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OECD report calls for rise in energy taxes

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A report by the OECD introduces a new indicator, the ‘carbon pricing gap’, to quantify the shortfall between current carbon pricing policies and estimates of real climate costs. The current gap is around 80% across 41 countries surveyed. The lower end estimate of real climate costs is €30 per tonne of CO2.

The report, Effective carbon rates: pricing CO2 through taxes and emissions trading systems, found that excise taxes make up by far the majority of taxes on energy use in all sectors. Emissions trading systems raise average rates in industry and electricity, but hardly at all in transport. Carbon taxes have only a marginal effect.

OECD secretary-general, Angel Gurría, said the ‘data shows that even moderate collective action to increase carbon prices can make a significant impact in putting countries on a pathway to a low carbon transition’. He added: ‘Prices can and do trigger reductions of energy use, improvements in energy efficiency and a shift towards cleaner forms of energy. The challenge is in getting the prices right’. See here.