To achieve net-zero emissions, countries must enhance climate action and address policy gaps. The OECD's 2024 Pricing Greenhouse Gas Emissions report reviews the progress of emissions pricing and energy taxation from 2021 to 2023, focusing on emissions trading systems (ETS), carbon taxes, and energy subsidies in 79 countries, covering 82% of global GHG emissions. The report underscores the need for coordinated global efforts in carbon pricing to meet climate targets effectively.
Key Insights
- Stalled progress: Carbon pricing momentum slowed due to the 2022 energy crisis, leading many governments to delay or reverse policies. Subsidies and tax exemptions reduced implicit carbon pricing, notably lowering the Net Effective Carbon Rate (Net ECR) for agriculture between 2021 and 2023, for example, to address energy affordability concerns.
- Advances in explicit pricing: Despite challenges, ETS and carbon taxes modestly expanded, with tighter emissions caps and mechanisms like Border Carbon Adjustments (BCA) and investment subsidies for low-emission technologies gaining traction.
- Diverse approaches and future outlook: Countries employ varied tools to meet climate goals. The expansion of ETSs, particularly in middle-income nations, could boost global emissions coverage by 7 percentage points. Targeted policies for complex sectors, such as waste incineration, are increasingly vital. The report calls for greater ambition, international coordination, and transparency in energy taxation to close implementation gaps and accelerate emissions reductions.
Though emissions coverage remains stable, new ETSs, sectoral expansions, carbon content pricing for imports, and investment in low-emission technologies form a network of complementary policies. Countries are tailoring solutions and exploring measures like BCA and free permits to address carbon leakage challenges.
