In 2023, almost 27% of the 41.7 billion tonnes of CO2e emissions in the 79 countries considered in this report were subject to a carbon price through ETSs or carbon taxes. Furthermore, 24% were subject to a fuel excise tax, resulting in a positive ECR for 44% of emissions.1 Figure 2.1 shows that the distribution of ECRs is skewed, with about 16% of GHG emissions subject to an ECR over EUR 30 per tonne of CO2e (/tCO2e), ca. 11% of emissions to a rate of EUR 60/tCO2e or more and 4% to a rate of EUR 120/tCO2e or more. More emissions are subject to higher ECRs than in 2018, when ECRs were over EUR 30/CO2e for 13% of GHG emissions, above EUR 60/tCO2e for 7% and above EUR 120/tCO2e for 3%.
Effective Carbon Rates 2025
Recent Trends in Taxes on Energy Use and Carbon Pricing
2023 and 2018, 79 countries
Note: For each percentile bracket, average rates are presented. ECR 2023* is adjusted to the same country coverage as 2018 (from 79 countries to 71). GHG emissions data combines data on CO2 emissions from energy use, based on the IEA World Energy Balances (IEA, 2025[1]), with “other GHG emissions” data from CAIT (Climate Watch, 2025[2]).
CO2 emissions from energy use represent about 74% of GHG emissions and this share varies widely across countries, from less than 10% to above 90% (Figure 2.2, Panel A). This depends in part on the importance of the agriculture sector in the economy (OECD, 2023[3]). CO2 emissions from energy use range from about 7.3% (Ethiopia) to 90.8% (Japan) of a country’s total GHG emissions (Figure 2.A.1).
At a global level, the industry and electricity sectors are the most emitting sectors in terms of CO2 emissions from energy use (Figure 2.2, Panel B). However, inter-country variation is large and in some countries the road transport sector may also account for a large share of emissions. The electricity and industry sectors each account for about 36% of total CO2 emissions from energy use.2 Across countries, while these shares vary widely, from 0% to 57% for electricity and 3.6% to 58% for industry, in half of the 79 countries they make up respectively at least 20% and 28% of countries’ CO2 emissions from energy use. While road transport emissions stand at about 17% of total CO2 emissions from energy use, this sector can represent a substantial share of these emissions in certain countries (up to 83.6%) and its share is at least 33% in half of the countries. The buildings sector represents a little less than 8% of total CO2 emissions from energy use, and even though it emits less than 9% of CO2 emissions from energy use in half of the countries, the share is high (up to 45%) in certain countries. The off-road transport sector and agriculture and fisheries sector combined represent less than 4% of total CO2 emissions from energy use.3
Agricultural emissions account for the largest share of “other GHG emissions” (i.e. GHG emissions that are not CO2 emissions from energy use), at a global level but also in most countries (Figure 2.2, Panel C). Non-energy related agricultural emissions represent 41% of total other GHG emissions, and account for at least 49.4% of other GHG emissions in half of the countries in the sample. This share varies widely, ranging from less than 0.1% (Israel) to about 86% (Uruguay). Industrial processes as well as energy (fugitive emissions and fuel combustion resulting in GHG emissions other than CO2) make up similar shares of estimated total other GHG emissions, at about 23.1% and 23.8% respectively. These shares can range from close to 2% (1.9% for energy in Uruguay and 1.7% for industrial processes in Uganda) to about 60% for energy (Russia) and 78.5% for industrial processes (Singapore). Countries with high industry-related CO2 emissions from energy use generally also have high emissions from industrial processes. Waste makes up a smaller share of other GHG emissions globally, and in most countries.
79 countries
Note: “Other GHG emissions” refer to methane and nitrous oxide from energy use, fugitive emissions, industrial process emissions (including F-gases), non-fuel based agricultural emissions and waste emissions. They exclude LUCF. GHG emissions data combines data on CO2 emissions from energy use, based on the IEA World Energy Balances (IEA, 2025[1]), with “other GHG emissions” data from CAIT (Climate Watch, 2025[2]). The “other GHG emissions” data is for 2022, while the data on CO2 emissions from energy use is for 2023 for OECD and G20 countries as well as Cyprus and Kazakhstan, and 2021 otherwise. Panel B and C sectors are further detailed in Tables A.A.1 and A.A.2. respectively.
The share of emissions from different fuels substantially varies across countries; globally, most emissions are from coal (46%) and natural gas (19.1%) (Figure 2.3 – Panel A). Emissions from coal range from 0.9% to 79% across countries, as coal use has been almost phased out in certain countries but remains important in others, especially in the electricity sector. Natural gas is used in all stationary sectors (electricity, industry, buildings; Figure 2.3 – Panel B) and hence is more important in countries where these sectors are relatively large. Diesel and gasoline are mostly used in the road transport sector, and kerosene in the off-road transport sector, so their shares in total CO2 emissions from energy use are linked to the importance of those sectors, globally and at the country level. Currently, non-renewable waste used for energy plays a limited role.
