Effective Carbon Rates 2025

Annexe A. Effective Carbon Rates methodology

The CPET database presents the Effective Carbon Rates measure of prices arising from carbon pricing instruments (carbon taxes and ETSs) as well as from fuel excise taxes and their mapping to the GHG emissions they cover for each country by sector and fuel, as well as by instrument (i.e. the measure can also be broken down by the ETS, carbon tax and fuel excise tax components). The term “carbon tax” is used to cover the broad range of all taxes that apply to greenhouse gases (including taxes on fluorinated gases (F-gases), for instance). The pricing instruments covered by ECRs either set an explicit price per unit of GHG (e.g., tonnes) or set a price per unit of fuel, which is then proportional to resulting CO₂ emissions.

Sectors and fuels

The CPET database covers CO₂ emissions from energy use from six sectors that together span all energy uses and also covers other GHG emissions (i.e. emissions from methane (CH₄), nitrous oxide (N₂O), fluorinated gases (F-gases) and CO₂ from industrial processes) excluding Land use change and Forestry (LUCF). Due to data limitations1 and to facilitate comparisons with previous ECR vintages, other GHG emissions are not allocated to the six economic sectors but are considered as a separate category. All sectors’ emissions are their Scope 1 emissions (Greenhouse Gas Protocol, 2011[1]). The six economic sectors and the other GHG category are further detailed in Table A A.1 and Table A A.2.

Table A A.1. CPET sectors and energy users responsible for CO₂ emissions from energy use and other GHG emissions category

Sector	Definition	Subsectors (energy users)
CO2 emissions from energy use
Road transport	Fossil fuel CO2 emissions from all primary energy used in road transport.	Road
Electricity	Fossil fuel CO2 emissions from primary energy used to generate electricity (excl. autoproducer electricity plants which are assigned to industry), including for electricity exports. Electricity imports are excluded.	Main activity producer electricity plants
Industry	Fossil fuel CO2 emissions from primary energy used in industrial facilities (incl. district heating and auto-producer electricity plants).	Adjusted losses in energy distribution, transmission and transport; Adjusted energy industry own use; Adjusted transformation processes; Auto-generation of electricity; Chemical and petrochemical; Construction; Food and tobacco; Industry not elsewhere specified; Iron and steel; Machinery; Mining and quarrying; Non-ferrous metals; Non-metallic minerals; Paper, pulp and print; Sold heat; Textile and leather; Transport equipment; Wood and wood products
Buildings	Fossil fuel CO2 emissions from primary energy used by households, commercial and public services for activities other than electricity generation and transport.	Commercial and public services; Final consumption not elsewhere specified; Residential
Off-road transport	Fossil fuel CO2 emissions from all primary energy used in off-road transport (incl. pipelines, rail transport, aviation and maritime transport). Fuels used in international aviation and maritime transport are not included.	Domestic aviation; Domestic navigation; Pipeline transport; Rail; Transport not elsewhere specified
Agriculture & fisheries	Fossil fuel CO2 emissions from primary energy used in agriculture, fisheries and forestry for activities other than electricity generation and transport.	Agriculture; Fishing
GHG emissions other than CO2 from energy use
Other GHG (excl. LUCF)	All other GHG emissions include methane, nitrous oxide from agriculture; fugitive emissions from oil, gas and coal mining activities; waste; non-fuel combustion CO2 emissions from industrial processes (mainly cement production), N20 and CH4 emissions from industrial processes and F-gas emissions. Excludes LUCF emissions. Excludes CO2 emissions from fuel combustion which are already reported in the agriculture & fisheries sector (since these are from energy use).	n.a.

Note: Estimates of primary energy use are based on the territoriality principle, and include energy sold in the territory of a country but potentially

used elsewhere (e.g. because of fuel tourism in road transport). Own classification based on information on energy flows contained in the IEA’s

extended world energy balances (IEA, 2025[2]) and “other GHG” reported in the Climate Watch dataset (Climate Watch, 2025[3]).

Source: OECD (2016[4]; 2022[5]).

