Climate change

Emissions of greenhouse gases (GHGs) from human activities disturb the radiative energy balance of the earth-atmosphere system. They exacerbate the natural greenhouse effect, leading to temperature changes and other disruption of the earth's climate. Land use changes and forestry also play a role by altering the amount of greenhouse gases captured or released by carbon sinks. Carbon dioxide (CO2) from the combustion of fossil fuels and deforestation is a major contributor to greenhouse gases. CO2 makes up the largest share of greenhouse gases and thus is a key factor in countries’ ability to mitigate climate change. National emissions are also affected by changes in global demand and supply patterns with increasing trade flows and the displacement of carbon-intensive production abroad. Reductions in domestic emissions can thus be partially or wholly offset elsewhere in the world.

Climate change is of global concern for its effects on green growth and sustainable development. It threatens ecosystems and biodiversity, affects water resources, human settlements and the frequency and scale of extreme weather events, with significant consequences for food production, human well-being, socio-economic activities and economic output.

The main challenges are to mitigate GHG emissions and stabilise GHG concentrations in the atmosphere at a level that would limit dangerous interference with the climate system, and to adapt to and manage risks from climate change.

  • This implies implementing national and international low-carbon strategies and further decoupling GHG emissions from economic growth. It also implies increasing the share of renewable energy sources in the supply mix, and reducing energy intensity by adopting energy-efficient production processes and increasing the energy efficiency of consumer goods and services.

  • With increasing trade flows, interdependent global value chains and the relocation of carbon-intensive production abroad, reductions in domestic emissions can be partially or wholly offset elsewhere in the world. Domestic mitigation efforts must thus be placed in a global context and must build on a good understanding of carbon flows associated with international trade and final domestic demand.

  • Ensuring a proper mix of market-based instruments, for example by promoting carbon pricing, environmentally-related taxation and removing government subsidies and other support for fossil fuels, plays an important role in this transition.

  • Beyond these steps, governments must align policies across a diverse range of non-climate areas including transport, housing, construction, spatial planning, agriculture and development cooperation. And they must consider synergies between emissions reduction, adaptation strategies and broader well-being objectives such as reduced air pollution and improved health.

Environmental performance can be assessed against domestic objectives and international goals and commitments. Tackling climate change and underlying drivers is part of the 2030 Agenda for Sustainable Development (New York, September 2015) under Goal 13: “Take urgent action to combat climate change and its impacts”; Goal 12: “Ensure sustainable consumption and production patterns”; Goal 9: “Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation” and Goal 7: “Ensure access to affordable, reliable, sustainable and modern energy for all”.

The main international agreement is the United Nations Framework Convention on Climate Change (1992) which is the basis of:

  • The Kyoto Protocol (1997) that sets internationally binding and differentiated emission reduction targets for six GHGs for 2008-12. It has been ratified by 177 parties, including all but two OECD countries, and has been in force since 2005. 37 industrialised countries and the European Union committed to reduce GHG emissions by an average of 5% below 1990 levels. The "Doha Amendment to the Kyoto Protocol" (2012), includes new commitments for the period 2013-20 and a revised list of GHGs. Parties committed to reduce GHG emissions by an average of at least 18% below 1990 levels over 2013-20. The amendment is not yet in force.

  • The Paris Agreement (2015) that strengthens the global response to the threat of climate change. The objective is to keep the average global temperature rise this century well below 2 degrees Celsius and as close as possible to 1.5 degrees Celsius above pre-industrial levels. Parties have expressed their commitments to 2025 or 2030 through nationally determined contributions (NDCs), including a regular report on their emissions and implementation efforts.

This is supported by the commitment in September 2009, of the Leaders of the Group of Twenty (G20) economies to “phase out and rationalize over the medium term inefficient fossil fuel subsidies while providing targeted support for the poorest.” To follow up on this commitment, G20 members have since engaged in a voluntary process of periodically reporting on their fossil-fuel subsidies.

The indicators presented here include the following:

They can be read in conjunction with other indicators on the driving forces and impacts of climate change, which are presented under other Environment at a Glance themes:

  • Global GHG emissions have increased by 1.5 fold since 1990, driven by economic growth and increasing fossil energy use.

  • In almost all OECD countries however, emissions have been declining in recent years partly due to the economic slowdown following the 2008 financial crisis, but also to strengthened climate policies.