79 countries, CO2 emissions from energy use.
Note: “Coal” stands for “Coal and other solid fossil fuels” and “Non-re Waste” stands for “Non-renewable Waste”. Other fossil fuels include petroleum coke, residual fuel oil and other refinery gases / bitumen / lubricants. CO2 emissions from energy use are based on the IEA World Energy Balances (IEA, 2025[1]) and the data is for 2023 for OECD and G20 countries as well as Cyprus and Kazakhstan, and 2021 otherwise.
The distribution of ECRs is heterogenous across sectors, with CO2 emissions from energy use facing the highest ECRs in the road transport sector (Figure 2.4). After the road transport sector, the highest rates are found in the electricity and off-road transport sectors. In 2023, only 6% of CO2 emissions in the road transport sector face a zero ECR and rates above EUR 60 and EUR 120/tCO2 mostly occur in this sector.4 More than three quarters (77%) of electricity sector CO2 emissions face a positive ECR, with half of ECRs in the sector between EUR 5 and 30/tCO2 and a little over 4 % above EUR 30/tCO2. The ECR is zero for 44% of emissions in the off-road transport sector but more than 20% face rates above EUR 30/tCO2. CO2 emissions from the industry sector contribute more than a quarter of total GHG emissions (section 2.1) and 29% of emissions in that sector face a positive ECR in 2023. 9% of these emissions in the industry sector face an ECR above EUR 30. Over one-third of the buildings sector CO2 emissions face a positive ECR, with about 18% of emissions covered by ECRs over EUR 30/tCO2. Other GHGs face the lowest ECRs, with 97% of emissions unpriced. Effective carbon rates may significantly vary within sectors (Figure 2.4), including because different instruments may be used (Figure 2.5), different fuels used in one sector may be taxed at different rates (Figure 2.6) and because of differences in the rates and coverage of instruments across countries (Figure 2.A.2 and Figure 2.A.3).
In 2023, fuel excise taxes cover nearly 24% of emissions, ETSs 22% and carbon taxes 5% (Figure 2.5). The base of carbon taxes generally coincides with that of fuel excise taxes as many carbon taxes are fuel-based (as opposed to directly levied on reported CO2e emissions). ETSs and carbon taxes generally do not overlap though, notably, in some cases carbon taxes are used to complement the ETS price (e.g. the UK carbon price floor, the Netherlands carbon levy5 or the recently introduced Hungarian carbon tax6). The overlap of ETSs with fuel excise taxes is also limited. In many cases, when tax and ETS coverage overlap, covered entities face reduced tax rates. In 2023, out of the 79 countries covered in this report, fuel excise taxes are present in 75 countries, ETSs in 41 countries and carbon taxes in 27 countries (see Figure 2.A.2 and Figure 2.A.3).
Carbon pricing instruments are used in all sectors, with more use of ETSs in the electricity and industry sectors and of carbon taxes in the buildings and road transport sectors (Figure 2.5). Where CO2 emissions from energy use in the electricity and industry sectors face a positive ECR, respectively 76% and 53% of coverage stems from ETSs. Where CO2 emissions from the buildings and road transport sectors are covered, respectively 29% and 15% stems from carbon taxes. In total, ETSs (respectively carbon taxes) cover about 8% (resp. 11%) of the buildings sector’s CO2 emissions, 59% (resp. 5%) of CO2 emissions in the electricity sector, 15% (resp. 4%) of CO2 emissions from energy use in the industry sector, 7% (resp. 13%) of transport CO2 emissions and 3.1% (resp. 0.4%) of the “other GHG” emissions category.
Fuel excise taxes and ECRs are on average highest in road transport. Overall, the highest ECR levels arise from fuel excise tax rates (Figure 2.1), though this is not the case in all sectors (Figure 2.5). While fuel excise tax rates are highest in the road transport sector (at an average of EUR 97/tCO2 for emissions priced by fuel excise taxes), they are much lower than ETS permit prices in the electricity and industry sectors (EUR 4 vs 14/tCO2 for electricity and EUR 11 vs 37/tCO2 for industry) – where these prices do not account for free allowances (see section 2.4). Moreover, in the electricity sector, fuel excise taxes cover less emissions than ETSs, and in the industry sector they cover a similar share of emissions. Carbon taxes cover less emissions than the two other instruments, but when applied, carbon taxes are set at non-negligeable rates (e.g. EUR 27/tCO2 in the buildings sector and EUR 22/tCO2 in the road transport sector for emissions priced by carbon taxes).
