Effective Carbon Rates 2025 provides comparable data and insights into how 79 countries, accounting for 82% of global greenhouse gas (GHG) emissions, use carbon taxes, emissions trading systems (ETSs), and fuel excise taxes.
The OECD published a report titled “Effective Carbon Rates 2025: Recent Trends in Taxes on Energy Use and Carbon Pricing”, which provides insights into how countries are implementing carbon taxes, emissions trading schemes, and fuel excise duties.
Countries balance diverse and interconnected policy objectives when deciding how to tax energy use or price carbon emissions. These policy objectives include raising public revenue, ensuring affordable energy, safeguarding competitiveness and reducing emissions.
Effective Carbon Rates 2025 provides comparable data and insights into how 79 countries, accounting for 82% of global greenhouse gas (GHG) emissions, use carbon taxes, emissions trading systems (ETSs), and fuel excise taxes. Two key trends emerge from the latest data: carbon pricing policies are increasingly diverse and flexible to balance diverse policy objectives, and their adoption, particularly that of ETSs, continues to expand to new countries and more sectors.
Executive summary
Countries deploy taxes on energy use, carbon taxes, and greenhouse gas emissions trading systems in view of policy objectives related to climate change, public revenue raising, energy affordability and cost of living, energy security, and competitiveness. This report takes stock of 79 countries’ use of these policy instruments. The policy space covered by the report is highly dynamic with strong attention for the impact of energy costs on technology choices, production costs and consumption patterns. By taking stock of recent developments, the report and its underlying database provide policymakers, stakeholders, and analysts with a point of reference and a basis for policy reform enquiries.
Two key observations emerge from the data. First, carbon pricing instruments, and especially emissions trading systems (ETSs), are being adopted in several countries and their sectoral scope tends to broaden – an evolution related to considerations on climate change, revenue raising, and emerging border carbon adjustment policies. In 2023, 27% of the 79 countries’ greenhouse gas emissions faced a carbon tax or were under an ETS; including fuel excise taxes broadens coverage to 44% of emissions. This is a significant increase in coverage compared to 2018, when these shares stood respectively at 15% and 33%.
Second, ETSs are increasingly diverse and flexible. Examples of flexibility include openness towards the use of carbon credits for compliance and placing targets on the carbon intensity of production – instead of emission levels – thus easing constraints on output. Such flexibility suggests efforts to balance climate change, affordability, competitiveness, growth, and energy security objectives. The observed diversity of policies reflects differences in national circumstances and priorities and provides space for a variety of approaches to innovation. It can also create a need for interoperability across emission trading systems, where there may be a role for international coordination.
The ECR combines the price signals from ETSs, carbon taxes, and fuel excise taxes. The Effective Carbon Rates 2025 report is part of the Carbon Pricing and Energy Taxation (CPET) series and is based on detailed data from 2023, with selected updates on key developments through mid-2025, across 79 countries accounting for approximately 82% of global greenhouse gas (GHG) emissions.
The report compares the level and the structure of ECRs, including the impact of free allowances on ETS price signals, across countries, economic sectors, and fuels. Detailed data on ECRs, by instrument (carbon taxes, ETSs, and fuel excise taxes) and broken down by country, sector, and fuel category, is available in the OECD Data Explorer’s Carbon Pricing and Energy Taxation database. In addition to the overall discussion of ECRs, the report includes a deep dive on evolving design choices in ETSs.
Carbon taxes and ETSs are currently in place in over 50 countries, and their reach continues to expand – an evolution mostly driven by ETSs. Since 2023, carbon pricing instruments have been introduced or are being considered in a dozen countries in Asia, Europe, Latin America, and the Caribbean. Sectoral coverage is increasing within historically covered sectors such as industry and electricity, buildings and domestic transport, but is also broadening to other sectors, including waste incineration, international shipping, and agriculture. The expansion of the Chinese national ETS to the aluminium, cement, and steel sectors is estimated to increase coverage by carbon pricing instruments to 34% in 2025 in the subset of countries analysed in this report.
Design choices for ETSs reflect increased interest in flexibility and in the limitation of compliance costs for firms. There is a move away from systems placing targets on carbon emissions (e.g., cap-and-trade) towards intensity-based systems where targets depend on the carbon intensity of production. Only two out of twenty ETSs were intensity-based in 2018, compared to 12 out of 34 ETSs in 2023. Intensity-based systems now account for 70% of emissions covered by ETSs. This development is linked with the rising practice of accounting for current production levels in free allowance allocation methods, even in cap-and-trade systems. ETSs can also provide sectoral (and in some cases geographical) flexibility by allowing the use of carbon credits for compliance, and temporal flexibility by allowing the banking and borrowing of allowances. More than half of ETSs allow the use of carbon credits for compliance, and almost all allow for banking of permits. These developments illustrate ways in which the balancing of policy objectives plays out, in line with countries’ priorities and circumstances.
