Effective Carbon Rates
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OECD, CTP/TPS Tax and Environment Unit ctp.contact@oecd.org

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The data was received and processed in Q1 of 2022.

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Energy use data was adapted from International Energy Agency (IEA) 2020, World Energy Statistics and Balances.
GHG are the sum of fossil-fuel related CO2 calculated based on energy use data for 2018 from IEA (2020), World Energy Statistics and Balances, and other GHGs from Climate Watch (2020), GHG Emissions (CAIT dataset), World Resources Institute.
ETS coverage estimates are based on the OECD’s (2021), Effective Carbon Rates 2021, with adjustments to account for recent coverage changes
Fossil fuel subsidy and electricity subsidiy estimates are based on the Inventory of Fossil Fuel Support where available and original research for the other countries (OECD, Forthcoming), Net Effective Carbon Rates. Due to data limitations, 2021 fossil fuel subsidy estimates are based on data for 2020.
Emission permit prices from Energy Exchanges, ETS registries and the ICAP Carbon Price Viewer.
IPCC emission factors
Tax and where necessary subsidy data was collected via publicly available official sources and consultation with government officials and independent experts who were asked to review and refine the data.

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OECD: Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Türkiye, United Kingdom and United States.
Non-OECD: Argentina, Bangladesh, Brazil, Burkina Faso, China, Côte d'Ivoire, Republic of Cyprus, Dominican Republic, Ecuador, Egypt, Ethiopia, Ghana, Guatemala, India, Indonesia, Jamaica, Kenya, Kyrgyzstan, Madagascar, Malaysia, Morocco, Nigeria, Panama, Paraguay, Peru, Philippines, Russia, Rwanda, South Africa, Sri Lanka, Uganda, Ukraine, Uruguay.

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The database focuses on pricing instruments that specifically 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. Common examples of policy instruments that fall outside the scope of the database include vehicle purchase taxes, registration or circulation taxes, and taxes that are directly levied on non-GHG emissions, such as the Danish tax on SOx. Some countries also apply production taxes on the extraction or exploitation of energy resources (e.g., severance taxes on oil extraction). Since these supply-side measures are not directly linked to domestic energy use or emissions, the database does not cover them either. Similarly, the database does not include value added taxes (VAT) or sales taxes. As VAT in principle applies equally to a wide range of goods, they do not change the relative prices of products and services (i.e. they do not make carbon-intensive goods and services more expensive than cleaner alternatives).

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Coal and other solid fossil fuels, Fuel oil, Diesel, Kerosene, Gasoline, LPG, Natural gas, Other fossil fuels and non-renewable waste, Biofuels (as memo item where appicable), Hydro, Solar, wind, ocean, Geothermal, Nuclear, Other electricity and heating sources and where applicable Other GHG (excl. LUCF)

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Road transport, off-road transport, buildings, industry, electricity, agriculture & fisheries and where applicable Other GHG (excl. LUCF).