2023, 79 countries
Note: Within each sector, ECR values are grouped into seven ranges (0, >0–≤5, …, >120). For each sector, coverage in each range is summed and divided by the sector’s total coverage; bars display the resulting percentage shares (summing to 100). Empty ranges are shown as zero-height bars.
Emissions related to industrial processes are the main “other GHG emissions” which are priced, while non-CO2 agricultural emissions face no carbon price in 2023. ETSs are the main instrument that covers other GHG emissions (90% of covered emissions - Figure 2.5) mostly through the pricing of emissions from industrial processes. Some ETSs also cover CH4 and N2O emissions from energy use (e.g. the Australian Safeguard Mechanism). Carbon taxes cover about 10% of priced emissions from other GHGs, mostly through taxes on F-gas emissions (e.g. in Denmark, Iceland, Norway, Poland, Spain). The pricing of agricultural emissions is currently being discussed in certain countries (section 3.1).
2023, 79 countries
Note: The figure shows both the level of pricing of and the share of emissions covered by fuel excise taxes, carbon taxes and emissions trading systems – by sector. It thus also highlights the variation in carbon pricing instruments across sectors. In the Carbon Pricing and Energy Taxation database, sectors corresponding to agriculture and fisheries, buildings, electricity, industry, off-road transport and road transport make up CO2 emissions from energy use. Other GHG emissions cover CH4, N2O and F-gas emissions as well as CO2 emissions from industrial process; they exclude LUCF.GHG emissions data combines data on CO2 emissions from energy use, based on the IEA World Energy Balances (IEA, 2025[1]), with “other GHG emissions” data from CAIT (Climate Watch, 2025[2]). Fuel excise tax rates are typically set per unit of volume or weight (e.g., litre, kilogram, cubic metre) or per unit of energy (e.g., gigajoule) and these rates have been translated into a price per tonne of CO2, based on the carbon content of these fuels, relying on calorific factors from the IEA World Energy Statistics and Balances (IEA, 2025[1]) and IPCC emissions conversion factors (IPCC, 2006[4]). All rates are expressed in real 2023 EUR using the latest available OECD exchange rate and inflation data.
Reading note: The horizontal axis of shows total GHG emissions (expressed in thousands of tonnes of CO2) for each sector across the 79 countries. The width of each sector along the horizontal axis therefore represents the total CO2e from each sector. The vertical axis shows different levels of ECRs. Within each of the six sectors, the width of the shaded rectangles shows the amount of CO₂e emissions in that sector subject to each type of instrument. The height of each shaded rectangle represents the average ECR level from the corresponding instrument conditional on instrument applicability (i.e. zeros are excluded). This Figure allows the components of the average ECR in each sector to be identified. Carbon taxes are shown in darker blue, fuel excise taxes are shown in lighter blue, while ETSs are shown in green. A tonne of CO2e emissions can face a positive ECR in different ways: only via carbon taxes (corresponding to a darker blue rectangle), only via fuel excise taxes (corresponding to a lighter blue rectangle), only via a tradable emissions permit price (corresponding to a green rectangle), or via a combination of these (i.e. when rectangles are stacked). Emissions that are not priced are shown with no rectangle. The yellow diamonds show the unconditional average ECR for each sector (i.e. averaged including over zero-ECR emissions).
Effective carbon rates vary across fuels and are highest for road transport fuels (diesel and gasoline) (Figure 2.6). On one end of the spectrum, diesel and gasoline, which are primarily used in the road transport sector, are subject to the highest ECRs (respectively EUR 77 and EUR 99/tCO2 on average) – this also relates to their historically broad tax base and the revenue raising objective of their taxation in many countries. Their ECR mainly stems from fuel excise taxes, i.e. the price on carbon is implicit. On the other end of the spectrum, coal and other solid fossil fuels, which are mostly used in the industry and electricity sectors (Figure 2.3, Panel B) face relatively low ECRs (at an average of almost EUR 4/tCO2 for taxes and EUR 13/tCO2 for ETSs when priced by the respective instruments) and are mainly priced through ETSs even though they still have one third of their emissions unpriced. Natural gas which is used in the buildings, electricity and industry sectors also has a large share of its emissions unpriced, resulting in an average ECR of EUR 11.5/tCO2. Fuels such as natural gas and LPG, which are important in the buildings sector often face reduced tax rates or exemptions, particularly when applying in the residential sector. Fuels used in industry may also face reduced rates when their industrial users are also subject to an ETS.
