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.


  • 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.


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Taxing Energy Use - Using Taxes for Climate Action

Taxing Energy Use provides unique information on energy and carbon taxes in OECD and G20 countries. Tax rates and tax base coverage are detailed by country, sector, energy source and tax type. The use of a common methodology ensures full comparability of tax rates and structures across countries. Summary indicators facilitate cross-country comparisons. Well-designed energy tax systems encourage citizens and investors to favour clean over polluting energy sources. Reforming energy tax systems is a key component in the fight against climate change and delivers co-benefits in the form of reduced health damages from local air pollution.

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Effective Carbon Rates - Pricing CO2 through Taxes and Emissions Trading Systems

Decarbonisation keeps climate change in check and contributes to cleaner air and water. Countries can price CO2-emissions to decarbonise their economies and steer them along a carbon-neutral growth path. Are countries using this tool to its full potential? This report measures carbon pricing of CO2-emissions from energy use in 42 OECD and G20 countries, covering 80% of world emissions. The analysis takes a comprehensive view of carbon prices, including specific taxes on energy use, carbon taxes and tradable emission permit prices. The ‘carbon pricing gap’ measures how much the 42 countries, together as well as individually, fall short of pricing emissions in line with levels needed for decarbonisation.




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

The key objective was to adopt the implementation guidelines of the Paris Climate Change Agreement.

The OECD actively contributed 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.





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