricing and those which are necessary to account for the negative externalities carbon emissions pose for the climate. Across the study area, prices fall short, with the average ECR at €14.40/tonne. The ECR is €0 for 60% of emissions from energy use in the 41 countries studied.
The report’s final results indicate a pricing gap of 80.1%, calculated by determining the difference between the price a tonne of emissions faces and €30/tonne CO2 for all units priced under €30, and compares this total to a case where all emissions face a €30 price. The OECD finds that “if all countries matched the efforts being achieved by the upper half of countries surveyed, the carbon pricing gap drops from 80.1% to 53.1%.”
In addition to the OECD members, the seven partner economies covered in the report are Argentina, Brazil, China, India, Indonesia, the Russian Federation and South Africa. [OECD Press Release] [OECD Publication Webpage] [OECD Publication Launch Announcement] [Publication: Effective Carbon Rates – Pricing CO2 through Taxes and Emissions Trading Systems]