OECD calls for higher carbon price

A study just published by the OECD suggests that most countries are failing to implement carbon pricing policies that actually work to reduce emissions, and is calling for higher pricing to ensure adherence to climate targets.

The study – Effective Carbon Rates on Energy – analysts data from 41 OECD and G20 jurisdictions, that together account for some 80% of global energy use. It found that 90% of the related emissions are priced below the €30 per tonne that is identified as a “low end” estimate for the damaged caused to the climate.

Instead, the OECD has proposed a new effective carbon rate, ECR, which could apply as a sum of carbon taxes, specific taxes on energy use and tradeable emission permit prices. Currently some 60% of energy use is not subject to any ECR, its data suggests.

Transportation currently pays a higher ECR on average, but this leaves a significant amount of emissions not being priced properly, the report suggests.

“The evidence leaves no doubt that carbon pricing policies are not being utilised to their full potential. Where stringent alternative policies are in place for emissions abatement, they are likely to be more costly than necessary. Higher ECRs will be needed to achieve climate goals, and in many cases they would bring co-benefits such as reducing air pollution or raising public revenue,” the OECD stated.

Click here to read the full report: effective-carbon-rates-on-energy



Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope.

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