2023, 79 countries, CO2 emissions from energy use.
Note: The figure shows both the level of pricing of and the share of emissions covered by fuel excise taxes, carbon taxes and emissions trading systems – by fuel category. It thus also highlights the variation in carbon pricing instruments across fuel categories. CO2 emissions from energy use are based on the IEA World Energy Balances (IEA, 2025[1]). The smallest fuel category (“Misc.*”) not legible in the figure includes fuel oil & non-renewable waste. Fuel excise tax rates are typically set per unit of volume or weight (e.g., litre, kilogram, cubic metre) or per unit of energy (e.g., gigajoule) and these rates have been translated into a price per tonne of CO2, based on the carbon content of these fuels, relying on calorific factors from the IEA World Energy Statistics and Balances (IEA, 2025[1]) and IPCC emissions conversion factors (IPCC, 2006[4]). All rates are expressed in real 2023 EUR using the latest available OECD exchange rate and inflation data.
Reading note: cf. reading note for Figure 2.5.
Between 2021 and 2023, global coverage of emissions by carbon pricing instruments changed little (Table 2.2). ETSs have gone from covering about 20% of GHG emissions in 2021 to 22% in 2023. This increase in coverage stems from reforms to existing systems, as well as the introduction of trading in the Australian Safeguard Mechanism and of new ETSs such as the Indonesia Economic Value of Carbon Trading Scheme, the Austria national ETS and the Washington Cap-and-Invest Program. New carbon taxes were introduced in Hungary and Uruguay as well as five States in Mexico (Durango, Guanajuato, Queretaro, State of Mexico, Yucatan)7 between 2021 and 2023, but they hardly increased total emissions coverage. While carbon pricing coverage did not significantly evolve on a global scale, some of these new initiatives did have an important impact on individual countries’ coverage of emissions (Table 2.1).
2018, 2021, 2023
Note: The table captures novel ETS systems or carbon taxes, and thus includes system evolution and transitions within the same jurisdiction even though they may not involve geographical expansion (e.g the UK ETS established following Brexit, or successive system changes in Canada).
* Due to data limitations, the Hungarian carbon tax has not yet been modelled.
** Since the Guanajuato carbon tax was implemented in July 2023, it has not been modelled yet (since taxes are as of 1 April 2023 - see Annex A).
*** Due to data limitations, the Mexico national ETS is generally not accounted for in ETS coverage or price estimates and not displayed in Figures.
ETSs prices are generally higher than carbon taxes and have increased more than carbon tax rates between 2021 and 2023 (Table 2.2). While the average permit price was almost the same as the average carbon tax rate in 2018, the gap between ETS prices and carbon taxes widened in 2021, with a slower divergence between 2021 and 2023 (see also OECD (2023[3]; 2024[5])).8 In 2023, the average carbon tax rate is of EUR 15.1/tCO2e and the average permit price is of EUR 20.2/tCO2e. Note that ETS permit prices represent marginal ETS price signals, i.e. the cost of buying an additional emission allowance. The availability of free allowances reduces the average price paid for each tonne of CO2e emissions, i.e. affects average ETS price signals, which are further discussed in section 2.4.
ETSs have been the main driver of changes in coverage and levels of ECRs between 2018 and 2023 – as compared to both carbon taxes and fuel excise taxes. Between 2018 and 2023, coverage of carbon taxes hardly evolved, remaining at around 5%, while that of ETSs more than doubled, from 10% to almost 22%. The evolution in ETS coverage is also in contrast with fuel excise taxes, the coverage of which has remained around 24% over the same period. One possible explanation for this trend in coverage may be the following: fuel excise taxes and carbon taxes are primarily used in the buildings and transport sectors, which represent less emissions than electricity and industry (Figure 2.2), where ETSs are mostly used (Figure 2.5) and are expanding. Over the 2018 – 2023 period, average carbon tax rates increased from EUR 14 to 15/tCO2e and average ETS permit prices rose from EUR 13 to 20/tCO2e. In contrast, fuel excise tax rates declined during this period. Nevertheless, in 2023, the average fuel excise tax rate when expressed in EUR per tonne of CO2 remained significantly higher than carbon tax rates and ETSs prices, at EUR 55/tCO2.