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The Effective Carbon Rate (ECR) is the sum of fuel excise taxes, carbon taxes and tradeable permits that effectively put a price on carbon emissions. The Net ECR equals the ECR minus fossil fuel subsidies that decrease pre-tax fossil fuel prices.
The Effective Energy Rate (EER), adds electricity taxes to the components included in the ECR indicator; the Net EER indicator additionally accounts for fossil fuel and electricity subsidies. Electricity excise taxes and subsidies generally do not treat fossil fuels in a differential manner compared to clean sources and are therefore excluded from the Net ECR indicator.
EUR 60 per tonne of CO2 is a midpoint estimate for carbon costs in 2020, and a low-end estimate for 2030. Pricing all emissions at least at EUR 60 in 2020 shows that a country is on a good track to reach the goals of the Paris Agreement to decarbonise by mid-century economically. EUR 30 is a historic low-end estimate for carbon costs, and EUR 120 is a midrange estimate for carbon costs in 2030.
The share of emissions priced above EUR Y per tonne of CO2-equivalent shows the share of emissions within a country or sector with a carbon price that exceeds EUR Y in percent.
Revenue potential from fossil fuel subsidy and carbon price reform shows how much revenues would increase if Net ECRs were raised to reach a carbon benchmark of EUR 120 per tonne of CO2 for all fossil fuels. Revenue estimates use the elasticities described in D’Arcangelo, F. et al. (Forthcoming), “Estimating the CO2 emission and revenue effects of carbon pricing: new evidence from a large cross-country dataset”, and are attributed to the reform components based on the assumption that the reforms are implemented sequentially. Phasing out free allocation is assumed to not lead to behavioural change. Revenue estimates may be considered an upper bound of the actual revenue potential as they were estimated on historical data (fewer and more expensive low-carbon technologies, lower carbon prices, few developing countries in the sample). Estimates are for fossil fuel CO2 emissions and do not include the revenue potential from reforming the pricing of other GHG or biofuels. Current net revenues are a bottom-up estimate using the Net ECR dataset and may not correspond to the revenues collected in practice.
The revenue forgone indicator estimates how much revenue countries could gain by raising net effective carbon rates to a given benchmark. Estimates are for fossil fuel CO2 emissions and do not include the revenue potential from reforming the pricing of other GHG or biofuels. Unlike the related revenue potential indicator, revenue forgone does not account for behavioural responses to higher prices.
Net energy tax revenues are a bottom-up estimate of the net revenues resulting from taxes and subsidies on energy, and the revenues from auctioning emissions permits for energy-related CO2 (estimated based on OECD’s (2021), Effective Carbon Rates 2021). Bottom-up revenue estimates may not correspond to the actual revenues and expenditures, inter alia due to differences between the base year and the rate date. Subsidy estimates are for 2020 and are based on data on relevant budgetary transfers from the Inventory of Fossil Fuel Support where available and original research for the other countries (OECD, Forthcoming), Net Effective Carbon Rates.

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For comparisons across time and countries in real prices, OECD inflation and exchange rate data are used. Where OECD exchange rate period averages were not available, they were supplemented using IMF International Financial Statistics. Inflation gaps were supplemented using the World Bank’s World Development Indicators Consumer Prices.

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In this vintage of the dataset, the Net ECR when expressed in real EUR for a given unit of CO2-equivalent can decrease (increase) between 2018 and 2021 for several reasons:
The government reduced (increased) tax rates or introduced (abolished) exemptions, rate reductions or refunds that benefit the emitter. Fuel or carbon taxes have been abolished (introduced). Tax rates were not indexed to inflation and have therefore declined in real terms ceteris paribus
Emission Trading Scheme (ETS) permit prices were lower (higher) in real terms, ETS coverage has decreased (increased) or an ETS has been abolished (introduced).
Fossil fuel subsidies were higher (lower) in real terms.
The country used a currency other than EUR which has depreciated against the EUR over time.
Note that this vintage of the dataset keeps energy use and emissions constant. Changes over time are therefore not due to:
The calorific value of the fuel being taxed has changed, but the tax rate that is levied on a volumetric basis (such as litres) has remained the same.
There were changes in the composition of the energy mix away from sources with a high Net ECR to those with a lower Net ECR, which could affect the average Net ECR.

Click to expand Recommended uses and limitations
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The Net ECR captures carbon price signals (resulting from taxes and emissions trading systems, as well as fossil fuel subsidies), whereas the Net EER measures energy price signals (resulting from the Net ECR components plus electricity taxes and subsidies).

Effective Carbon RatesAbstract

Companion dataset to the OECD Series on Carbon Pricing and Energy Taxation.

The "Pricing Greenhouse Gas Emissions: Turning Climate Targets into Climate Action" report tracks how explicit carbon prices, energy taxes and subsidies – an important subset of climate policy instruments that directly alter the cost of emitting GHG or change electricity prices – have evolved between 2018 and 2021. Reforming these instruments could help to meet climate targets, lead to cleaner air and water, and improve public finances. The report covers 71 countries, which together account for approximately 80% of global GHG emissions and energy use. Explicit carbon prices, energy taxes and subsidies are detailed by country, sector, product and instrument. The use of a common methodology ensures comparability across countries. Summary indicators facilitate cross country comparisons and allow policy makers and the public to keep track of progress made and identify opportunities for reform.

