As carbon pricing continues to expand across countries and sectors as part of broader carbon mitigation efforts, design choices are increasingly diverse and flexible to reflect a variety of policy objectives including reducing emissions, raising public revenue, and strengthening energy affordability, energy security, and competitiveness, according to a new OECD report.
Effective Carbon Rates 2025: Recent trends in taxes on energy use and carbon pricing presents information on how countries are using carbon taxes, emissions trading systems (ETS) and fuel excise taxes.
Covering 79 countries that together account for 82% of global greenhouse gas emissions, this edition provides detailed and comprehensive 2023 data, with selected updates through 2025, and places a particular focus on ETSs.
The share of greenhouse gas emissions subject to a carbon tax or covered by an ETS reached almost 27% in 2023, up from 15% in 2018, across the 79 countries analysed in the report. Carbon taxes and emissions trading systems are now in place in over 50 countries. Since 2023, carbon pricing instruments have been introduced or are being considered in a dozen countries in Asia, Europe and Latin America and the Caribbean.
Changes in coverage are mostly driven by ETSs: coverage of emissions by carbon taxes remained stable between 2018 and 2023, at around 5%, while coverage by ETSs more than doubled, from 10% to 22%. The expansion of the Chinese national ETS to the aluminium, cement and steel sectors could further increase ETS coverage to 29% in 2025.
Sector coverage is increasing. ETSs are the main carbon pricing instrument used in the electricity and industry sectors, which together account for about two thirds of emissions. These systems are currently extending either to sectors historically covered by fuel excise and carbon taxes (such as buildings, transport), or to new sectors including international maritime transport.
ETS design is evolving. Many systems now set targets based on the carbon intensity of production, creating flexibility for fluctuations in production, instead of setting a fixed emissions cap as in cap-and-trade systems. In 2018, only two in 20 ETSs were intensity-based; by 2023, 12 out of 34 were, and these now account for 70% of emissions covered by ETSs. Similarly, accounting for current production levels in free allowance allocation methods has become more common, even in cap-and-trade systems.
For more information on the OECD’s work on effective carbon rates, visit https://www.oecd.org/en/topics/policy-issues/tax-and-the-environment.html. This link, and the above link to the report Effective Carbon Rates 2025, can be used in media articles.
For further information, journalists are invited to contact Elisabeth Schoeffmann at the OECD Media Office (+33 1 45 24 97 00).
Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.