Environment at a Glance Indicators

Climate change

Context

Issues at stake

Emissions of greenhouse gases (GHGs) from human activities disturb the radiative energy balance of the earth-atmosphere system. They exacerbate the natural greenhouse effect, leading to temperature changes and other disruption of the earth's climate. Land use changes and forestry also play a role by altering the amount of greenhouse gases captured or released by carbon sinks. Carbon dioxide (CO₂) from the combustion of fossil fuels and deforestation is a major contributor to greenhouse gases. CO₂ makes up the largest share of greenhouse gases and is a key factor in countries’ ability to mitigate climate change. National emissions are also affected by changes in global demand and supply patterns with increasing trade flows and the displacement of carbon-intensive production abroad. Reductions in domestic emissions can thus be partially or wholly offset elsewhere in the world.

Climate change is of global concern for its effects on green growth and sustainable development. It threatens ecosystems and biodiversity, affects water resources, human settlements and the frequency and scale of extreme weather events, with significant consequences for food production, human well-being, socio-economic activities and economic output.

Policy challenges

The main challenges are to mitigate GHG emissions and stabilise GHG concentrations in the atmosphere at a level that would limit dangerous interference with the climate system, and to adapt to and manage risks from climate change.

• This implies implementing national and international low-carbon strategies and further decoupling GHG emissions from economic growth. It also implies increasing the share of renewable energy sources in the supply mix, and reducing energy intensity by adopting energy-efficient production processes and increasing the energy efficiency of consumer goods and services.

• With increasing trade flows, interdependent global value chains and the relocation of carbon-intensive production abroad, reductions in domestic emissions can be partially or wholly offset elsewhere in the world. Domestic mitigation efforts must thus be placed in a global context and must build on a good understanding of carbon flows associated with international trade and final domestic demand.

• Ensuring a proper mix of policy instruments such as market-based instruments (carbon pricing, environmentally-related taxation and removing government subsidies and other support for fossil fuels) and non-market based instruments (GHG emissions standards) plays an important role in this transition.

• Beyond these steps, governments must align policies across a diverse range of non-climate areas including transport, housing, construction, spatial planning, agriculture and development cooperation. And they must consider synergies between emissions reduction, adaptation strategies and broader well-being objectives such as reduced air pollution and improved health.

Measuring progress and performance

Environmental performance can be assessed against domestic objectives and international goals and commitments. Tackling climate change and underlying drivers is part of the 2030 Agenda for Sustainable Development (New York, September 2015) under Goal 13: “Take urgent action to combat climate change and its impacts”; Goal 12: “Ensure sustainable consumption and production patterns”; Goal 9: “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation” and Goal 7: “Ensure access to affordable, reliable, sustainable and modern energy for all”.

The main international agreement is the United Nations Framework Convention on Climate Change (1992) which is the basis of:

• The Kyoto Protocol (1997) that sets internationally binding and differentiated emission reduction targets for six GHGs for 2008-12. It has been ratified by 177 parties, including all but two OECD countries, and has been in force since 2005. 37 industrialised countries and the European Union committed to reduce GHG emissions by an average of 5% below 1990 levels. The "Doha Amendment to the Kyoto Protocol" (2012), includes new commitments for the period 2013-20 and a revised list of GHGs. Parties committed to reduce GHG emissions by an average of at least 18% below 1990 levels over 2013-20. The amendment is not yet in force.

• The Paris Agreement (2015) that strengthens the global response to the threat of climate change. The objective is to keep the average global temperature rise this century well below 2 degrees Celsius and as close as possible to 1.5 degrees Celsius above pre-industrial levels. Parties have expressed their commitments to 2025 or 2030 through nationally determined contributions (NDCs), including a regular report on their emissions and implementation efforts.

This is supported by the commitment in September 2009, of the Leaders of the Group of Twenty (G20) economies to “phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest.” To follow up on this commitment, G20 members have since engaged in a voluntary process of periodically reporting on their fossil-fuel subsidies.

Indicator groups

The indicators presented here include the following:

 

Emissions and drivers
Greenhouse gas emissions: levels, intensities, by source, by sector GHG emissions footprint: production-based and demand-based GHG emissions, intensities, productivities Energy use: energy supply and mix, intensities, share of renewables
Impact & Risks
Annual temperature change Annual precipitation change Population exposure to hot days Cropland exposure to drought
Policy measures and instruments
Climate actions and policies Taxes relevant for climate change: revenue raised and tax base structure Fossil-fuel support: fossil-fuel subsidies and other support measures Net effective carbon rate Official development assistance for climate: mitigation, adaptation

Greenhouse gas emissions

Key messages

• Following a 7% decrease in 2020 caused by the COVID-19 pandemic and the subsequent decline in activities, GHG emissions in OECD countries rebounded by 4% in 2021 and then started to fall again in 2022.

• In most OECD countries emissions have been declining since 2010 partly due to the economic slowdown following the 2008 financial crisis, but also to strengthened climate policies, shift to cleaner energy sources and technologies.

• However, the rate of progress in reducing emissions varies significantly across individual OECD countries. Progress overall is insufficient.

Main trends and recent developments

Despite some progress achieved in decoupling GHG emissions from GDP growth, emissions are still growing in some countries. Historically, OECD countries emitted the bulk of global GHGs, but the share of partner countries in global emissions has been increasing since 2010 to over 45%. CO₂ determines the overall trend. Global energy-related CO₂ emissions grew by 1.1% in 2023, to reach a new record high of 37.4 billion tonnes (IEA, 2024).

