Tax policy analysis

Tax and the Environment


‌‌By putting a price on pollution, taxes and tradable permit systems incentivise emissions abatement at the lowest possible cost. The OECD's work on tax and the environment investigates to what extent countries harness the power of taxes and tradable permit systems for environmental and climate policy. Additional topics of expertise include the interaction between environmental taxation and the broader tax system, and the impacts of environmental taxes on competitiveness and on equity.



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  • The effective carbon rate (ECR) is the price signal of carbon emissions resulting from carbon taxes, specific taxes on energy use, and the prices of tradable emissions permits. 

  • 60% of CO2-emissions from all energy use in the 41 countries are not subject to an ECR at all, 30% are subject to a rate between zero and EUR 30 per tonne of CO2, and only 10% to a rate of at least EUR 30 per tonne. Hence, 90% of emissions are priced below a low-end estimate of the climate cost of CO2-emissions, being EUR 30 per tonne, and 60% of CO2-emissions are not priced at all. 

  • Outside of road transport, the ECR is zero for 70% of emissions, and 96% of emissions from energy use are subject to an ECR of less than EUR 30 per tonne of CO2. In road transport, 46% of CO2-emissions in the 41 countries face a rate of at least EUR 30 per tonne of CO2-emissions.

  • Country-specific figures on carbon pricing, energy taxation and environmentally related tax revenue are available for 41 OECD and G20 countries.



COP 23 side event: Carbon pricing for the low-carbon transition • 15 November 2017, 11:00 - 12:30

Avoiding the potentially very high costs of climate change requires transitioning to a low carbon economy. Carbon pricing, in the form of emissions trading systems or taxes, helps to reduce emissions, but what is its role in driving the low carbon transition?‌


OECD Green Talks webinar • 26 September 2016

OECD Environment Director, Simon Upton, hosts Kurt Van Dender, OECD environmental tax policy expert to discussed the OECD's latest publication on Effective Carbon Rates - a new, combined measure of the extent to which countries use taxes and emissions trading systems to price carbon, and to introduce the carbon pricing gap.


6th ITD Global Conference: Tax & the Environment • 1-3 July 2015



 Effective Carbon Rates cover



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