71 countries
Note: Permit prices and tax rates were converted into (constant) 2023 EUR using the latest available OECD exchange rate and inflation data. The average ECR level by instrument is equal to the emissions-weighted conditional average of carbon tax rates for emissions priced by carbon taxes, of permit prices for emissions priced by ETSs and of fuel excise tax rates for emissions priced by fuel excise taxes. Fuel excise tax rates are typically set per unit of volume or weight (e.g., litre, kilogram, cubic metre) or per unit of energy (e.g., gigajoule) and these rates have been translated into a price per tonne of CO2, based on the carbon content of these fuels, relying on calorific factors from the IEA World Energy Statistics and Balances (IEA, 2025[1]) and IPCC emissions conversion factors (IPCC, 2006[4]). The table presents figures across the 71 countries covered in the Carbon Pricing and Energy Taxation database in 2018 (see Annex A of OECD (2024[5]) for a list of countries covered in the different CPET vintages), in order for comparisons to be possible.
Differences with previous editions: Similar data points were presented in OECD (2022[6]), OECD (2023[3]) and OECD (2024[5]), though exact values across reports may not be equal because of e.g. changes in the emissions base or of the base year of EUR values. Coverage is equal to the share of the corresponding year’s emissions covered by the respective instruments – and hence is not based on the same emissions base, as is the case in OECD (2022[6]) and OECD (2024[5]). OECD (2023[3]) presents coverage based on CO2 emissions from energy use.
In 2023, in the 79 countries considered in this report, there are 34 ETSs covering emissions in 41 countries. The emissions of the 41 countries account for 70.5% of the sample’s GHG emissions, and these countries have 32% of their GHG emissions covered by an ETS. ETSs apply at the supranational level in one instance, the national level in eleven instances and the subnational level in twenty-two instances (Table 2.1).
This report covers the following ETSs in place in 2023: the Australia Safeguard Mechanism, the Austria national ETS (NEHG), the Canadian systems (Alberta Technology Innovation and Emissions Reduction (TIER) Regulation, Canada Federal Output-Based Pricing System (FOBPS),9 New Brunswick Output-Based Pricing System, Newfoundland and Labrador Performance Standards System (PSS), Nova Scotia Output-Based Pricing System for Industry, Ontario Emissions Performance Standards (EPS), Québec Cap-and-Trade System, Saskatchewan Output-Based Performance Standards), the Chinese national ETS, the Chinese Pilot ETSs (Beijing, Chongqing, Fujian, Guangdong, Hubei, Shanghai, Shenzhen, Tianjin), the European Union (EU) ETS, the German national ETS (nEHS), Indonesia’s Economic Value of Carbon (Nilai Ekonomi Karbon) Trading Scheme, the Japanese subnational ETSs (Saitama Target Setting ETS and Tokyo Cap-and-Trade System), the Kazakhstan ETS, the Korean Emissions Trading System, the Mexico National ETS,10 the New Zealand ETS, the Swiss ETS, the United Kingdom (UK) ETS, all United States (US) subnational ETSs (California Cap-and-Trade, the Regional Greenhouse Gas initiative (RGGI), Massachusetts Limits on Emissions from Electricity Generators, Washington Cap-and-Invest).
In 2023, the share of GHG emissions covered by ETSs in different countries varies substantially, ranging from about 2% in Japan to 84% in Germany (Figure 2.7, Panel A).11 The share of a country’s emissions covered by ETSs depends on various factors, including sectoral coverage, the level of application of the ETS (supranational, national, subnational), and whether in the case of subnational ETSs, these span an important share of the country’s emissions (e.g. the Canadian Province or Territory-level ETSs) or not (e.g. the two Japanese city-level ETS).
Average 2023 permit prices range from EUR 0.6/CO2e to EUR 84/CO2e across systems (Figure 2.7, Panel B).12 16 systems had an average 2023 permit price equal to or above EUR 30/tCO2e, and 3 above EUR 60/tCO2e. It should be noted, however, that these yearly average permit prices can hide important volatility within the year (OECD, 2023[3]). For instance, in 2023, EU ETS permit prices ranged between about EUR 66/tCO2e and EUR 97/tCO2e, resulting in an average permit price over 2023 of EUR 84/tCO2e.
Note: Panel A: Countries are presented first with data sorted by share of emissions priced (descending), followed by supranational systems. GHG emissions expressed in CO2e. In the Carbon Pricing and Energy Taxation database, sectors corresponding to agriculture and fisheries, buildings, electricity, industry, off-road transport and road transport make up CO2 emissions from energy use. Other GHG emissions cover CH4, N2O and F-gas emissions as well as CO2 emissions from industrial process; they exclude LUCF. Panel B: Average permit price over 2023. Permit prices from the primary market when available, else from the secondary market (see Annex B for more detail on permit price sources). Country averages are emissions-weighted averages of the 2023 permit prices of applicable schemes, conditional on ETS coverage. Data are sorted by country alphabetical order, price (ascending) with the country average appearing last, supranational systems. EU ETS countries feature only in the case where national systems are also in operation, which is the case in Austria and Germany. Note that average permit prices refer to permit prices averaged over the year 2023. This does not refer to the EACR concept, where the ETS-related price signal weights permit prices by the share of allowances not received for free.