Emissions of OECD countries peaked in 2007 and have been gradually falling until 2017 (by 10%). The COVID‑19 pandemic and the associated reduction in human activities caused emissions to drop by an additional 7% by 2020, but they rebounded by 4% in 2021 and then started to fall again in 2022. Before the COVID-19 pandemic, emissions have been declining in most OECD countries, partly due to a slowdown in economic activity following the 2008 economic crisis, but also to strengthened climate policies and changing patterns of energy consumption. Emission intensities per unit of GDP and per person decreased since 2005 in almost all OECD countries, revealing a strong overall decoupling from economic growth. Under the Kyoto Protocol, most OECD countries met their emission reduction commitments for the first (2008-12) and second (2013-2020) period.

Overall progress is however insufficient. Climate change is increasingly impacting people’s lives, national economies, biodiversity and ecosystems, including the ocean.

On average, energy industries generate 28% of GHG emissions in OECD countries, followed by transport (23%), manufacturing industries (12%), agriculture (10%), industrial processes (8%) and waste (3%). While the share of emissions from energy industries have slightly decreased since 2007, those from transport and agriculture increased. In some countries such as Lithuania, Luxembourg, Slovenia, Sweden and Switzerland, emissions from transport account for more than 30% of total emissions, while in New Zealand and Ireland, agriculture is the first GHG emitter (above 35%).

Individual OECD countries’ rates of progress vary significantly, whether emissions are considered in absolute numbers, per person amounts or per unit of GDP. This partly reflects different national circumstances, such as composition and rate of economic growth, socio-demographic developments, energy supply and consumption patterns, energy prices, and the extent to which the countries have taken steps to reduce emissions from various sources and to price carbon.

Indicators

Comparability and interpretation

Data on GHG emissions display a good level of comparability. Reductions in national emissions may also be the result of offshoring domestic production (and the associated emissions). Evidence of decoupling based on domestic emissions per unit of GDP or per person, therefore may reveal only part of the story.

For further details, see the metadata in the source databases.

GHG emissions footprint

Key messages

• Global demand-based GHG emissions (or GHG footprint) increased by 33% between 2000 and 2020, while they diminished by 17% in the OECD area. As a result, the OECD share of global demand-based GHG emissions decreased from 57% in 2000 to 36% in 2020.

• The OECD, as an aggregate, is a net-importer of GHGs, meaning that it consumes (through imported goods) more GHG emissions than it produces. OECD net imports grew from 1995 to reach a peak in 2006 and have been gradually declining ever since.

• Global demand-based emissions intensity per person increased by 4.4% between 2000 and 2020, while they decreased by 27% in the OECD area over the same period.

• Between 2000 and 2020, production- and demand-based GHG productivity increased by over 60% in the OECD area. Differences among OECD countries are large but all countries show increases in productivity, both for production-based and demand-based emissions.

Main trends and recent developments

Overall, global demand-based GHG emissions (or GHG footprint), which includes emissions embodied in final demand, increased by 33% between 2000 and 2020. By contrast, they diminished by 17% in the OECD area. As a result, the share of OECD countries in global demand-based GHG emissions decreased from 57% in 2000 to 36% in 2020. In 2020, China, the United States, the European Union (EU27), India, Japan and Southeast Asia (ASEAN) countries were the largest producers and consumers of GHG emissions. Since 1995, both production and consumption of emissions have fallen in Japan, the United States and the European Union. Over the same period, there were significant increases in China, India and Southeast Asia.

A similar picture can be observed for production-based emissions: global production-based GHG emissions increased by 33% between 2000 and 2020, compared to a decrease of 16% in the OECD area. As a result, the share of OECD countries in global production-based GHG emissions decreased from 50% in 2000 to 31% in 2020.

The OECD, as an aggregate, is a net-importer of GHGs (i.e. it consumes more GHG emissions through imported goods, than it produces), which means that non-OECD countries as a group are net exporters. OECD net imports grew from 1995 to reach a peak in 2006 and have been gradually declining ever since.

The difference in intensities is smaller, with global per person demand-based, energy-related emissions increasing by 4.4%, compared to a decrease of 27% in the OECD area over the same period.

Production- and demand-based GHG productivity increased by over 60% in the OECD area between 2000 and 2020. Differences among OECD countries are large but all countries show increases over the period 2000-2020, both for production-based and demand-based emissions.

Indicators

Comparability and interpretation

Estimates of greenhouse gas (GHG) emissions by industry, are based primarily on Air Emissions Accounts (AEA) and drawing on other sources of GHG emissions statistics. They are combined with OECD’s Inter-Country Input-Output (ICIO) tables to produce estimates of emissions from consumption (or demand) perspectives. This allows indicators of GHG footprints to be developed, revealing the emissions associated with intermediate consumption, final consumption and capital formation expenditures along global production chains. The use of emissions statistics compiled under the System of Environmental Economic Accounting (SEEA) framework, which is based on the resident principle, allows calculation of production-based emissions by industry that cover not only CO2 emissions from fuel combustion, but also non-fuel combustion emissions.

GHG footprint indicators reveal emissions embodied in domestic and international production networks and emissions associated with final demand patterns from purchasers’ price perspectives for the period 1995 to 2020.

For further details, see the metadata in the source databases.

Energy use

Key messages

• Total energy supply in OECD in 2023 remained below the ten-year average observed before the COVID-19 pandemic.

• OECD countries continue to rely on fossil fuels for 78% of their energy, while renewables, although increasing, still play a relatively minor role in energy mixes, 12.5% of total energy supply and 33% of electricity output in 2023.

• Energy intensity decreased for OECD countries overall, but results to date are insufficient to effectively reduce air and GHG emissions from energy use.

Main trends and recent developments

Although energy demand rebounded following strong restrictions in mobility in 2020 (IEA, 2021), it is still below ten-year long-term average observed before the pandemic in OECD countries in 2023. Total energy supply (TES) per person also rebounded following the pandemic, but remains below the long-term average observed before 2020.

