Aligning Policies for a Low-carbon Economy

image of Aligning Policies for a Low-carbon Economy

This report produced in co-operation with the International Energy Agency (IEA), the International Transport Forum (ITF) and the Nuclear Energy Agency (NEA) identifies the misalignments between climate change objectives and policy and regulatory frameworks across a range of policy domains (investment, taxation, innovation and skills, trade, and adaptation) and activities at the heart of climate policy (electricity, urban mobility and rural land use).

Outside of countries’ core climate policies, many of the regulatory features of today’s economies have been built around the availability of fossil fuels and without any regard for the greenhouse gas emissions stemming from human activities. This report makes a diagnosis of these contradictions and points to means of solving them to support a more effective transition of all countries to a low-carbon economy.



Implementing climate-friendly taxation practices

Taxation is an important lever of economic policy. Taxes and tax expenditures on energy can greatly influence energy-related CO2 emissions. After an overview of existing fossil fuel subsidies, this chapter first describes the diversity of taxes applying to fossil fuels, including the differences between gasoline and diesel fuels in transport. It then identifies other tax provisions that can have a strong influence on emissions, such as the fiscal treatment of company cars and commuting expenses, and the design of property taxes. The role of tax provisions in driving investments in specific activities should also be assessed against the objective of the low-carbon transition.


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