OECD report flags big gaps in carbon pricing

Published 12:02 on December 7, 2015  /  Last updated at 23:06 on September 15, 2020  /  Carbon Taxes, Climate Talks, International  /  No Comments

Some 60% of emissions from energy use in major economies are not subject to any carbon price and most of those that are have price exposure well below the damage they cause to the climate, the OECD said in a report on Monday.

Some 60% of emissions from energy use in major economies are not subject to any carbon price and most of those that are have price exposure well below the damage they cause to the climate, the OECD said in a report on Monday.

The Effective Carbon Rates (ECR) on Energy study looked at the sum of carbon taxes and other levies on energy use, and emission permit prices for six economic sectors in 34 OECD countries and Argentina, Brazil, China, India, Indonesia, Russia and South Africa.

“The evidence leaves no doubt that carbon pricing policies are not being utilised to their full potential. Where stringent alternative policies are in place for emissions abatement, they are likely to be more costly than necessary. Higher ECRs will be needed to achieve climate goals, and in many cases they would bring co-benefits such as reducing air pollution or raising public revenue,” said the report, which was presented on the sidelines of the UN climate talks in Paris.

Findings include:

  • Across the 41 countries, 60% of CO2 emissions from energy use are subject to no ECR, 30% to €0-30/tCO2, and 10% above €30 – the low estimate of their cost to the climate.
  • Excluding road transport emissions, the ECR is zero for 70% of emissions, and 96% of emissions from energy use are subject to an ECR of less than €30/tCO2. In road transport, 46% of CO2 emissions are priced above €30/t.
  • In all countries the ECR consists predominantly of specific energy taxes, rather than carbon taxes. The prices of CO2 permits represent only a small part of total ECRs. The average ECR in road transport is much higher than in other sectors, as specific taxes on energy use are higher in road transport than in other sectors.

By Ben Garside – ben@carbon-pulse.com

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