Energy efficiency has been improving more slowly since 2015. Global energy efficiency progress, as measured by primary energy intensity, is expected to be slightly below the long-term trend, showing a slowdown from 2022. However, slower progress masks gains in some countries and regions. A transformation is underway in energy efficiency and clean energy, with many governments introducing new, or strengthening existing, policies and energy-saving programmes. These policies are leading to faster deployment of efficient technologies and are contributing towards an expected peaking of fossil fuel demand in the coming years (IEA, 2023a).

In the 1990s and 2000s, energy intensity per unit of GDP decreased for OECD countries overall as a consequence of structural changes in the economy and energy conservation measures, and, since 2009, as a consequence of the slowdown in economic activity following the economic crisis. In some countries, the decrease was due to the transfer of energy-intensive industries to other countries. Such outsourcing may increase pressures on the global environment if less energy efficient techniques are involved.

Variations in energy intensity among OECD countries are wide. They depend on national economic structure and income, geography, energy policies and prices, and countries’ endowment in different types of energy resources. While some decoupling between growth in energy use and GDP has been achieved, results to date are insufficient to effectively reduce air and GHG emissions. Relative decoupling between TES and GDP is occurring in all regions of the OECD, however, in OECD Asia-Oceania, it began much later (2003) than in OECD Europe and OECD America (1990).

The supply structure varies considerably among countries. It is influenced by demand from industry, transport and households, by national energy policies and by national and international energy prices. Developments in TES were accompanied by changes in the fuel mix. Since 2000, OECD countries’ reliance on fossil fuels declined although it remains close to 78%. The shares of solid fuels and oil slightly fell, while those of natural gas and renewable energy rose. Biofuels and waste, followed by hydro represent the largest renewable sources.

Global annual renewable capacity additions increased by almost 50% to nearly 510 gigawatts (GW) in 2023, the fastest growth rate in the past two decades. While renewable capacity in Europe, the United States and Brazil increased considerably, China’s acceleration was extraordinary. Globally, solar PV alone accounted for three-quarters of renewable capacity additions worldwide. The world is on course to add more renewable capacity in the next five years than has been installed since the first commercial renewable energy power plant was built more than 100 years ago. Under existing policies and market conditions, global renewable capacity is forecast to reach 7 300 GW by 2028. However, this growth trajectory would see global capacity increase to 2.5 times its current level by 2030, falling short of the goal of tripling global renewable power capacity by 2030 (IEA, 2023b).

Indicators

Comparability and interpretation

Data quality is not homogeneous for all countries. In some countries, data are based on secondary sources, and where incomplete, estimates were made by the IEA. In general, data are likely to be more accurate for production and trade than for international bunkers or stock changes; and statistics for biofuels and waste are less accurate than those for traditional commercial energy data. Estonia strongly rely on domestically produced oil shale (transformed into other petroleum products and exported). This production is counted as negative to oil in total energy supply, resulting in a negative share in the energy mix. The high values for Iceland are due to a significant increase in the production of hydro- and geothermal power mainly used in aluminium smelters. The supply structure, which may vary considerably among countries is dependent on final demands by industry, transport and the household sector, and is highly influenced by national energy policies and endowments in energy resources.

For further details see the metadata in the source databases listed under Sources below.

Impact and risks

Key messages

• Land surface temperatures have been steadily increasing across the OECD over the past decades, being on average 0.9°C above the baseline climatology in 2019-23.

• Population in both OECD and partner countries has been increasingly exposed to extreme temperatures, with an estimated 12% more people exposed to hot days in 2019-23 compared to the baseline climatology 1981-2010.

• Croplands are increasingly susceptible to agricultural droughts. Some of the worst affected OECD countries are Colombia, Mexico and Portugal, with a more than 4% decrease in cropland soil moisture compared to the baseline period.

• The Netherlands and Hungary have approximately 20% of their land exposed to risk of extreme river flooding.

Main trends and recent developments

For the first time in history, Earth has experienced a continuous 12-month period (through June 2024) during which the planet's average temperature exceeded 1.5°C above the pre-industrial baseline.1 Most OECD and partner countries are increasingly affected by hot days The countries with highest annual temperature change in 2023 are: Canada (2.2°C over the baseline climatology 1981-2010) and Switzerland (2.05°C above). Since 1979 the population in both OECD and OECD partner countries has been increasingly exposed to hot days, with an estimated 12% more people exposed to hot days in the period 2019-23 compared to the reference period 1981-2010.

Countries whose population was most exposed to hot days in 2019-23 include Saudi Arabia (98.3%), India (97.4%), Thailand (93.6%) and Israel (91%), an estimated 1.4 billion people in total. Although exposure to extreme temperatures in countries such as Saudi Arabia and Israel was already historically high, the duration of exposure is increasing.

Across OECD and partner countries there is a significant decrease in soil moisture on croplands (2.4%) over the period 2019-2023 compared to the reference period 1981-2010. Countries most affected by drought are Argentina, Brazil and Romania, which recorded declines of more than 6% in cropland soil moisture in the past five years. Some of the worst affected OECD countries are Colombia, Mexico and Portugal, with a more than 4% decrease in cropland soil moisture compared to the baseline period. Drought can also exacerbate other climate-related hazards such as conditions that increase the possibility of wildfires due to dry vegetation and fuel load and changing weather patterns.

Mean precipitation affects OECD and partners unequally. South American and eastern European countries have witnessed a decrease in average annual precipitation change in 2023 compared to 1981-2010 whereas North America, southeast-Asia and western Europe have all witnessed increases. In turn, these precipitation changes can inhibit flooding, due to a combination of factors, either with extreme precipitation in countries witnessing an increase in precipitation, or drought, with decrease in mean precipitation, preventing water to saturate and resulting in flash floods. The most at-risk OECD and partner countries are the Netherlands and Hungary, with approximately 20% of their land exposed to risk of extreme river flooding. The significant changes in mean precipitation change affects OECD countries differently, which needs to be taken into account when preventing future impacts and potential economic costs at national level.

