Carbon pricing: There's still a long way to go!

The OECD has just published a report on carbon pricing. The analysis covers 41 OECD and G20 countries, accounting for approximately 55% of global greenhouse gas emissions*.

Country by country, the OECD examines the volume of emissions subject to pricing, whether through a tax, a market-based system, or indirect pricing resulting from a regulatory standard. In the latter case, the OECD takes into account, in particular, air quality standards that impose a carbon price on fossil fuels.

We thus learn that, based on this broad understanding of the mechanisms, approximately 40% of the emissions in question are subject to a carbon price. Are these prices "up to par"? To answer this question, the OECD uses a benchmark of 30€/tCO2e, a conservative estimate of the damage caused by emitting one metric ton of CO2e.

The OECD notes that Only 10% of the emissions in question are subject to a price higher than 30€/tCO2e. So there is still a long way to go before we can establish an effective carbon pricing system!

[caption id="attachment_4472" align="aligncenter" width="460"]

 Source: Carbone 4, based on OECD data. The curve has been smoothed due to a lack of access to the source data.[/caption]

Link to the study and press releases:http://www.oecd.org/tax/effective-carbon-rates-9789264260115-en.htm

* In this report, the OECD measures emissions from energy use, which account for 69% of total global emissions. Given the geographic scope of the study (80% of emissions), it therefore covers approximately 55% of total global emissions.

Article written by Alexandre Florentin and Claire Gassiat