In this article, we will look into the 30 countries with carbon tax in the world. If you want to skip our detailed analysis you can go directly to the 10 Countries with Carbon Tax in the World.
Carbon Tax and Emissions Trading System
Carbon tax and emission trading systems (ETS) are two primary types of carbon pricing instruments. Carbon tax refers to a policy tool aimed at reducing GHG emissions by setting a price on them. The government sets a price per ton of emissions, to promote low-carbon alternatives and innovative green technologies. The outcome of emission reduction of a carbon tax is not defined, however the carbon price is, unlike the ETS.
ETS, commonly referred to as cap-and-trade system, is also a carbon pricing approach toward emissions reduction. In this market-driven system, a regulator sets a threshold for GHG emissions from various sectors of an economy. It allows the trading of emission allowances to entities in the ETS to stay within the emission limits, while allowing flexible carbon rates.
Both carbon pricing systems are widely adopted across many nations and jurisdictions around the world, serving as a tool to reduce emissions of a country by setting a price or threshold for emissions.
Carbon Pricing Systems Around the World
According to the World Bank, revenue generated from carbon taxes and emissions trading systems (ETS) reached nearly $95 billion in 2022, despite the high inflation, energy crises, and fiscal pressures. As of 2023, 23% of the global GHG emissions are covered by 73 carbon pricing instruments.
Many nations and regions around the world have adopted different carbon pricing systems. For instance, the European Union ETS was launched in 2005 for the EU member nations along with countries including Iceland, Lichtenstein, Norway, and Northern Ireland. The EU ETS is currently in its fourth trading phase (2021-2030). According to the European Union, the member states aim to reduce carbon emissions by 55% by 2030, compared to 1990 levels, and become carbon neutral by 2050. Since its launch, the EU ETS has reduced emissions from power plants and industries by 37%.
The United States does not have a national carbon tax or ETS. However, eleven states in the country are participants of the cap and trade system established in 2009, the Regional Greenhouse Gas Initiative. The members include New York, New Jersey, Connecticut, Massachusetts, New Hampshire, Maine, Maryland, Delaware, Pennsylvania, Rhode Island, and Vermont. The RGGI requires the participant states with 25 MW fossil fuels power generators to have allowances equal to their carbon emissions over a three-year period. The CO2 cap for the participating states is 157,184,044 CO2 allowances for 2024.
With the rising push toward carbon neutrality, many countries are now adopting carbon pricing instruments to promote emission reduction. Governments in countries including C?te d’Ivoire, Botswana, Indonesia, Israel, Morrocco, Taiwan, and New Zealand are actively working toward developing a carbon tax, according to the World Bank carbon pricing data. In 2022, new instruments were implemented in Indonesia, Austria, Uruguay, and subnational jurisdictions of the US and Mexico.
The rise in efficient and sustainable alternatives is contributing to a decrease in GHG emissions across the world. According to the 2023 report of carbon emissions by IEA, global emissions grew 0.5% per year in the decade to 2023, driven by the rise in global deployment of clean energy alternatives, marking the lowest growth since the great depression. Businesses and corporations around the world, play a major role in global emissions. Therefore, instruments such as carbon tax and ETS require corporations to control their emissions and adopt sustainable and low-carbon alternatives. Autodesk, Inc. (NASDAQ:ADSK), Wheaton Precious Metals Corp. (NYSE:WPM), and Prologis, Inc. (NYSE:PLD) are some of the most carbon productive companies in the world, that are efficiently generating revenue while limiting their carbon footprint. Let's have a look at them in detail.
Autodesk, Inc. (NASDAQ:ADSK) is a leading software company, that provides sustainable and workflow efficiency solutions to businesses. On April 2, the company introduced the Total Carbon Analysis tool for promoting a sustainable built environment. It is one of the key products of the company for the architecture, engineering, construction, and operations industries. The Total Carbon Analysis tool will help architects understand the carbon footprint of their building designs early in the design process. The Embodied Carbon Analysis in Autodesk Forma boasts AI-assisted capabilities and allows architects to test the environmental impact of their designs. Autodesk, Inc. (NASDAQ:ADSK) also highlighted the launch of new capabilities developed in Autodesk Insight, which asses the environmental impacts of HVAC, architectural elements, building materials, and lighting.
Wheaton Precious Metals Corp. (NYSE:WPM) is a metal streaming company, headquartered in Canada. The company is actively working toward reducing its carbon footprint. It aims to minimize its GHG emissions by 50% by 2030. The company also invests in collaborative sustainable solutions, with a notable initial investment of $4 million in 2021 for renewable energy deployment and other emissions control solutions. Wheaton Precious Metals Corp. (NYSE:WPM) integrates efficient measures to reduce its environmental impact and prioritizes ESG while screening its streaming agreements.
Prologis, Inc. (NYSE:PLD) is a leading logistics real estate company, specializing in energy and sustainability, warehouse solutions, and mobility. It is one of the most carbon-productive companies in the world and aims to reach carbon neutrality by 2040. On December 6, 2023, the company announced that its rooftop solar and storage installation is now capable of generating 500 MW of energy. This serves as a major milestone in the company's goal of achieving 1 GW of energy generation by 2025. This 500 MW facility can power 86,500 US homes. Prologis, Inc. (NYSE:PLD) is one of the top companies in the US with on-site solar generation.
Carbon pricing instruments help countries offset their emissions from major industries, by legislating tax and allowance trading for the emissions generated by corporations. These instruments promote green technology and sustainability incorporation into business operations, by setting a price on emissions. With this context, let's have a look at the 30 countries with a carbon tax in the world.