Indicators

Comparability and interpretation

The addition of global datasets when analysing climate change events is primordial as it allows for the creation of comparable results between countries and regions. With the evolution of data sources and data collection methods (remote sensing and openly accessible data), global datasets have become more granular, both in resolution and types of indicators available.

The OECD set of indicators is based on historical observational data -collected and recorded- that goes back as far as 1979. This time-period is relatively short for analysing climate change events, nevertheless, the data, while limited, still shows the exposure of climate-related hazards to the population, croplands, forests, and urban areas. These 43 years of data illustrate that climate change impacts are already visible by analysing even a short period of historical data. A limitation is that these indicators reflect what has happened, not what will happen. Nevertheless, the data set can support countries to understand the evolution and potential impact of climate-related hazards to guide policy choices. For further details see Maes, M. J. A., et al. (2022).

Climate Actions and Policies

Key messages

• In 2022, the growth rate of the sum of national climate action as measured by the CAPMF slowed down in the OECD and OECD partner countries.

• The recent energy crisis triggered countries to ramp up fossil fuel support to record levels while postponing planned climate actions such as carbon pricing and the phasing out of fossil fuel infrastructure.

• In some countries, the energy crisis triggered the adoption of more ambitious targets on renewables and energy efficiency.

• Climate action on market-based instruments (MBIs) slowed down significantly between 2010 and 2022, while action on non-MBIs and ‘Targets, governance and climate data’ increased.

Main trends and recent developments

In 2022, the growth rate of the sum of national climate action as measured by the IPAC Climate Actions and Policies Measurement Framework (CAPMF) slowed down in the OECD and OECD partner countries. The total number of adopted policies expanded by only 1%. By contrast, between 2000 and 2021, overall climate action as measured by the CAPMF increased by an average of 10% a year. Countries’ policy approaches are the result of a complex interaction between past climate action, climate ambitions, emissions profile, and available technologies, as well as countries’ cultural, social, political and institutional conditions (OECD, 2023a).

The main causes of the overall slowdown in climate action, triggered by the recent energy crisis, include decreases in public expenditure in research and development of low-carbon technologies such as renewables, energy efficiency, carbon capture and storage, postponement of the phase-out date of fossil fuel infrastructures, and reduced funding for climate advisory bodies. On the other hand, the energy crisis triggered more climate action as concerns over energy security and reliance on fossil fuels motivated some countries to adopt more ambitious targets on renewables and energy efficiency (OECD, 2023a).

Climate action on market-based instruments (MBIs) slowed down significantly between 2010 and 2022, while action on non-MBIs (nMBIs) and ‘Targets, governance and climate data’ increased. This is due to (i) the expansion and increase in stringency of carbon pricing (e.g. permit prices in most ETS increased, partly driven by more stringent emissions caps set by countries), and (ii) backtracking on other MBI policies, notably related to fossil fuel support (OECD, 2023a).

Indicators

Comparability and interpretation

The IPAC CAPMF monitors trends in climate mitigation policy adoption and policy stringency for OECD and OECD partner countries (Nachtigall et al., 2022). The CAPMF covers a broad range of policy instruments (e.g. market-based, non-market based) and other climate actions (e.g. climate targets, climate governance, climate data), comprising 75% of instruments listed in the IPCC Sixth Assessment Report (OECD, 2023). It covers several important sector-specific policies that are jointly responsible for 89% of GHG emissions in OECD and OECD partner countries. However, results should be interpreted with care. The CAPMF does not capture all policies (sectors and instrument types) due to data availability constraints, such as agriculture and land-based sectors, tax credits and other subsidies for cleaner technologies or an expansion of voluntary approaches, or adaptation policies. Policies included in the CAPMF may, thus, not be fully representative of mitigation approaches of some countries. Rather, these policies represent a range of mitigation actions that countries could employ.

Taxes relevant for climate change

Key messages

• In the OECD area, climate change-related taxes raised USD 578 billion in 2022, representing the majority of environmentally related tax revenue (84%).

• The bulk of climate change related tax revenue comes from taxing energy and transport; pollution and resource tax bases play a minor role in generating revenue.

• Overall, the share of environmentally related tax revenue (ERTR) compared to GDP, continues to decline in OECD countries. ERTR is also decreasing, it represented 1.3% of GDP in 2022, down from 1.8% of GDP in the early 2000s.

Main trends and recent developments

In the OECD area, climate change-related taxes raised USD 578 billion in 2022, representing the majority of environmentally related tax revenue (84%). This share has decreased slightly since the early 2000s. The bulk of revenue coming from taxes directed at climate change is raised from taxing energy (66%), in particular motor fuels, and transport (20%), while pollution and resource tax bases play a minor role in generating revenue. Pricing CO₂ and energy remains the most economically efficient tool to bend the direction of carbon emissions globally, and create favourable conditions to mobilise private finance and investment required to achieve global mitigation objectives. Taxes on logging, forestry products and land use change, in turn, can help safeguard planetary carbon sinks and encourage carbon sequestration.

