Decarbonisation keeps climate change in check and contributes to cleaner air and water. Countries can price CO2-emissions to decarbonise their economies and steer them along a carbon-neutral growth path. But are countries using this tool to its full potential?
This map indicates the carbon pricing of CO2 emissions from energy use in 42 OECD and G20 countries, covering 80% of world emissions. It shows that only 10 of the countries were pricing carbon at even half the EUR 60 per tonne benchmark (bright green on the map), which is a mid-range estimate of the real cost of CO2 emissions for 2020 and a low-end estimate for 2030. If a country does not price any carbon emissions from energy use, it is shown in dark brown in the map.
It is estimated that an increase in the effective carbon rate of EUR 1 per tonne of CO2 leads on average to a 0.73% reduction in emissions over time. Increasing the price of fuels that are high in carbon can encourage energy users to go for low or zero-carbon options. A commitment to carbon prices also creates certainty for investors that it pays to invest in low-carbon technologies.