Update 4pm: We have been contacted by the OECD. See below for some additional context and a second map.
But that’s not quite the end of the story, according to a new report from the Organization for Economic Cooperation and Development (OECD). It says that energy taxes, even if they are not designed to price carbon, can add to the effect of emissions trading systems and CO2 taxes.
The OECD has aggregated all these impacts to calculate an “effective carbon price” for 41 major countries around the world, including Europe, the US, Russia, India and China among others. Carbon Brief has mapped the results to show which countries have the highest “effective” carbon price. The OECD is a club of 34 developed nations that promotes economic development.
The number of carbon pricing schemes is expanding, covering more than $50bn, according to the World Bank. The OECD’s findings add an interesting new layer to this, by showing the effective price these schemes impose in different countries and in different parts of the economy.
In total, it finds an effective carbon price of €14 per tonne of CO2, averaged across the 41 countries it assessed and including road transport, industry, power stations and buildings. It says this is far short of the long-term economic damage associated with warming emissions, which it puts at a minimum of €30/tCO2.
A few countries do measure up to this mark. However, many more have effectively non-existent carbon prices, even when you take energy taxes into account. In total, the OECD says some 90% of CO2 emissions are not priced adequately.
The map below shows the average effective carbon price for industry, power and buildings ranging from €0/t in Russia up to €55/t in the Netherlands. The US, China and India, the world’s three top emitters, all have negligible carbon prices.Effective carbon price in the 34 OECD nations along with Argentina, Brazil, China, India, Indonesia, Russia and South Africa (€ per tonne of CO2 average across industry, buildings and the power sector). Hover over the map to see the price in each country. Source: Effective Carbon Rates: Pricing CO2 through taxes and emissions trading systems. Map by Carbon Brief using Highmaps.
One striking finding is the wide variation in effective price between EU countries, even though they share a common emissions trading system with a uniform carbon price. This illustrates the importance of the additional energy taxes included by the OECD.
It’s worth noting one important caveat in the map comparison, which is that the OECD’s study uses pricing information from 2012. Since then, to give just two examples, pilot carbon markets in China have developed and expanded, while the UK’s carbon price floor has increased.
(Note 4pm: The report does include China’s pilot carbon markets, the OECD tells Carbon Brief. It uses prices from after 2012, adjusted backwards to account for inflation.)
You can read more about how the effective carbon price is calculated along with some theory and background on the need to price emissions in the OECD’s report. Vox’s David Roberts has more on the promise of carbon pricing and the political hurdles facing effective implementation.
The average effective carbon price may not be the best way to compare countries. The OECD tells Carbon Brief: “[it] can be heavily influenced by a small share of emissions (e.g. oil products in several sectors) being priced at a significant rate.”
That’s why the bulk of the OECD report focuses on the share of emissions facing an adequate carbon price. The second map, below, shows the share of non-road energy-related emissions in each country facing a carbon price of €30 or above.Share of non-road energy-related CO2 emissions facing a carbon price of €30/t or more in the 34 OECD nations along with Argentina, Brazil, China, India, Indonesia, Russia and South Africa (%). Hover over the map to see the share in each country. Source: Effective Carbon Rates: Pricing CO2 through taxes and emissions trading systems. Map by Carbon Brief using Highmaps.
You can see from this second map that the US, China and India once again score poorly, with no more than 3% of their non-road energy emissions covered by a meaningful carbon price.