Overall, the share of environmentally related tax revenue (ERTR) continues to decline in OECD countries, amounting to 4% of total tax revenue in 2022, down from 5.9% in early 2000s. Compared to GDP, ERTR is also decreasing and reached 1.3% of GDP in 2022 down from 1.8% of GDP in the early 2000s. The decreasing trend is a combination of factors, namely, that tax rates are typically defined in physical units (e.g. per litre) and hence are set in nominal terms. Without inflation adjustment, these rates decrease in real terms over time. While countries such as Denmark, the Netherlands and Sweden have implemented such adjustments, most OECD countries do not yet apply inflation adjustments to environmentally related taxes. Another factor contributing to this trend is the increase in crude oil prices up until mid-2014, which triggered substitution away from motor fuel use, also making adjustments in nominal tax rates on motor fuels politically difficult. Yet some countries, such as Slovenia, Costa Rica, Türkiye and Estonia strengthened the role of environmentally related taxes and have tripled their share of tax revenue since 2000.

Indicators

Comparability and interpretation

The indicators on environmentally related taxes should not be used to assess the “environmental friendliness” of the tax systems. For such analysis, additional information, describing the economic and taxation structure of each country, is required. Moreover, a number of environmentally related taxes can have important environmental impacts even if they raise little (or no) revenue. In addition, revenue from fees and charges, and from royalties related to resource management, is not included.

Comparisons of ERTRs in OECD countries provide a useful starting point for analysing the impact of environmental taxation, however, comparing only the levels of revenue does not provide the full picture of a country’s environmental policy, as it does not provide information on the levels of tax rates or the exemptions applied. Other parts of the OECD PINE database, including information on tax rates and exemptions, allows deeper assessment of the environmental impacts of these taxes. In addition, governments may choose to implement environmental policy using a range of other instruments, including fees and charges, expenditures (both direct and subsidies) and regulation, some of which are also detailed in the PINE database (see http://oe.cd/pine for information on the use of alternative instruments in countries).

For further details see the metadata in the source databases.

Fossil fuel subsidies and other support measures

Key messages

• The fiscal cost of government support for fossil fuels provided by the 51 OECD, G20, and Eastern Partnership economies covered by the OECD Inventory was around USD 422 billion in 2022, more than doubling 2021 levels.

• This was mostly the result of the rise in energy prices with the rebound of the global economy, further intensified by Russia's war of aggression against Ukraine. Support for producers reached levels not previously seen in OECD tracking efforts. In addition, consumption subsidies are anticipated to rise even further in the upcoming years due to higher fuel prices and energy use.

Main trends and recent developments

Many governments continue to support fossil fuel production and use financially, in particular oil and gas. This undermines the effectiveness of environmental policies by lowering the cost of emitting carbon and is a barrier to moving towards a more energy efficient and low-carbon economy. It can also impose a strain on government budgets.

The fiscal cost of government support for fossil fuels provided by the 51 OECD, G20, and Eastern Partnership economies covered by the OECD Inventory was around USD 422 billion in 2022, more than doubling 2021 levels. This was mostly the result of the rise in energy prices with the rebound of the global economy, further intensified by Russia's war of aggression against Ukraine. Support for producers reached levels not previously seen in OECD tracking efforts. Those subsidies have partly offset producer losses from domestic price controls as global energy prices surged in late 2021.

In addition, the IEA calculates that fossil fuels sold below market prices amounted to USD 1 126.6 billion, a jump of 116% from 2021, driven by the international markets price hike. These consumption subsidies are anticipated to rise even further in the upcoming years due to higher fuel prices and energy use (OECD, 2023b).

Indicators

Comparability and interpretation

The OECD Inventory of Support Measures for Fossil Fuels, which covers 51 OECD, G20, and Eastern Partnership economies, identifies and estimates policies that support the production or consumption of fossil fuels. It includes direct budgetary transfers and tax expenditures that may provide a benefit or preference for fossil-fuel production or consumption relative to alternatives. Unlike direct budgetary expenditures, where outlays can usually be measured, tax expenditures are estimates of the fiscal revenue that is foregone due to a particular feature of the tax system that reduces a tax rate relative to a benchmark tax rate. It is important to note that definitions of tax expenditures, and the benchmarks used to estimate their size, are nationally determined. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.

Measures appearing in the OECD Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.

Net effective carbon rate

Key messages

• In 2021, more than 40% of GHG emissions in 71 countries, which together account for approximately 80% of global GHG emissions and energy use, face a positive net effective carbon rate (Net ECR) – up from 32% in 2018.

• Net effective carbon rates are on average 34 EUR/tCO₂e with wide variations between countries. It is negative in Indonesia (due to support to fossil fuel consumption) and up to 133 EUR/tCO₂e in Switzerland.

• 25% of GHG emissions in 2021 are covered by an emissions trading system (ETS), a carbon tax, or both. The share of GHG emissions covered by fuel excise taxes, an implicit form of carbon pricing most common in the road transport sector (but also relevant for heating fuels, especially in Europe), remains at 24%.

• The share of GHG emissions covered by carbon taxes or emissions trading systems (or both) is now about as large as the share covered by fuel excise taxes. Fossil fuel subsidies that counteract the carbon price signals provided by the other instruments apply to approximately 22% of GHG emissions.

Comparability and interpretation

The "Pricing Greenhouse Gas Emissions: Turning Climate Targets into Climate Action" report tracks how explicit carbon prices, energy taxes and subsidies – an important subset of climate policy instruments that directly alter the cost of emitting GHG or change electricity prices – have evolved between 2018 and 2021. Reforming these instruments could help to meet climate targets, lead to cleaner air and water, and improve public finances. The report covers 71 countries, which together account for approximately 80% of global GHG emissions and energy use. Explicit carbon prices, energy taxes and subsidies are detailed by country, sector, product and instrument. The use of a common methodology ensures comparability across countries. Summary indicators facilitate cross country comparisons and allow policy makers and the public to keep track of progress made and identify opportunities for reform (OECD, 2022; Garsous, G., et al.,2023).