30 Countries with Carbon Tax in the World
Aerial view of an oil refinery, showcasing the company's hydrocarbon-producing market segment.
Methodology
To compile our list of the 30 countries with carbon tax in the world, we consulted the carbon pricing database of the World Bank. We identified 27 countries with a carbon tax and sourced their carbon tax price per tonne of CO2e emissions in USD, as of 2023. To expand our list, we also looked at the countries with an ETS and incorporated the ones with the highest ETS price rate on our list. For unavailable carbon tax price rates for some countries employing both carbon pricing mechanisms, we ranked them based on their ETS price rate. Our list ranks the 30 countries with carbon tax in the world in ascending order of their carbon pricing tax rates and ETS price rate, as of 2023, with countries relying solely on an emission trading system ranked lower.
Please note that for the EU countries with unavailable carbon tax prices, we have used the EU ETS price rate to rank them.
30 Countries with Carbon Tax in the World
30. South Korea
ETS Price (2023): $11.24 per tCO2e
South Korea is ranked among the countries with a carbon tax in the world. The country implemented an emission trading system in 2015, covering the power, construction, and industrial sectors, among others. As of 2023, the ETS price rate in the country is $11.24.
29. Germany
ETS Price (2023): $32.53 per tCO2e
Germany implemented its national ETS in 2021, which covers the transport and heat emissions previously not covered by the EU ETS. In 2022, the country generated $7.07 billion in revenue from carbon pricing. It is ranked 29th on our list.
28. Austria
ETS Price (2023): $35.34 per tCO2e
As of 2023, Austria has an ETS price of $35.34 and is ranked 28th on our list. The country is an EU member and is also covered by the EU ETS. However, it launched its national ETS in 2022 for sectors not covered by the EU emissions trading system.
27. Iceland
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Iceland is one of the countries with a carbon tax in the world. It implemented its carbon tax in 2010, which covers gases including CO2, CFCs, and HFCs.
26. Sweden
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Sweden is a member of the EU, and has both carbon tax and ETS deployed in the country. In 2022, the country generated $2.34 billion from carbon tax.
25. Portugal
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Portugal ranks 25th on our list. The country has had a carbon tax since 2015, which covers the power sector, aviation sector, and agriculture, forestry, and fishing fuel use.
24. Poland
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Ranked 24th on our list, Poland deployed the carbon tax in 1990. It generated $7 million in revenue from carbon tax in 2022. The country is also an EU member and has EU ETS, with a price rate of $96.30.
23. Norway
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Norway is ranked among the countries with a carbon tax in the world. In 2022, the country generated a revenue of $2.16 billion from carbon pricing.
22. Netherlands
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
The Netherlands ranks 22nd on our list. The country implemented the carbon tax in 2021. Its carbon tax provides coverage for nitrogen oxides and carbon dioxide emissions.
21. Luxembourg
Carbon Tax Price: NA
ETS Price (2023): $96.30 per tCO2e
Luxembourg is one of the countries with a carbon tax in the world. The country generated $287 million in revenue in 2022.
20. Ukraine
Carbon Tax Price (2023): $0.82 per tCO2e
Ukraine ranks 20th on our list. Deployed in 2011, its carbon tax price rate is $0.82 per tonne of CO2e. The country is also actively working towards establishing an emission trading system.
19. Japan
Carbon Tax Price (2023): $2.17 per tCO2e
Japan implemented a carbon tax in 2012. As of 2023, the country's carbon tax rate is $2.17. It is ranked 19th on our list.
18. Estonia
Carbon Tax Price (2023): $2.18 per tCO2e
ETS Price (2023): $96.30 per tCO2e
Estonia is one of the countries with a carbon tax in the world. In 2022, the country generated a revenue of $2 million from carbon pricing.
17. Argentina
Carbon Tax Price (2023): $3.34 per tCO2e
Argentina is ranked 17th among the countries with a carbon tax. As of 2023, the carbon tax price in the country is $3.34/tCO2e.
16. Singapore
Carbon Tax Price (2023): $3.77 per tCO2e
Singapore is ranked 16th on our list of the countries with carbon tax in the world. As of 2023, the country has a carbon price rate of $3.77 per tonne of CO2e.
15. Mexico
Carbon Tax Price (2023): $3.79 per tCO2e
Mexico deployed a carbon tax in 2014, which covers sectors including mining and extraction, electricity and power, transportation, aviation, and agriculture, among others. It is ranked 15th on our list.
14. Chile
Carbon Tax Price (2023): $5.0 per tCO2e
Chile is one of the countries with a carbon tax in the world. As of 2023, its carbon tax is priced at $5 per tonne of CO2e.
13. Colombia
Carbon Tax Price (2023): $5.06 per tCO2e
Colombia has had a carbon tax since 2017. In 2022, the country generated $113 million in revenue from carbon tax. It is ranked 13th on our list.
12. South Africa
Carbon Tax Price (2023): $8.93 per tCO2e
Placed 12th on our list, South Africa implemented its carbon tax in 2019. As of 2023, its carbon tax is $8.93 per tonne of CO2e.
11. Spain
Carbon Tax Price (2023): $16.31 per tCO2e
ETS Price: $96.30 per tCO2e
Spain is ranked 11th on our list of the countries with a carbon tax in the world. As of 2023, the country has a carbon tax price of $16.31 per tCO2e. Since Spain is a member of the European Union, EU ETS also applies in the country.
