State and Trends of Carbon Pricing 2023

cooperation


Executive Summary
• Facing a global energy crisis and high inflation, many countries responded with relief measures: lowering energy prices for businesses and households through changes to energy taxes, fossil fuel subsidies, or price controls, or by making direct payments.
• These measures saw already high levels of government debt continue to climb.
• Despite these challenges, there was continued momentum for climate action.
Several high-emitting countries strengthened domestic climate policies and targets, though global efforts still fall short of what is required.
• In this context, the political economy of carbon pricing has become even more complex.

THE PAST YEAR HAS SEEN GOVERNMENTS FACE CHALLENGES ON SEVERAL FRONTS Executive Summary
• Prices increased in half of ETSs or carbon taxes, although in real terms surging inflation will have offset some of the increase.
• There were only a few instances where governments wound back ETSs or carbon taxes in response to the energy crisis by delaying the start of a new instrument, postponing a planned expansion or price increase, or in one case repealing a carbon tax.
• With several new instruments launched and some scope expansions, the number of implemented instruments increased to 73 with the share of global GHG emissions covered around 23%. Instruments are considered "scheduled for implementation" once they have been formally adopted through legislation and have an official, planned start date.Instruments are considered "under consideration" if the government has announced its intention to work toward the implementation of a carbon pricing initiative and this has been formally confirmed by official government sources.Some countries that have mechanisms implemented also have additional instruments under consideration.For subnational jurisdictions only the subnational instrument is reflected.

MAP OF CARBON TAXES AND ETSs Executive Summary
Note: Nominal prices on April 1, 2023, or most recent exchangetraded or auction prices before April 1, 2023, are shown for illustrative purposes only.Only the main rate is shown for each instrument.Some instruments are not shown in this graph as current price information is not available.Prices are not necessarily comparable between instruments because of (for example) differences in the sectors covered and allocation methods applied, specific exemptions, and compensation methods.The 2030 carbon price corridor is based on the recommendations in the report of the High-Level Commission on Carbon Prices adjusted for inflation.Several jurisdictions apply different carbon tax rates to different sectors or fuels.In these cases, the included price reflects the highest general tax rate or primary fuel covered by the carbon tax.The instruments included on the x-axis reflect prices provided by each instrument.Instruments indicated with* are in jurisdictions with multiple instruments, so coverage of those jurisdictions' total emissions may be higher than indicated by an individual instrument.The EU ETS includes 27 EU member states plus Norway, Iceland, and Liechtenstein.Several federal and subnational policies in Canada are priced at the same rate, reflecting the Pan-Canadian Approach that requires all Canadian provinces and territories to have a carbon pricing system in place that aligns with the minimum national stringency federal standards.These are presented in two instruments (a carbon tax and an ETS): the carbon tax entry (Canada provinces and federal) includes the federal fuel charge, British Columbia carbon tax, and Newfoundland and Labrador carbon tax, while Canada federal and provinces (ETS entry) includes the federal Output-Based Pricing System (OBPS), Alberta Technology Innovation Emissions Reduction regulation, New Brunswick ETS, Newfoundland and Labrador Performance Standard Systems, and Saskatchewan OBPS.The coverage under Canada reflects the combined coverage of Canada's total emissions by the included policies.Coverage estimates for subnational Mexico carbon taxes were not available-approximate estimates are included based on the fuels covered by each instrument.

PRICES AND COVERAGE ACROSS ETSs AND CARBON TAXES Executive Summary
• Governments continue to face trade-offs between different objectives, such as increasing revenue, promoting community acceptance, and managing international competitiveness.
• Revenues from ETSs and carbon taxes are often used for specific purposes-almost 40% of the revenue is earmarked for green spending, and 10% is used to compensate households or businesses.Both are seen as ways to increase support for these policies.
• The revenue potential of ETSs and carbon taxes has become more relevant in light of increasing pressures on public budgets.

RECORD HIGH REVENUES FROM ETSs AND CARBON TAXES APPROACHED USD 100 BILLION
Executive Summary • Most existing instruments are in high-income countries in North America and Europe, at either the national, subnational, or regional level.Highincome jurisdictions account for the highest carbon prices.
• There is only one instrument in the Middle East and Africa region.However, several African countries are exploring options and taking preparatory steps.
• Interest from emerging economies is driven by the need for climate change mitigation policy but also managing transition risks, exploring revenue opportunities, and preparing for European Union accession.

UPTAKE OF ETSs AND CARBON TAXES ARE RISING IN EMERGING ECONOMIES; HIGH-INCOME COUNTRIES STILL DOMINATE
Executive Summary

PRICES OF STANDARDIZED CARBON CREDIT CONTRACTS 2021-2023
Removals is a basket assessment of carbon credits from nature-based or technological projects that remove GHG emissions from the atmosphere.Avoidance is a basket assessment of carbon credits from projects that avoid GHG emissions.