Please cite as OECD (2022), Pricing Greenhouse Gas Emissions: Turning Climate Targets into Climate Action, OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris

Pricing Greenhouse Gas Emissionshttps://oe.cd/pricing-greenhouse-gas-emissions
Contact person/organisation

OECD, CTP/TPS Tax and Environment Unit ctp.contact@oecd.org

Data source(s) used

Energy use data was adapted from International Energy Agency (IEA) 2020, World Energy Statistics and Balances.
GHG are the sum of fossil-fuel related CO2 calculated based on energy use data for 2018 from IEA (2020), World Energy Statistics and Balances, and other GHGs from Climate Watch (2020), GHG Emissions (CAIT dataset), World Resources Institute.
ETS coverage estimates are based on the OECD’s (2021), Effective Carbon Rates 2021, with adjustments to account for recent coverage changes
Fossil fuel subsidy and electricity subsidiy estimates are based on the Inventory of Fossil Fuel Support where available and original research for the other countries (OECD, Forthcoming), Net Effective Carbon Rates. Due to data limitations, 2021 fossil fuel subsidy estimates are based on data for 2020.
Emission permit prices from Energy Exchanges, ETS registries and the ICAP Carbon Price Viewer.
IPCC emission factors
Tax and where necessary subsidy data was collected via publicly available official sources and consultation with government officials and independent experts who were asked to review and refine the data.

Date last input received

The data was received and processed in Q1 of 2022.

Base period

Tax rates and permit prices refer to the same base year. Due to data limitations, 2021 fossil fuel subsidy estimates are based on data for 2020. Effective tax rates for 2018 and 2021 are both mapped to 2018 energy use and emissions data, which facilitates comparisons between the two points in time, as changes in average rates are not affected by changes in the composition of energy use and GHG emissions. At the time of data collection, the latest available energy use, emissions, and ETS coverage data available for all countries was from 2018, which was used as a proxy for the 2021 base.

Date last updated

21-05-2022

Contact person

ctp.contact@oecd.org

Geographic coverage

OECD: Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Türkiye, United Kingdom and United States.
Non-OECD: Argentina, Bangladesh, Brazil, Burkina Faso, China, Côte d'Ivoire, Republic of Cyprus, Dominican Republic, Ecuador, Egypt, Ethiopia, Ghana, Guatemala, India, Indonesia, Jamaica, Kenya, Kyrgyzstan, Madagascar, Malaysia, Morocco, Nigeria, Panama, Paraguay, Peru, Philippines, Russia, Rwanda, South Africa, Sri Lanka, Uganda, Ukraine, Uruguay.

Sector coverage

Road transport, off-road transport, buildings, industry, electricity, agriculture & fisheries and where applicable Other GHG (excl. LUCF).

Product coverage

Coal and other solid fossil fuels, Fuel oil, Diesel, Kerosene, Gasoline, LPG, Natural gas, Other fossil fuels and non-renewable waste, Biofuels (as memo item where appicable), Hydro, Solar, wind, ocean, Geothermal, Nuclear, Other electricity and heating sources and where applicable Other GHG (excl. LUCF)

Other coverage

The database focuses on pricing instruments that specifically 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. Common examples of policy instruments that fall outside the scope of the database include vehicle purchase taxes, registration or circulation taxes, and taxes that are directly levied on non-GHG emissions, such as the Danish tax on SOx. Some countries also apply production taxes on the extraction or exploitation of energy resources (e.g., severance taxes on oil extraction). Since these supply-side measures are not directly linked to domestic energy use or emissions, the database does not cover them either. Similarly, the database does not include value added taxes (VAT) or sales taxes. As VAT in principle applies equally to a wide range of goods, they do not change the relative prices of products and services (i.e. they do not make carbon-intensive goods and services more expensive than cleaner alternatives).