In 2023, all ETSs include the electricity or industry sector in their scope (Figure 2.7, Panel A and Table 2.A.1). Electricity sector emissions are partly covered by all ETSs with the exception of the German and Austrian national ETSs as well as some Chinese Pilot ETSs since the inception of the Chinese national ETS in 2021. Almost all ETSs (with the exception of the Indonesian ETS) cover a part of the industry sector (Annex B), as in most cases even ETSs covering only emissions from power plants extend in part to the industry sector through their coverage of captive power plants.13
All sectors have part of their emissions covered by ETSs. In 2023, about 58.5% of the 79-country sample’s electricity sector CO2 emissions are covered by an ETS. This stems in large part from (i) the Chinese national ETS, which covers China’s power sector emissions and the EU ETS, which covers almost all of EU countries’ as well as Iceland, Liechtenstein and Norway’s power sector emissions, combined with (ii) the Chinese electricity sector’s CO2 emissions accounting for about 48% of total emissions from the electricity sector and the EU ETS countries’ for about 4%. The industry sector’s CO2 emissions from energy use come next, with about 15.4% of total emissions covered by an ETS. Almost 8% of the buildings’ sector CO2 emissions are covered by an ETS, and this mostly comes from the introduction of the German national ETS. Indeed, the German buildings sector makes up 4% of total buildings CO2 emissions. The most targeted off-road transport emissions are from aviation (67% of covered emissions from off-road transport) and pipeline transport (11%). Other GHG emissions covered are mostly from industrial process emissions: even when ETSs cover only CO2 emissions, if they cover industry, they generally include both energy-related and industrial process-related emissions (see Annex B for more details). The road transport sector is mostly covered upstream through systems such as the New Zealand’s ETS or the Austrian and German national ETSs (Annex B).
In most ETSs, covered entities receive emission allowances for free, with wide variations in the share of free allowances across systems. The shares of free allocation of allowances in total verified emissions are presented by system in Figure 2.8, Panel A. Free allowances can ease the transition for industries with carbon-intensive processes into an ETS and can be used to protect firms against competitiveness losses and to reduce carbon leakage risks. The decision to allocate allowances for free thus depends on many factors, including the maturity of the ETS, the market structure and the energy (or emission) intensiveness and trade exposure of sectors targeted. In 2023, the share of free allocation of allowances varies widely across systems, ranging from 100% in Japanese ETSs or the Chinese national ETS, for instance, to almost 0% in RGGI and the Massachusetts Limits on Emissions from Electricity Generators (310 CMR 7.74). Some systems have a provision for auctions to take place even when in practice most allowances are allocated for free. For instance, all Chinese pilot ETSs have the possibility of organising auctions, but only 3 of them held auctions in 2023 (Beijing, Hubei and Shanghai)14 (ICAP, 2025[7]).
The shares of free allowances differ across sectors, with the highest shares in the electricity and industry sectors as well as the “other GHG” category (Figure 2.8, Panel B). In 2023, in the electricity and industry sectors, whose emissions are predominantly priced through ETSs (Figure 2.5), respectively 91% and 87% of allowances are allocated for free. The off-road transport sector receives 62% of allowances for free, consistent with emissions from aviation generally receiving high shares of free allowances. Since other GHG emissions covered are mostly from industrial process emissions, the share of free allowances received for this category is comparable to that received for industry CO2 emissions from energy use, though slightly higher (96%). These global sectoral shares, however, hide variations across systems (Table 2.A.1): for instance, the electricity sector receives negligeable shares of free allowances in the EU ETS, the RGGI, the Swiss ETS and the UK ETS.
Note: Panel A: The EU ETS applies to all EU countries as well as Iceland, Liechtenstein and Norway. The individual EU countries are not presented in Panel A, unless they have a national ETS in place as well, which is the case in Austria and Germany. Mexico’s ETS is not presented here due to lack of information. Canada, China, Japan and the United States each have sub-national ETSs (along with the national ETS for China), and the ETS-level as well as the resulting country-level shares of free allocation of allowances in total verified emissions are presented here. Agri. & Fish. stands for Agriculture and Fisheries (fuel combustion-related emission).
While free allocation of allowances generally maintains marginal price signals, it affects average price signals. When free allowances may be traded, they maintain the marginal price signal faced by firms because even if entities receive free allowances, reducing their emissions (or emission intensity) allows them to sell extra permits while emitting more (or being more emission-intensive) requires them to buy additional permits. And even if they emit exactly what they have been allocated, they face an opportunity cost as they forgo the income they would have gotten from reducing their emissions and selling those extra permits. However, the average price paid by entities for permits does depend on the level of free allowance received (OECD, 2023[3]).
