07/12/2015 – OECD urges efforts to better price carbon as new analysis finds that 90% of CO2-emissions are priced below EUR 30 per tonne, a low-end estimate of climate damage, and 60% are not priced at all. Effective Carbon Rates in the OECD and Selected Partner Economies calculates effective carbon rates (ECR) on CO2-emissions from energy use for 41 countries which together use 80% of global emissions.
CO2-emissions from energy use are a primary contributor to climate change. Putting a price on carbon, through taxes or through emissions trading systems, is one of the most effective tools for reducing the CO2-emissions from energy use. Prices can reduce energy use, improve energy efficiency, and drive a shift towards less harmful forms of energy.
Effective Carbon Rates in the OECD and Selected Partner Economies, calculates – for the first time – the ECR on energy use for 6 economic sectors in 41 countries (the 34 OECD member countries and seven partner economies: Argentina, Brazil, China, India, Indonesia, Russia and South Africa).
The effective carbon rate is the sum of specific taxes on energy use, carbon taxes, and prices of tradable emissions permits, where these apply. It is the total price on carbon emissions from energy use resulting from market-based policy instruments (including specific energy taxes that are not explicitly intended as taxes on carbon emissions but that are economically equivalent.)
The main findings, for 41 countries representing 80% of world emissions in 2012, are as follows:
“We need an effective price on carbon emissions if we want to tackle climate change. Unfortunately, implementation of the polluter pays principle is woefully lacking", said OECD Secretary-General Angel Gurría. "While lower-end estimates put the damage from emitting 1 tonne of CO2 at EUR 30, 90% of all emissions from energy use are priced at less than that when we look at 41 countries representing 80% of world energy use. Moreover, 60% of emissions are not subject to any price whatsoever. We cannot continue like this if reducing greenhouse gas emissions in a cost-effective manner is a true policy objective.”