  • The rate of progress in reducing emissions varies significantly across individual OECD countries. Progress overall is insufficient and GHG emissions are expected to rise again due to recent increase of energy use and CO2-related emissions.

Despite some progress achieved in decoupling GHG emissions from GDP growth, emissions are still growing in some countries. Global GHG emissions have increased by 1.5 fold since 1990, driven by economic growth and increasing fossil energy use in developing countries. Historically, OECD countries emitted the bulk of global GHGs, but the share of BRIICS countries in global emissions has been increasing to over 40% since 2010. CO2 determines the overall trend. Together with CH4 and N2O, it accounts for about 98% of GHG emissions (IEA, 2019).

Emissions of OECD countries peaked in 2007, have been gradually falling over the past 12 years (-10%). Emissions have been declining in most OECD countries, partly due to a slowdown in economic activity following the 2008 economic crisis, but also to strengthened climate policies and changing patterns of energy consumption. Emission intensities per unit of GDP and per capita decreased since 2005 in almost all OECD countries, revealing a strong overall decoupling from economic growth. Under the Kyoto Protocol, most OECD countries met their emission reduction commitments for the first period 2008-12 and are on track to meet their 2020 target.

Overall progress is however insufficient. GHG emissions are expected to rise again due to recent increase of energy use and CO2-related emissions. Climate change is increasingly impacting people’s lives, national economies, biodiversity and ecosystems, including the ocean.

On average, energy industries generate 28% of GHG emissions in OECD countries, followed by transport (24%), manufacturing industries (12%), agriculture, (10%), industrial processes (7%) and waste (3%). While the share of emissions from energy industries have slightly decreased since 2005, those from transport and agriculture increased. In some countries such as Luxembourg, Slovenia, Sweden and Switzerland, emissions from transport account for more than 30% of total emissions, while in New Zealand and Ireland, agriculture is the first GHG emitter (above 30%).

Individual OECD countries’ rates of progress vary significantly, whether emissions are considered in absolute numbers, per capita amounts or per unit of GDP. This partly reflects different national circumstances, such as composition and rate of economic growth, socio-demographic developments, energy supply and consumption patterns, energy prices, and the extent to which the countries have taken steps to reduce emissions from various sources and to price carbon.

Data on GHG emissions display a good level of comparability. The high per-GDP emissions of Estonia result from the use of oil shale for electricity generation (oil shale has a high carbon emission factor). The high per-capita emissions of Luxembourg result from a high number of cross-border workers and the lower taxation of road fuels compared to neighbouring countries, which attracts drivers to refuel in the country.

Reductions in national emissions may also be the result of offshoring domestic production (and the associated emissions). Evidence of decoupling based on domestic emissions per unit of GDP or per capita, therefore, may reveal only part of the story.

For further details, see the metadata in the source databases listed under Sources below.

  • Despite a slowdown in the OECD area, global CO2 emissions continued to grow. Very few countries have managed to reduce emission levels in absolute terms.

  • OECD countries emit about one third of global CO2 emissions from energy use, compared to more than 50% in 1990.

  • A more nuanced picture emerges when emissions are considered from the perspective of final demand. The carbon footprint of OECD countries is generally higher than emissions from domestic production.

CO2 from the combustion of fossil fuels and biomass accounts for about 90% of total CO2 emissions and two third of total GHG emissions, therefore determining overall GHG emissions trend. Global energy-related CO2 emissions picked-up and reached a record high of 33.6 billion tonnes in 2018. They have stabilised in 2019. This level exceeds the range of 25-30 Gt of CO2e per year, considered to be in line with containing temperature rises below 1.5°C (IPCC (IPCC, 2018). Emissions are still growing in many countries, mainly due to increases in the transport and the energy sectors.

Since 2000, OECD energy-related CO2 emissions have decreased while economic growth has been positive. This is due to structural changes in industry and energy supply, improvements in energy efficiency in production processes and structural changes in global value chains. Most countries have achieved only a relative decoupling between emissions and economic growth, although some managed to reduce emission levels in absolute terms. While decreasing in OECD America and OECD Europe, energy-related CO2 emissions continue to grow in the OECD Asia-Oceania region. This is due to energy supply and consumption patterns and trends, often combined with relatively low energy prices.

Since 1990, energy-related CO2 emissions have grown more slowly in OECD countries as a group than they have worldwide. Today, OECD countries emit about one third of global CO2 emissions from energy use, compared to more than 50% in 1990.