Key statistical concept

The Effective Carbon Rate (ECR) is the sum of fuel excise taxes, carbon taxes and tradeable permits that effectively put a price on carbon emissions. The Net ECR equals the ECR minus fossil fuel subsidies that decrease pre-tax fossil fuel prices.
The Effective Energy Rate (EER), adds electricity taxes to the components included in the ECR indicator; the Net EER indicator additionally accounts for fossil fuel and electricity subsidies. Electricity excise taxes and subsidies generally do not treat fossil fuels in a differential manner compared to clean sources and are therefore excluded from the Net ECR indicator.
EUR 60 per tonne of CO2 is a midpoint estimate for carbon costs in 2020, and a low-end estimate for 2030. Pricing all emissions at least at EUR 60 in 2020 shows that a country is on a good track to reach the goals of the Paris Agreement to decarbonise by mid-century economically. EUR 30 is a historic low-end estimate for carbon costs, and EUR 120 is a midrange estimate for carbon costs in 2030.
The share of emissions priced above EUR Y per tonne of CO2-equivalent shows the share of emissions within a country or sector with a carbon price that exceeds EUR Y in percent.
Revenue potential from fossil fuel subsidy and carbon price reform shows how much revenues would increase if Net ECRs were raised to reach a carbon benchmark of EUR 120 per tonne of CO2 for all fossil fuels. Revenue estimates use the elasticities described in D’Arcangelo, F. et al. (Forthcoming), “Estimating the CO2 emission and revenue effects of carbon pricing: new evidence from a large cross-country dataset”, and are attributed to the reform components based on the assumption that the reforms are implemented sequentially. Phasing out free allocation is assumed to not lead to behavioural change. Revenue estimates may be considered an upper bound of the actual revenue potential as they were estimated on historical data (fewer and more expensive low-carbon technologies, lower carbon prices, few developing countries in the sample). Estimates are for fossil fuel CO2 emissions and do not include the revenue potential from reforming the pricing of other GHG or biofuels. Current net revenues are a bottom-up estimate using the Net ECR dataset and may not correspond to the revenues collected in practice.
The revenue forgone indicator estimates how much revenue countries could gain by raising net effective carbon rates to a given benchmark. Estimates are for fossil fuel CO2 emissions and do not include the revenue potential from reforming the pricing of other GHG or biofuels. Unlike the related revenue potential indicator, revenue forgone does not account for behavioural responses to higher prices.
Net energy tax revenues are a bottom-up estimate of the net revenues resulting from taxes and subsidies on energy, and the revenues from auctioning emissions permits for energy-related CO2 (estimated based on OECD’s (2021), Effective Carbon Rates 2021). Bottom-up revenue estimates may not correspond to the actual revenues and expenditures, inter alia due to differences between the base year and the rate date. Subsidy estimates are for 2020 and are based on data on relevant budgetary transfers from the Inventory of Fossil Fuel Support where available and original research for the other countries (OECD, Forthcoming), Net Effective Carbon Rates.

Other manipulations

For comparisons across time and countries in real prices, OECD inflation and exchange rate data are used. Where OECD exchange rate period averages were not available, they were supplemented using IMF International Financial Statistics. Inflation gaps were supplemented using the World Bank’s World Development Indicators Consumer Prices.

Recommended uses and limitations

The Net ECR captures carbon price signals (resulting from taxes and emissions trading systems, as well as fossil fuel subsidies), whereas the Net EER measures energy price signals (resulting from the Net ECR components plus electricity taxes and subsidies).

Other comments

In this vintage of the dataset, the Net ECR when expressed in real EUR for a given unit of CO2-equivalent can decrease (increase) between 2018 and 2021 for several reasons:
The government reduced (increased) tax rates or introduced (abolished) exemptions, rate reductions or refunds that benefit the emitter. Fuel or carbon taxes have been abolished (introduced). Tax rates were not indexed to inflation and have therefore declined in real terms ceteris paribus
Emission Trading Scheme (ETS) permit prices were lower (higher) in real terms, ETS coverage has decreased (increased) or an ETS has been abolished (introduced).
Fossil fuel subsidies were higher (lower) in real terms.
The country used a currency other than EUR which has depreciated against the EUR over time.
Note that this vintage of the dataset keeps energy use and emissions constant. Changes over time are therefore not due to:
The calorific value of the fuel being taxed has changed, but the tax rate that is levied on a volumetric basis (such as litres) has remained the same.
There were changes in the composition of the energy mix away from sources with a high Net ECR to those with a lower Net ECR, which could affect the average Net ECR.