Official development assistance (ODA)

Key messages

• DAC members' bilateral ODA with climate objectives has been gradually increasing over the last decade. In 2021-22, it reached nearly 50 billion USD on average annually, representing 32.9% of total bilateral allocable ODA from DAC members, an increase from 30.6% over 2020-21.

• Of all climate-related activities in 2021-22, 34% addressed adaptation, 37% mitigation and 29% both objectives. The share of climate-related activities in bilateral ODA varies across regions: 33% of commitments to Africa were climate-related in 2021-22, against 46% in Oceania, 43% in Latin America and the Caribbean, and 42% in Asia. In absolute terms, while Africa was the largest ODA recipient in 2021-22 (USD 47 billions), it had less climate-related finance than Asia (USD 15 billion against USD 18 billions).

• In energy, transport, general environment protection and water and sanitation, more than 80% of the activities were climate related in 2021-22. Support for mitigation dominates in sectors with more potential for greenhouse gas emission abatement, such as transport and energy (in most cases with climate as a principal objective too). Support for adaptation focuses more on those closely linked to nature, such as agriculture, forestry and fishing, or water supply and sanitation (in most cases, with climate as a significant objective).

• While this growth is promising, the majority of ODA flows have still not been aligned with the objectives of the Paris Agreement.

Glossary

Carbon dioxide (CO₂) emissions from energy use (production-based CO₂ emissions): Refer to gross direct CO₂ emissions from fossil fuel combustion, emitted within the national territory. Human-caused emissions from other sources are not included. Emissions from oil held in international marine and aviation bunkers are excluded. CO₂ removal by sinks, indirect emissions from land use changes and indirect effects through interactions in the atmosphere are not taken into account.

Climate actions and policy instruments are policy instruments or other actions that have the explicit intent of achieving declared policy objectives to advance mitigation or are non-climate policies which are expected to have a material effect on GHG emissions.

Policy instruments are institutional vehicles or tools through which governments facilitate the implementation of domestic and international objectives. Their effectiveness will depend on several issues associated with their operation, including government’s capacity to enforce, the possibility of economic agents to change their behaviour, and the broader policy landscape.

• Market-based instruments are policy instruments that use markets, prices and/or other monetary means to provide incentives for producers and consumers to reduce or eliminate environmental and other externalities.

• Non market based instruments are instruments that work through the imposition of certain obligations or by installing non-monetary incentives to change behaviour (e.g. directly regulated by the government such as standards, information instruments, voluntary approaches).

• Targets, governance and climate data include net-zero targets, nationally determined contributions (NDCs), independent climate advisory bodies, climate education, ratification of key international climate treaties, participation in international climate initiatives, evaluation of biennial (update) reports, Submission of key documents, GHG emissions reporting and accounting.

Climate change-related tax revenue: Revenue raised from taxes and auctioning of tradable permits directed at climate change. These include specific taxes on i) energy products and revenue from auctioning of CO2 tradable allowances; ii) use of motor vehicles, iii) pollution (e.g. cement production); and iv) resource extraction (e.g. forestry taxes).

The information on taxes and the associated tax revenue is extracted from the OECD Policy Instruments for the Environment (PINE) database (http://oe.cd/pine). The PINE database, contains quantitative and qualitative information on over 4500 policy instruments in 145 countries worldwide. Policy instruments are tagged into 22 environmental domains that represent the focal issues (environmental externalities). Instruments can have both a direct and an indirect effect on several environmental domains; however, only the domain to which the instrument has a direct effect is considered. For more details, see the metadata to the OECD Environmentally related tax revenue dataset.

Environmentally-related taxation: Environmentally related taxes include taxes to (i) energy products for transport purposes (petrol and diesel) and for stationary purposes (fossil fuels and electricity); (ii) motor vehicles and transport (one-off import or sales taxes, recurrent taxes on registration or road use and other transport taxes); (iii) waste management (final disposal, packaging and other waste-related product taxes); (iv) ozone-depleting substances and (v) other environmentally related taxes.

The indicators on environmentally related taxes should be used in combination with information on the economic and taxation structure of each country. Note that revenue from fees and charges, such as water abstraction or waste collection charges, is not included as environmentally related tax revenue. Missing values can sometimes lead to visible 'breaks' in auto generated charts. For more information, please refer to the source data and metadata on OECD Data Explorer.

Effective carbon rates: Effective Carbon Rates (ECR) include fuel excise taxes, carbon taxes and tradable emission permit prices. The Net ECR equals the ECR minus fossil fuel subsidies that decrease pre-tax fossil fuel prices (OECD, 2022; Garsous, G., et al.,2023).

Greenhouse gas emissions statistics: The following sources of greenhouse gas statistics are used in this document:

• National GHG inventories: OECD Environment Statistics (database) based on national inventory submissions to the United Nations Framework Convention on Climate Change (UNFCCC, CRF tables), and replies to the OECD State of the Environment Questionnaire. These statistics come from official submissions of GHG emissions data by Parties to the UNFCCC. Complete data sets including and excluding land use, land-use change and forestry (LULUCF) are available for Annex I Parties to the UNFCCC and partial data sets are available for non-Annex I Parties.

• IEA statistics on CO₂ emissions: IEA estimates of CO₂ emissions from fuel combustion are calculated using IEA energy data and the default methods and emission factors from the Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories.

• IEA/EDGAR statistics on total GHG emissions: This dataset combines IEA statistics on CO₂ from fossil fuel combustion with data for CO2 from non-energy-related sources and gas flaring, and emissions of methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride from the Emissions Database for Global Atmospheric Research (EDGAR). The EDGAR database includes partial coverage of emissions from land use, land-use change and forestry (direct emissions from forest fires, emissions from decay of aboveground biomass that remains after logging and deforestation, emissions from peat fires and decay of drained peat soils).