The wedge between the marginal and average carbon prices arising from ETSs is captured by the difference between Effective Average Carbon Rates (EACR) and Effective Marginal Carbon Rates (EMCR). The EMCR or ECR is the main indicator used in this report: it summarises the marginal carbon rates faced by subsectors, sectors or countries. The EACR, on the other hand, summarises the average carbon rates they face.15 The EMCR measures the strength of the marginal incentive to reduce emissions provided by carbon prices and fuel excise taxes while the EACR represents the strength of the incentives to invest in longer-term decarbonisation and provides an estimate of the carbon pricing and fuel excise tax-related costs faced by firms (see section 1.2 of this report and Box 4.1 of OECD (2021[8])).
The difference between EMCRs and EACRs is largest in the electricity and industry sectors (Figure 2.9). Figure 2.9 presents results at the sector level and Table 2.A.1 presents results by sector for each country or group of countries with an ETS. The discrepancy between EMCR and EACR varies with the share of free allocation in the ETS systems as well as the share of the sector’s emissions priced through ETSs. For instance, in off-road transport there can be a non-negligeable gap between marginal and average carbon prices hence EMCRs and EACRs in certain countries, but this is less evident at the global level since a relatively small share of this sector’s emissions is priced by ETSs (Figure 2.5). Another example is that of Japan, where even though allowances are allocated at 100% for free in the Tokyo Cap-and-Trade System and the Saitama Target Setting Emissions Trading System, given that these two systems price about 1.6% of the country’s emissions (Figure 2.7), the high share of free allocation hardly lowers the country’s EACR, since in Japan ECRs are mostly driven by fuel excise and carbon taxes (Figure 2.A.2). In most countries with ETSs, however, the EACR is at least halved as compared to the EMCR in the industry sector and (in less cases) in the electricity sector (Table 2.A.1). At the sector level, the EMCR is of EUR 9/tCO2e in the electricity sector and of EUR 8/tCO2e in the industry sector whereas the EACR is of respectively EUR 5/tCO2e and 3/tCO2e.
2023, 79 countries.
Note: The EACR is a metric that accounts for free allowances received by entities when calculating the ETS price signal in different sectors – it does not account for the impact of different compliance options provided in carbon taxes and ETSs which could also drive a wedge between the marginal price signal and the average price signal (see example in Box 4.2 for ETSs).
References
[2] Climate Watch (2025), Historical GHG Emissions, https://www.climatewatchdata.org/ghg-emissions (accessed on 2025).
[15] DEE of Guangdong Province (2024), Notice of the Guangdong Provincial Department of Ecology and Environment on the Issuance of the Guangdong Provincial Carbon Emission Quota Allocation Plan for 2023, https://gdee.gd.gov.cn/shbtwj/content/post_4330650.html (accessed on 30 June 2025).
[12] Flammini, A. et al. (2022), “Emissions of greenhouse gases from energy use in agriculture, forestry and fisheries: 1970–2019”, Earth System Science Data, Vol. 14/2, pp. 811-821, https://doi.org/10.5194/essd-14-811-2022.
[7] ICAP (2025), Emissions Trading Worldwide: Status Report 2025., Berlin: International Carbon Action Partnership., https://icapcarbonaction.com/system/files/document/250409_icap_sr25_final.pdf.
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[13] IPCC (2023), “Agriculture, Forestry and Other Land Uses (AFOLU)”, in Climate Change 2022 - Mitigation of Climate Change, Cambridge University Press, https://doi.org/10.1017/9781009157926.009.
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[3] OECD (2023), Effective Carbon Rates 2023: Pricing Greenhouse Gas Emissions through Taxes and Emissions Trading, OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris, https://doi.org/10.1787/b84d5b36-en.
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This Annex presents some of the data at the country-level to complement the data presented at the sector or global level in Chapter 2. The figures highlight significant cross-country variations in composition of GHG emissions, ECRs and ECR instruments, levels and coverage.16
78 countries.
Note: Other GHG emissions refer to methane and nitrous oxide from energy use, fugitive emissions, industrial process emissions (including F-gases), non-fuel based agricultural emissions and waste emissions. GHG emissions data combines data on CO2 emissions from energy use, based on the IEA World Energy Balances (IEA, 2025[1]), with “other GHG emissions” data from CAIT (Climate Watch, 2025[2]). . The “other GHG emissions” data is for 2022, while the data on CO2 emissions from energy use is for 2023 for OECD and G20 countries as well as Cyprus and Kazakhstan, and 2021 otherwise.
