1887

OECD Environment Working Papers

This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.

English

Carbon pricing and COVID-19

Policy changes, challenges and design options in OECD and G20 countries

This paper assesses the role of carbon pricing in a sustainable recovery from COVID-19. It tracks the policy changes in carbon pricing within OECD and G20 countries between January 2020 and August 2021 of the COVID-19 pandemic. Carbon pricing as defined here includes emissions trading schemes, fossil fuel support and carbon, fuel excise or aviation taxes. The paper also highlights the need for the recovery to be sustainable and discusses the advantages, limitations and uses of carbon pricing therein. In addition, it describes additional challenges to as well as increased rationale for carbon pricing in the pandemic. It provides evidence on the effects of carbon pricing on the challenges and discusses carbon pricing design elements to help overcome those challenges. The paper concludes that there were more policy changes with an expected negative impact on climate. However, it is likely that the impact of the climate-positive changes – which are broader in coverage and scope - will outweigh the climate-negative changes.

English

Keywords: sustainable recovery, COVID-19, carbon pricing, carbon tax, emissions trading system, ETS, Fossil fuel subsidies, revenue recycling, climate change, climate mitigation, NDC
JEL: H23: Public Economics / Taxation, Subsidies, and Revenue / Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies; Q58: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environmental Economics: Government Policy; Q56: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth; Q54: Agricultural and Natural Resource Economics; Environmental and Ecological Economics / Environmental Economics / Climate; Natural Disasters and Their Management; Global Warming
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