Table A A.2. Climate Watch “Other GHG” data

Description of the data used for the CPET database: sectors, content, gases, sources

Climate Watch Sector	Sector Contents	IPCC Category	Greenhouse Gases	Source
Energy
Electricity / Heat	Electricity & heat plants (fossil fuels) – Public plants & Auto-producers (electricity, heat, CHP)	1A1a	(CO₂,) CH₄, N₂O	IEA*
	Other Energy Industries (fossil fuels)	1A1b,c	(CO₂,) CH₄, N₂O	IEA*
Manufacturing / Construction	Manufacturing & construction (fossil fuels)	1A2	(CO₂,) CH₄, N₂O	IEA*
Transportation	Transportation (fossil fuels)	1A3	(CO₂,) CH₄, N₂O	IEA*
Buildings	Residential, Commercial and Public Services	1A4a, b	(CO₂,) CH₄, N₂O	IEA*
Other fuel combustion	Agriculture, Fishing, and Other Fuel Use	1A4c, 1A5	(CO₂,) CH₄, N₂O	IEA*
Fugitive emissions	Coal Mining	1B1	CH₄	IEA*, U.S. EPA
	Natural Gas and Oil Systems	1B2	(CO₂,) CH₄	IEA*
	Other Emissions Sources	1B2, 1A6	(CO₂,) CH₄, N₂O	U.S. EPA
Industrial Processes
	Cement	2A1	CO₂	Andrew R.M.
	Adipic and Nitric Acid Production	2B2, 3	N₂O	U.S. EPA
	Electronics Manufacturing	2E1, 2, 3	Aggregated F-Gases	U.S. EPA
	Electric Power Systems	2G1	SF₆	U.S. EPA
	Metals (Aluminum, Magnesium)	2C3, 4	PFCs, SF₆	U.S. EPA
	Use of Substitutes for ODS	2F1-6	HFCs	U.S. EPA
	HCFC-22 Production	2B9a	HFCs	U.S. EPA
	Other Industrial Process Sources	2A, B, C	CH₄, N₂O	U.S. EPA
Agriculture
	Enteric Fermentation	3A1	CH₄	FAOSTAT
	Manure Management	3B2	CH₄, N₂O	FAOSTAT
	Rice Cultivation	3C7	CH₄	FAOSTAT
Waste
	Landfills (Solid Waste)	4A	CH₄	U.S. EPA
	Wastewater Treatment	4D	CH₄, N₂O	U.S. EPA
	Other Non-Agricultural Sources (Waste and Other)	4E	CH₄, N₂O	U.S. EPA

Note: The description of the Bunker Fuels and LUCF sectors is not included in this table as these sectors are not part of the emissions base of the CPET database.

* GCP (GCP, 2025[6]) data is used in energy sectors to fill gaps where IEA data is not available.

Source: World Resources Institute (2024[7]).

The CPET data may also be broken down by fuel. Fuels are grouped into nine categories, described in Table A A.3.

Table A A.3. Fuel category breakdown

Energy type	Fuel category	Energy Products
Fossil fuels	Coal and other solid fossil fuels	Anthracite; Bitumen; Bituminous coal; Brown coal briquettes; Oven coke; Coking coal; Gas coke; Lignite; Oil shale; Patent fuel; Peat; Peat products; Petroleum coke; Sub-bituminous coal
	Fuel oil	Fuel oil
	Diesel	Gas/diesel oil excluding biofuels
	Kerosene	Jet kerosene; Other kerosene
	Gasoline	Aviation gasoline; Jet gasoline; Motor gasoline
	LPG	Liquefied Petroleum Gas
	Natural gas	Natural gas
	Other fossil fuels and non-renewable waste	Additives; Blast furnace gas; Coal tar; Coke oven gas; Converter gas; Crude oil; Ethane; Gas works gas; Lubricants; Naphtha; Natural gas liquids; Other hydrocarbons; Other oil products; Paraffin waxes; Refinery feedstocks; Refinery gas; White and industrial spirit; Industrial waste; Non-renewable municipal waste
Biofuels	Biofuels	Bio jet kerosene; Biodiesels; Biogases; Biogasoline; Charcoal; Municipal waste (renewable); non-specified primary biofuels and waste; Other liquid biofuels; Primary solid biofuels

Note: Energy products are defined as in IEA (IEA, 2025[8]). Emissions from the combustion of biofuels are not included in this edition.

