By Jonas Teusch, Economist, and Konstantinos Theodoropoulos, Statistician, OECD Centre for Tax Policy and Administration
Taxing energy use for sustainable development
Why should low-income countries implement carbon pricing policies to reduce carbon emissions when the world’s most advanced economies are falling woefully short of the prices needed to reach the objectives of the Paris Agreement? Indeed, more than 70% of emissions from OECD and G20 countries are completely untaxed, and more than half remain entirely unpriced even when accounting for emissions trading systems. Carbon emissions of most developing and emerging economies pale in comparison to OECD and G20 countries. For example, the 15 selected developing and emerging economies1 analysed in a recent OECD report Taxing Energy Use for Sustainable Development account for less than 4% of global emissions, whereas OECD and G20 countries collectively account for more than three quarters of global carbon emissions.
Against this background, does it matter that none of the 15 selected countries currently price carbon explicitly, and 83% of carbon emissions remain entirely untaxed?Continue reading