On a per-capita basis, OECD countries still emit far more CO2 than most other world regions, with 8.3 tonnes of CO2 emitted per capita on average in OECD countries in 2019, compared to 4.4 tonnes in the rest of the world. Individual OECD countries’ rates of progress vary significantly, regardless of whether they are considered in absolute numbers, per capita amounts or per unit of GDP.

A more nuanced picture emerges when emissions are considered from the perspective of final demand. The carbon footprint of OECD countries, that accounts for all carbon emitted anywhere in the world to satisfy domestic final demand is generally higher than emissions from domestic production. This is because OECD countries have increasingly outsourced the production of consumer goods to other countries.

The CO2 emission estimates are affected by the quality of the underlying energy data, but in general the comparability across countries is quite good. The low CO2 emissions productivity of Estonia result from the use of oil shale for electricity generation. Oil shale has a high-carbon emission factor. The high per-capita emissions of Luxembourg result from the lower taxation of road fuels compared to neighbouring countries, which attracts drivers to refuel in the country.

Carbon productivity indicators inform about the relative decoupling between economic activity and carbon emissions into the atmosphere. They provide insight into how much carbon productivity has improved. They also measure how much of the improvement is due to domestic policies and how much to displacement or substitution effects. The demand perspective helps explain production-based trends.

Reductions in national emissions can also be achieved by offshoring domestic production and, thus, the related emissions. Evidence of decoupling based on domestic emissions, therefore, may reveal only part of the story.

For further details see the metadata in the source databases listed under Sources below.

  • The COVID-19 pandemic and associated restrictions on mobility resulted in a 6% decrease of total energy supply between 2019 and 2020 in the OECD.

  • OECD countries continue to rely on fossil fuels for 78% of their energy; although increasing, renewables still play only a relatively minor role in energy mixes.

  • Energy intensity decreased for OECD countries overall, but while some decoupling of environmental effects from growth in energy use has been achieved, results to date are insufficient to effectively reduce air and GHG emissions from energy use.

In 2020, energy demand has contracted by 4% globally and by 6% in the OECD, due to the COVID-19 pandemic and associated restrictions on mobility (IEA, 2021). Total energy supply (TES) per capita has declined by 7% on average across the OECD between 2019 and 2020: the highest decrease occurred in Luxembourg, Colombia, Greece, Spain and France, while intensities per capita have continued to rise in Norway and Australia.

Global improvements in energy efficiency have been declining since 2015. As a result of the Covid-19 crisis and continuing low energy prices, energy intensity improved by only 0.8% in 2020, roughly half the rate for 2019 (1.6%) (IEA, 2021).

In the 1990s and 2000s, energy intensity per unit of GDP decreased for OECD countries overall as a consequence of structural changes in the economy and energy conservation measures, and, since 2009, as a consequence of the slowdown in economic activity following the economic crisis. In some countries, the decrease was due to the transfer of energy-intensive industries to other countries. Such outsourcing may increase pressures on the global environment if less energy efficient techniques are involved.

Variations in energy intensity among OECD countries are wide. They depend on national economic structure and income, geography, energy policies and prices, and countries’ endowment in different types of energy resources. While some decoupling of environmental effects from growth in energy use has been achieved, results to date are insufficient to effectively reduce air and GHG emissions from energy use. Relative decoupling between TES and GDP is occurring in all regions of the OECD, however, in OECD Asia-Oceania, it began much later (2003) than in OECD Europe and OECD America (1990).

The supply structure varies considerably among countries. It is influenced by demand from industry, transport and households, by national energy policies and by national and international energy prices. Developments in TES were accompanied by changes in the fuel mix. Since 2000, OECD countries’ reliance on fossil fuels declined although it remains close to 78%. The shares of solid fuels and oil slightly fell, while those of natural gas and renewable energy rose. Biofuels and waste, followed by hydro represent the largest renewable sources.

In 2020, even while economies bent under the weight of Covid-19 lockdowns, renewable sources of energy such as wind and solar PV continued to grow, and electric vehicles set new sales records (IEA, 2021). Renewables (i.e. solar, wind, liquid biofuels and biogases) with the lowest shares in TES exhibited the highest growth rates over the last decade, now making 30% of electricity production. The largest renewable sources are biofuels and waste, followed by hydro.