2023, 78 countries.
Note: Effective carbon rates are averaged across all GHG emissions, excl. LUCF, including those emissions that are not covered by any carbon pricing instrument, for each of the 78 countries. Effective Average Carbon Rates account for free allocation of allowances in emissions trading systems (see section 2.4). All rates are expressed in 2023 EUR using the latest available OECD exchange rate and inflation data. Prices are rounded to the nearest eurocent. Other GHG emissions data are from CAIT (Climate Watch, 2025[2]), while the data on CO2 emissions from energy use are based on the IEA World Energy Balances (IEA, 2025[1]).
Effective carbon rates vary across countries (Figure 2.A.2), depending on the kinds of instruments used, their coverage (Figure 2.A.3) and rates. ECRs are generally higher in countries with carbon pricing instruments. Many countries combine carbon taxes and emissions trading systems. EACRs and EMCRs differ more when ETSs cover more emissions and when the share of free allowances is high. Sectoral differences within countries are presented in Table 2.A.1.
2023, 78 countries. Shares are presented in percent.
Note: Shares covered by ECRs are often less than sum of the shares covered by its components due to overlapping instruments. Percentages are rounded to the first decimal place. Other GHG emissions data are from CAIT (Climate Watch, 2025[2]), while the data on CO2 emissions from energy use are based on the IEA World Energy Balances (IEA, 2025[1]).
2023, in EUR
Note: n.a. not applicable. Free allocation shares greater than 1 were normalised to 1. The EACR is also calculated following this standardisation.
EMCR and EACR are averaged across all emissions in a sector, including those emissions that are not covered by any carbon pricing instrument.
ETS prices are conditional averages weighted by the emissions covered by the operational systems identified in a given sector. *The EU ETS
here is considered without Austria and Germany, which have their own ETS. Austrian and German ETS coverage in this table is meant as coverage by the EU ETS and their national ETSs.
← 1. Carbon prices and energy taxes can overlap (see Figure 2.5, Figure 2.6), which explains why a 27% carbon pricing coverage and a 24% fuel excise tax coverage add up to a 44% ECR coverage.
← 2. This results in CO2 emissions from energy use in these sectors each representing above 26% of total GHG emissions.
← 3. However, for both sectors, other emissions which can be larger are not accounted for in these estimates. Emissions from the off-road transport sector presented here restrict to domestic emissions. International maritime and aviation emissions respectively make up 3% and 2.5% of global CO2 emissions from energy use (IMO, 2021[10]; IEA, 2023[11]). GHG emissions from fuel use in the agriculture, forestry and fisheries sector only represents a small share of GHG emissions from this sector (less than 8%, according to data from Flammini et al. (2022[12]) and IPCC (2023[13])).
← 4. High taxation rates in this sector may also reflect the pricing of other externalities caused by road transport, such as air pollution, accidents, congestion and noise, or can reflect revenue raising objectives.
← 5. Both of which are classified as carbon taxes, see Background Notes on taxes (OECD, 2024[9]). It is to be noted that in June 2025, the Dutch Parliament voted to abolish the national carbon levy, see Box 3.1.
← 6. See https://njt.hu/jogszabaly/2023-320-20-22#SZ1, as accessed on 30/06/2025.
← 7. However, the carbon tax in the Mexican State of Baja California was also abolished between 2021 and 2023.
← 9. Over the course of 2023, the federal OBPS was operational in Manitoba, Nunavut, Prince Edward Island and Yukon.
← 10. Due to data limitations, the Mexico national ETS is generally not accounted for in ETS coverage or price estimates and not displayed in Figures.
← 11. Due to different underlying databases and methodologies, ECR instrument coverage estimates may differ from those computed by individual governments.
← 12. Note that average permit prices refer to permit prices averaged over a year or across multiple countries. This does not refer to the EACR concept, where the ETS-related price signal weights permit prices by the share of allowances not received for free. Average 2023 permit prices refer to permit prices averaged over year 2023.
← 13. See CPET sector definitions in Annex A, Table A A.1, with autogeneration of electricity included in the industry sector.
← 14. And in 2023, in the Guangdong Pilot ETS, the quota was distributed partially free of charge and partially for a fee (DEE of Guangdong Province, 2024[15]).
← 15. The EACR component related to ETSs is equal to: EACRETS = EMCRETS x (1-share of (tradeable) free allowances). This gives an indication of the average price signal implied by ETSs and differs from the split of the ETS base into the base covered by (tradeable) free allowances and that not covered by free allowances.
← 16. Due to different underlying databases and methodologies, ECR instrument coverage estimates may differ from those computed by individual governments.