Resource Guide
Research provided by National Library, Singapore.
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Carbon Tax
24 February 2017
Introduction
A carbon tax is a fee for making users of fossil fuels pay for climate damage their fuel use imposes by
releasing carbon dioxide into the atmosphere, and for motivating switches to clean energy.
One of the goals of the December 2015 Paris Agreement, ratified by 195 countries, is to reduce global
emissions as soon as possible. Many countries are thus looking at adopting carbon pricing practices.
The carbon pricing helps shift the burden for environmental damage back on those who are responsible
for it. Polluters can decide for themselves whether to discontinue their polluting activity, reduce
emissions or continue polluting and paying for it. Its aim is to achieve the overall environmental goal in
the most flexible and cost-effective way. Carbon pricing also stimulates clean technology and market
innovation, fueling new, low-carbon drivers of economic growth.
The World Bank explains the two main types of carbon pricing:
 A carbon tax – directly sets a price on carbon by defining a tax rate on greenhouse gas
emissions or more commonly on the carbon content of fossil fuels.
 Emissions trading systems (ETS) – also referred to as a cap-and-trade system, caps the total
level of greenhouse gas emissions and allows those industries with low emissions to sell their
extra allowance to larger emitters. ETS establishes a market price for greenhouse gas
emissions based on the supply and demand for emission allowances.
The choice of instrument adopted by a country depends on its national and economic circumstances.
Today, around 40 countries and more than 20 cities, states and provinces are using carbon pricing
mechanisms with more planning to implement them in the future.
This resource guide presents relevant reports and studies that explain carbon taxing; provides learnings
from countries that have embarked on carbon taxation; and highlights trends in carbon pricing and the
impact of carbon pricing on competitiveness.
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Resource Guide
Research provided by National Library, Singapore.
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Taxing carbon: What, why and how
This report examines the what, why and how of implementing a
carbon tax and using the revenue it would generate. It focuses on
reducing emissions to combat climate change by imposing a
carbon tax (which it finds more politically viable than a cap-andtrade system). It highlights the challenges in applying a tax for all
greenhouse gas emissions or using a “social cost of carbon”
approach to determine carbon pricing. It also highlights lessons
from other countries such as reduced emissions after introduction
of carbon pricing, and significant changes in energy industry,
among others.
Marron, D., Toder, E., & Austin, L. (2015, June). Taxing carbon: What, why and
how. Tax Policy Center, Urban Institute & Brookings Institution. Retrieved February
24, 2017, from
http://www.taxpolicycenter.org/sites/default/files/alfresco/publication-pdfs/2000274Taxing-Carbon-What-Why-and-How.pdf
Learning from 19 carbon taxes: What does the
evidence show?
This paper summarises carbon taxes enacted in 16 countries, two
Canadian provinces (British Columbia and Quebec) and one city
(Boulder, Colorado) and reviews various studies that explore the
impact of these taxes. It finds that carbon tax has been successful
in British Columbia and there have been proposals to increase the
tax; there was an overall decline in carbon emission during the two
years carbon tax was in effect in Australia; Norwegian tax found a
modest reduction in emissions; and Sweden which has the highest
carbon tax, also saw a modest overall emissions reduction and an
increase in the use of biomass for district heating; among others.
Nadel, S. (2016). Learning from 19 carbon taxes: What does the evidence show?
American Council for an Energy-Efficient Economy. Retrieved February 24, 2017,
from
http://aceee.org/files/proceedings/2016/data/papers/9_49.pdf
Carbon taxation policy case studies
This policy report analyses different carbon taxation policies in the
world. It looks at nine cases: Finland; Sweden; United Kingdom;
France; Japan; Chile; South Africa; British Columbia (Canada); and
Australia. It provides insights that can be considered for a future
carbon tax. They include: discussing how best to design the carbon
pricing policies to achieve maximum amount of greenhouse gas
mitigation and minimum harm to the country’s development; setting
the right level of tax for a carbon tax mechanism to be successful;
and setting a clear timetable to gradually increase the tax levels
into the future; among others.
Bavbek, G. (2016, October). Carbon taxation policy case studies. Centre for
Economics and Foreign Policy Studies. Retrieved February 24, 2017, from
http://www.edam.org.tr/en/File?id=3200
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Resource Guide
Research provided by National Library, Singapore.
______________________________________________________________________________________
Global trends in carbon pricing
Overview of existing, emerging, and potential regional, national, and subnational carbon
pricing instruments (ETS and tax)
Kossoy, A., Peszko, G., et. al. (2015) State and trends of carbon pricing. World Bank Group & Ecofys.
Retrieved February 24, 2017, from
http://documents.worldbank.org/curated/en/636161467995665933/pdf/99533-REVISED-PUB-P153405Box393205B.pdf
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Resource Guide
Research provided by National Library, Singapore.
______________________________________________________________________________________
The price is right: A straightforward premier on
carbon pricing system
No matter where a tax or trading system falls in an economy’s
supply chain – from electricity- and fuel-dependent citizens to the
biggest energy-industry players – everyone pays and everyone
profits from it. This carbon-pricing primer illustrates the building
blocks, key players and processes of a carbon tax system; a capand-trade system; and a simple hybrid system, and highlights the
pros and cons of each. The examples cited in this report are similar
with British Columbia’s and Quebec’s systems.
Walker, N. & Perrault, J. (2016). The price is right: A straightforward premier on
carbon pricing system. Energy Exchange. Retrieved February 24, 2017, from
http://www.energy-exchange.net/wpcontent/uploads/2016/01/ThePriceIsRight_EEWinter16.pdf
Ireland’s carbon tax and fiscal crisis: Issues in
fiscal adjustment, environmental effectiveness,
competitiveness, leakage and equity implications
In 2010, the Troika provided Ireland with financial support to tide
over its 2008 fiscal crisis. During the same year, a carbon tax
covering most CO2 emissions from non-traded sectors (mainly
transport, heat in buildings and heat and process emissions by
small enterprises) was introduced. This paper examines the
features of the tax; the interplay between fiscal adjustment and
meeting the obligations of raising taxes; and the implications for
competitiveness and carbon leakage, environmental effectiveness
and equity issues. It also draws conclusions regarding why it
happened and provides insights for countries in a similar situation.
Convery, F., Dunne, L., & Joyce, D. (2013). Ireland’s carbon tax and fiscal crisis:
Issues in fiscal adjustment, environmental effectiveness, competitiveness, leakage
and equity implications. OECD Environment Working Papers, No. 59, OECD.
Retrieved February 24, 2017, from http://dx.doi.org/10.1787/5k3z11j3w0bw-en
What is the impact of carbon pricing on
competitiveness?
This report looks at whether carbon pricing negatively impacts
competitiveness; potential impacts on competitiveness can be
managed as carbon prices increase; and carbon prices improve
competitiveness. It finds that businesses and governments are
increasingly using carbon prices to drive the cost-efficient transition
to a low-carbon economy. A key challenge to accepting carbon
pricing is the fear of reduced economic competitiveness, but
evidence till date shows little impact. Competitiveness concerns
can be addressed through political engagement and targeted
policies.
What is the impact of carbon pricing on competitiveness? (2016, June). Carbon
Pricing Leadership Coalition. Retrieved February 24, 2017, from
http://pubdocs.worldbank.org/en/759561467228928508/CPLC-Competitivenessprint2.pdf
All rights reserved. National Library Board, 2017.
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