![]() Notes on some of the individual countries based on Effective Carbon Prices are also available here.įor copies or further information on Effective Carbon Prices, journalists should contact the OECD's Media Relations Division (+33 1 4524 9700). “Cherry-picking a few easy measures will not do the trick.” “There is only one way forward: governments need to put in place the optimal policy mix to eliminate emissions from fossil fuels in the second half of the century,” Mr Gurría said. Yet capital subsidies and feed-in-tariffs are much more commonly used in spite of being more costly.ĭuring a lecture hosted by the London School of Economics earlier in October, Mr Gurría said governments must adopt a coherent approach to carbon pricing if they are to meet international commitments to gradually phase out fossil fuel emissions and limit climate change to a 2✬ temperature increase from pre-industrial levels. In the electricity sector, capital subsidies cost EUR 176 per tonne of CO 2 abated feed-in-tariffs,(long-term contracts for energy producers, typically based on the cost of generation of renewable energy) cost EUR 169 per tonne and trading systems EUR 10 per tonne of CO 2 on average. The carbon tax applies to the purchase and use of fossil fuels and covers approximately 70 of provincial greenhouse gas emissions. The report confirms that countries could achieve higher levels of emission reductions at lower cost if they used smarter, market-based policy instruments. It underlines that while the cost of carbon taxes is clear – which is why they are easy targets for political opposition – other policy instruments entail higher costs to society per tonne of CO 2 abated, in many cases, substantially higher. The study draws lessons from climate change policies in 15 countries in some of the sectors that generate the most emissions: electricity generation, road transport, pulp & paper and cement, as well as household energy use. This price flows through the economy, incentivizing businesses and people to switch. This is a chaotic landscape that sends no clear signal, and must be addressed.” With a carbon tax, a fee is applied wherever fossil fuels enter the economy. “Countries are pricing carbon in a multitude of ways, not always the most effective,” said OECD Secretary-General Angel Gurría. "There has been a huge amount of taxing and regulating around carbon, with prices established too high or too low, and the outcome has been far from optimal. Carbon pricing involves setting a price on carbon, the main cause of climate change, to enable governments to impose a financial burden on companies. For example, the average cost of reducing a tonne of carbon emissions in the road transport sector can be up to eight times higher when instruments other than fuel taxes are used, according to the report. Carbon taxes and emission trading systems are the most cost-effective means of reducing CO 2 emissions, and should be at the centre of government efforts to tackle climate change, according to a new OECD study.Įffective Carbon Prices shows that taxes and trading systems are preferable to other policies, such as feed-in tariffs, subsidies and other regulatory instruments. ![]() Green growth and sustainable development. ![]()
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