Centre for Tax Policy and Administration

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.



  • 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. 

  • 46 % of CO2-emissions from all energy use in the 42 countries are not subject to an ECR at all, and only 12% to a rate of at least EUR 30 per tonne. Hence, 88% of emissions are priced below a low-end estimate of the costs of CO2-emissions to society, being EUR 30 per tonne.

  • The Carbon Pricing Gap measures how much OECD and G20 countries fall short of pricing carbon emissions in line with a benchmark value for carbon pricing. It describes the state of carbon pricing and can be compared across countries and time. At EUR 30 per tonne the carbon pricing is 76.5% for the 42 countries.

  • Countries'carbon pricing gaps ranged from 27% to 100% in 2015. Countries with a low gap tend to emit fewer emissions than countries that hardly price any emissions. Low-gap countries also emit less CO2, per unit of GDP and are better prepared for the low carbon economy.

  • Country-specific figures on carbon pricing, energy taxation and environmentally related tax revenue are available for 42 OECD and G20 countries.




OECD at UN Climate Change Conference (COP24) •  2-14 December 2018

The key objective of this year’s COP24 is to adopt the implementation guidelines of the Paris Climate Change Agreement.

The OECD is actively contributing to this important event through a series of side events, publications, and by taking part in a number of workshops, seminars and other events throughout the conference.


Green Talks Webinar - Carbon pricing trends: Measuring the momentum • 18 September 2018 

Decarbonisation keeps climate change in check and contributes to cleaner air and water. Carbon pricing is a cost-effective means of reducing CO2 emissions, but countries are still not using this tool to its full potential to curb climate change.

OECD experts presented the key findings from the report on Effective Carbon Rates, which measures pricing of CO2-emissions from energy use in 42 OECD and G20 countries, covering 80% of world emissions, and provided a first appreciation of countries’ progress since 2012.

Green Talks Webinar - Taxing Energy Use: Reforming energy tax systems to achieve environmental goals • 14 February 2018 

With almost no emissions from energy use priced at levels required to keep global temperature increases below 2 degrees Celsius, there is still considerable scope, and an urgent need, to improve the use of taxation to reduce pollution and combat climate change.

How do energy and carbon taxes differ across countries, different fuels and sectors? What should be done to reduce emissions and reach global climate goals at minimum cost?


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



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