Source: OECD (2019[9])

Instrument choice

The ECR indicator covers pricing instruments that apply to a base that is directly proportional to energy use or GHG emissions. It therefore excludes taxes and fees that are only partially correlated with energy use or GHG emissions – e.g. vehicle purchase taxes, registration or circulation taxes, and taxes that are directly levied on air pollution emissions (e.g. the Danish tax on SOX or the Swedish NOx fee). Production taxes on the extraction or exploitation of energy resources (e.g. severance taxes on oil extraction) are not within the scope of instruments covered either, as supply-side measures are not directly linked to domestic energy use or emissions.

The database covers specific taxes and instruments that encourage a switch away from carbon-intensive fuels by changing relative prices. In line with these two criteria, value added taxes (VAT) or sales taxes are not accounted for. Indeed, in principle VAT applies equally to a wide range of goods, so does not change the relative prices of products and services (i.e. it does not make carbon-intensive goods and services more expensive relative to cleaner alternatives). In practice, differential VAT treatment and concessionary rates may target certain forms of energy use, thereby changing their relative price (OECD, 2015[10]). However, quantifying the effects of differential VAT treatment is beyond the scope of the database as it is not a specific tax. Moreover, such an exercise would entail extensive price information, which is generally not available for all energy products. Also, electricity excise taxes do not treat fossil fuels in a differential manner as compared to clean sources and are therefore not part of the ECR indicator.

The ECR indicator includes support measures for fossil fuel consumption that are delivered through the tax code, such as excise or carbon tax exemptions, rate reductions and refunds, which are pervasive in energy tax and carbon pricing systems. This is different from the Net ECR (nECR) database, which includes also fossil fuel subsidies that lower pre-tax prices (budgetary transfers). Indeed, the availability of preferential treatment varies substantially across countries, and even within a country such preferential treatment frequently changes over time. As a result, simply comparing statutory rates (also sometimes referred to as standard or advertised rates) across countries and time would be misleading. More precisely, certain energy users or GHG emitters frequently enjoy preferential treatment that effectively reduces prices on energy or emissions. Therefore, effective carbon tax rates measured by the database are adjusted accordingly irrespective of whether countries report such policy measures as tax expenditures (OECD, 2022[5]).2

General ECR methodology, data cycles and content of current report

Once data on ETS permit prices and coverage is gathered, the Effective Carbon Rates (resp. Net ECR) indicator then builds on the fuel excise tax and carbon tax data (resp. and fossil fuel subsidies budgetary transfers data). The first publication of Effective Carbon Rates describes the methodology for matching ETS permit prices and coverage with taxes (OECD, 2016[4]). In particular, carbon taxes are often entirely or partially alleviated if the energy user is subject to an ETS. This is reflected once the tax data is merged with the ETS information to generate the Effective Carbon Rates. The ECR calculation process entails two data gathering cycles: a first cycle that gathers data on taxes and fossil fuel subsidies for a given year (e.g. 2023), and a second cycle that gathers data on ETS coverage and permit prices for the previous year (still 2023) as well as maps these instruments to the same year emissions base data.

Effective carbon rates in 2023 consist of tax rates as of 1 April 2023 and permit prices from ETSs averaged over 2023. Where available, the coverage of emissions trading systems is estimated based on data by the authorities governing the respective systems (see Annexe B). The fuel excise and carbon taxes data is described in the background notes available at OECD (2024[11]). In this publication, CO₂ emissions from energy use data is for 2023 when available, namely OECD and G20 countries plus Cyprus and Kazakhstan and for 2021 elsewhere.3 It is based on energy use data from the International Energy Agency’s World Energy Statistics and Balances (IEA, 2025[2]). Other GHG emissions data is for 2022 and is from the CAIT database (Climate Watch, 2025[3]). Official exchange rate and inflation data are used to express prices in constant terms when required and noted.

Notes

← 1.  In particular the energy-related non-CO₂ emissions of heat and electricity may not be disentangled and attributed to the respective CPET sectors/subsectors.

← 2.  This represents a different approach from the OECD’s Inventory of Fossil Fuel Support. See Box 1.2 of (OECD, 2022[5]) for additional details on the difference in approaches.

← 3.  In the accompanying database to be published later this year on the OECD Data Explorer, the CO₂ emissions from energy use base data will be updated to 2023 for all 79 countries.