Greenhouse gas emissions by source (territory principle): Greenhouse gas (GHG) emissions refer to the sum of GHGs that have direct effects on climate change and are considered responsible for a major part of global warming: carbon dioxide (CO₂), methane (CH₄), nitrous oxide (N₂O), chlorofluorocarbons (CFCs), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF₆) and nitrogen trifluoride (NF3).

Greenhouse gas emission estimates are divided into main sectors, which are groupings of related processes, sources and sinks:

• Energy (energy industries, manufacturing industries, transport and other energy uses)

• Industrial Processes and Product Use (IPPU)

• Agriculture

• Waste

• Other (e.g., indirect emissions from nitrogen deposition from non-agriculture sources).

They refer to GHGs emitted within the national territory and exclude CO₂ emissions and removals from category 4 - Land use change and forestry. They do not cover international transactions of emission reduction units or certified emission reductions.

GHG (greenhouse gas) footprint: estimates of GHG emissions embodied in final domestic demand are obtained from the OECD dataset on Greenhouse gas Footprint Indicators, derived from combining the 2023 edition of the OECD Inter-Country Input-Output (ICIO) Tables and other Greenhouse Gas Emissions databases, such as Air Emissions Accounts. Estimates of GHG emissions by industry, are based primarily on Air Emissions Accounts (AEA) and drawing on other sources of GHG emissions statistics. They are combined with OECD’s Inter-Country Input-Output (ICIO) tables to produce estimates of emissions from consumption (or demand) perspectives. This allows indicators of GHG footprints to be developed, revealing the emissions associated with intermediate consumption, final consumption and capital formation expenditures along global production chains. The use of emissions statistics compiled under the System of Environmental Economic Accounting (SEEA) framework, which is based on the resident principle, allows calculation of production-based emissions by industry that cover not only CO₂ emissions from fuel combustion, but also non-fuel combustion emissions.

The estimates are calculated for 76 economies. The methodology uses SEEA residence principle to estimate industry emissions embodied in domestic and international production networks and emissions associated with final demand patterns from purchasers’ price perspectives.

Impact and risk of climate related hazards:

• Average annual surface temperature change: changes in the base mean surface air temperature over land in 2018-2022 compared to the baseline period 1981-2010 (measured in Celsius degrees (°C))

• Average annual precipitation change: changes in the base mean volume of precipitation in 2018-2022 compared to the baseline period 1981-2010 (measured in mm)

• Population exposure to hot days: number of days in which a population is exposed to surface air temperatures which exceed 35°C (measured in days/year)

• Cropland exposure to drought: changes in cropland soil moisture in 2018-2022 compared to the baseline climatology in 1981-2020 (measure in %)

Official Development Assistance: Total ODA comprises both screened and non-screened ODA bilateral commitments. ODA data are obtained from the Aid Activities Targeting Global Environmental Objectives dataset of the Creditor Reporting System of the OECD International Development Statistics Database.

Environmentally related Official Development Assistance (ODA) is expressed as a percentage of total ODA. Environmentally related ODA is identified using marker "Environment" and the set of “Rio Markers”. The Rio Markers specifically screen for policy objectives of a cross-sectorial nature, including climate change, biodiversity and desertification. This variable includes only data on bilateral commitments and is calculated by aggregating up from the level of the individual projects in order to avoid double-counting. ODA commitments identified using the "Environment" marker (principal or significant objective) include activities that are intended to produce an improvement in the physical and/or biological environment of the recipient country, area or target group concerned or include specific action to integrate environmental concerns with a range of development objectives through institution building and/or capacity development. The “Environment” marker was introduced in 1992.

• Climate change mitigation-related aid is defined as activities that strengthen the resilience of countries to climate change and that contribute to stabilisation of GHG concentrations by promoting reduction of emissions or enhancement of GHG sequestration. The climate change mitigation marker was introduced in 1998.

• Climate change adaptation-related aid, approved by OECD-DAC members in December 2009, is defined as aid in support of climate change adaptation and complements the climate change mitigation marker, thus allowing presentation of a more complete picture of aid in support of developing countries’ efforts to address climate change. The climate change adaptation marker was introduced in 2010.

Total fossil fuel support: Comprises Consumer Support Estimates (CSE), Producer Support Estimates (PSE) and General Services Support Estimate (GSSE), for petroleum, coal and natural gas. Measures that benefit individual producers are classified under the PSE, while those that benefit individual consumers are classified under the CSE. Measures benefitting producers or consumers collectively are classified under the GSSE, as are measures that do not increase current production or consumption of fossil fuels but that may do so in the future. The definition of support encompasses policies that can induce changes in the relative prices of fossil fuels in the support estimate level.

Fossil fuel support by type of support refer the share of consumption, production and general services support in total fossil fuel support.

Fossil fuel support by fuel refer to the share of petroleum, coal and gas support in in total fossil fuel support.

Total energy supply: Total energy supply (TES) is made up of production + imports – exports – international marine bunkers – international aviation bunkers ± stock changes. Primary energy comprises coal, peat and peat products, oil shale, natural gas, crude oil and oil products, nuclear, and renewable energy (bioenergy, geothermal, hydropower, ocean, solar and wind). Electricity trade is included in total primary energy supply, but excluded from the calculation of the breakdown by source.

The share of renewables in the production of electricity. The main renewable forms are hydro, geothermal, wind, biomass, waste and solar energy.

Total fossil fuel support: Comprises Consumer Support Estimates (CSE), Producer Support Estimates (PSE) and General Services Support Estimate (GSSE), for petroleum, coal and natural gas. Measures that benefit individual producers are classified under the PSE, while those that benefit individual consumers are classified under the CSE. Measures benefitting producers or consumers collectively are classified under the GSSE, as are measures that do not increase current production or consumption of fossil fuels but that may do so in the future. The definition of support encompasses policies that can induce changes in the relative prices of fossil fuels in the support estimate level.

Fossil fuel support by type of support refer the share of consumption, production and general services support in total fossil fuel support.

Fossil fuel support by fuel refer to the share of petroleum, coal and gas support in in total fossil fuel support.

Data sources

IEA, "Detailed CO2 estimates", IEA CO2 Emissions from Fuel Combustion Statistics: Greenhouse Gas Emissions from Energy (database), https://doi.org/10.1787/data-00429-en.

IEA, "World energy statistics", IEA World Energy Statistics and Balances (database), https://doi.org/10.1787/data-00510-en.

IEA/OECD, " Climate-related hazards: Exposure to extreme precipitation", Environment Statistics (database), https://oe.cd/dx/4TG, based on Maes, M. J. A., et al. (2022).

IEA/OECD, " Climate-related hazards: Exposure to extreme temperature", Environment Statistics (database), https://oe.cd/dx/4TF, based on Maes, M. J. A., et al. (2022).

OECD, "Air and climate: Greenhouse gas emissions by source", OECD Environment Statistics (database), https://doi.org/10.1787/data-00594-en.

OECD, “Greenhouse gas footprint indicators”, OECD Greenhouse Gas Footprints (GHGFP): Emissions embodied in bilateral trade (database), https://data-explorer.oecd.org/?tm=GHGFP&snb=5.

OECD, " Climate-related hazards: Exposure to drought", Environment Statistics (database), https://oe.cd/dx/4TH , based on Maes, M. J. A., et al. (2022)

OECD, “Development: Official Development Assistance - Aid activities targeting global environmental objectives”, OECD International Development Statistics (database).

OECD, "Environmental policy: Environmentally related tax revenue", OECD Environment Statistics (database), https://doi.org/10.1787/df563d69-en

OECD, "Green growth indicators", OECD Environment Statistics (database), https://doi.org/10.1787/data-00665-en.

OECD, “OECD Inventory of Support Measures for Fossil Fuels” (database), http://www.oecd.org/fossil-fuels.

OECD, “Policy Instruments for the Environment (PINE)” (database), http://oe.cd/pine

References and further reading

EDGAR (Emissions Database for Global Atmospheric Research) (2023), Community GHG Database, a collaboration between the European Commission, Joint Research Centre (JRC), the International Energy Agency (IEA), and comprising IEA-EDGAR CO₂, EDGAR CH₄, EDGAR N₂O, EDGAR F-GASES version 8.0, (2023) European Commission, JRC (Datasets), https://edgar.jrc.ec.europa.eu/report_2023#intro.

Garsous, G., et al. (2023), "Net effective carbon rates", OECD Taxation Working Papers, No. 61, OECD Publishing, Paris, https://doi.org/10.1787/279e049e-en.

IEA (2024), CO₂ Emissions in 2023, https://www.iea.org/reports/co2-emissions-in-2023

IEA (2023a), Energy Efficiency 2023, IEA, Paris https://www.iea.org/reports/energy-efficiency-2023

IEA (2023b), Renewables 2023, IEA, Paris https ://www.iea.org/reports/renewables-2023

IEA (2023c), World Energy Outlook 2023, https://www.iea.org/reports/world-energy-outlook-2023

IPCC (2018), Special Report: Global Warming of 1.5°C, Chapter 2, https://www.ipcc.ch/sr15/

Maes, M., et al. (2022), "Monitoring exposure to climate-related hazards: Indicator methodology and key results", OECD Environment Working Papers, No. 201, OECD Publishing, Paris, https://doi.org/10.1787/da074cb6-en.

OECD Data Explorer, Environment datasets

OECD International Programme for Action on Climate, https://www.oecd.org/climate-action/ipac

OECD work in support of climate action: http://oe.cd/climate-action

OECD Climate-related Development Finance Data: https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/climate-change.htm

OECD, Science, Technology and Innovation Working Papers, No. 2020/11, OECD Publishing, Paris, https://doi.org/10.1787/8f2963b8-en

OECD (2024a), Climate Finance Provided and Mobilised by Developed Countries in 2013-2022, Climate Finance and the USD 100 Billion Goal, OECD Publishing, Paris, https://doi.org/10.1787/19150727-en.

OECD (2024b), Official Development Assistance for climate in 2022: A snapshot, https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/climate-change.htm

OECD (2023a), The Climate Action Monitor 2023: Providing Information to Monitor Progress Towards Net-Zero, OECD Publishing, Paris, https://doi.org/10.1787/60e338a2-en.

OECD (2023b), OECD Inventory of Support Measures for Fossil Fuels 2023, OECD Publishing, Paris, https://doi.org/10.1787/87dc4a55-en.

OECD (2022), Pricing Greenhouse Gas Emissions: Turning Climate Targets into Climate Action, OECD Series on Carbon Pricing and Energy Taxation, OECD Publishing, Paris, https://doi.org/10.1787/e9778969-en.

OECD (2021), OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021, OECD Publishing, Paris, https://doi.org/10.1787/e670c620-en.

OECD/IEA (2021), "Update on recent progress in reform of inefficient fossil-fuel subsidies that encourage wasteful consumption", https://www.oecd.org/fossil-fuels/publicationsandfurtherreading/OECD-IEA-G20-Fossil-Fuel-Subsidies-Reform-Update-2021.pdf.

United Nations Framework Convention on Climate Change, https://unfccc.int/.

Yamano N. and J. Guilhoto (2020) "CO2 emissions embodied in international trade and domestic final demand: methodology and results using the OECD Inter-Country Input-Output Database"

Note

← 1.  https://insideclimatenews.org/news/09072024/average-global-temperatures-above-pre-industrial-levels-for-12-months/