Data quality is not homogeneous for all countries. In some countries, data are based on secondary sources, and where incomplete, estimates were made by the IEA. In general, data are likely to be more accurate for production and trade than for international bunkers or stock changes; and statistics for biofuels and waste are less accurate than those for traditional commercial energy data. Estonia strongly rely on domestically produced oil shale (transformed into other petroleum products and exported). This production is counted as negative to oil in total energy supply, resulting in a negative share in the energy mix.The high values for Iceland are due to a significant increase in the production of hydro- and geothermal power mainly used in aluminium smelters. The supply structure, which may vary considerably among countries is dependent on final demands by industry, transport and the household sector, and is highly influenced by national energy policies and endowments in energy resources.

For further details see the metadata in the source databases listed under Sources below.

  • In the OECD area, climate change-related taxes raised USD 770 billion in 2020, representing the majority of environmentally related tax revenue (90%).

  • The bulk of climate change related tax revenue comes from taxing energy and transport; pollution and resource tax bases play a minor role in generating revenue.

  • Overall, the share of environmentally related tax revenue (ERTR) continues to decline in OECD countries, amounting to 5% of total tax revenue in 2020, down from 5.9% in early 2000s. Compared to GDP, ERTR is also decreasing and reached 1.5% of GDP in 2020, down from 1.8% of GDP in the early 2000s.

In the OECD area, climate change-related taxes raised USD 770 billion in 2020, representing the majority of environmentally related tax revenue (90%). This share has remained relatively unchanged since 2000. The bulk of revenue coming from taxes directed at climate change is raised from taxing energy (77%), in particular motor fuels, and transport (22%), while pollution and resource tax bases play a minor role in generating revenue. Pricing CO2 and energy remains the most economically efficient tool to bend the direction of carbon emissions globally, and create favourable conditions to mobilise private finance and investment required to achieve global mitigation objectives. Taxes on tax bases such as logging, forestry products and land use change, in turn, can help safeguard planetary carbon sinks and encourage carbon sequestration.

Overall, the share of environmentally related tax revenue (ERTR) continues to decline in OECD countries, amounting to 5% of total tax revenue in 2020, down from 5.9% in early 2000s. Compared to GDP, ERTR is also decreasing and reached 1.5% of GDP in 2020 down from 1.8% of GDP in the early 2000s. The decreasing trend is a combination of factors, namely, that tax rates are typically defined in physical units (e.g. per litre) and hence are set in nominal terms. Without inflation adjustment, these rates decrease in real terms over time. While countries such as Denmark, the Netherlands and Sweden have implemented such adjustments, most OECD countries do not yet apply inflation adjustments to environmentally related taxes. Another factor contributing to this trend is the increase in crude oil prices up until mid-2014, which triggered substitution away from motor fuel use, also making adjustments in nominal tax rates on motor fuels politically difficult. Yet some countries, such as Slovenia, Costa Rica, Turkey and Estonia strengthened the role of environmentally related taxes and have tripled their share of tax revenue since 2000.

The indicators on environmentally related taxes should not be used to assess the “environmental friendliness” of the tax systems. For such analysis, additional information, describing the economic and taxation structure of each country, is required. Moreover, a number of environmentally related taxes can have important environmental impacts even if they raise little (or no) revenue. In addition, revenue from fees and charges, and from royalties related to resource management, is not included.

Comparisons of ERTRs in OECD countries provide a useful starting point for analysing the impact of environmental taxation, however, comparing only the levels of revenue does not provide the full picture of a country’s environmental policy, as it does not provide information on the levels of tax rates or the exemptions applied. Other parts of the OECD PINE database, including information on tax rates and exemptions, allows deeper assessment of the environmental impacts of these taxes. In addition, governments may choose to implement environmental policy using a range of other instruments, including fees and charges, expenditures (both direct and subsidies) and regulation, some of which are also detailed in the PINE database (see http://oe.cd/pine for information on the use of alternative instruments in countries).

For further details see the metadata in the source databases listed under Data sources below.

  • The 50 OECD, G20, and Eastern Partnership economies covered by the OECD Inventory provided around USD 183 billion in support for fossil fuels in 2020, a 10% decrease compared to the previous year.

  • This was mostly the mechanical result of declining fuel prices and demand as the COVID-19 pandemic led to a lull in global activity. In today’s climate of rising energy prices, it is expected that consumption subsidies will increase again in 2021, aided by an uptick in economic activity.

  • On the production side, the data show a 5% rise in direct support for the production of fossil fuels, some of this is the result of large government bailouts to state oil and electricity companies.

Many governments continue to support fossil fuel production and use financially, in particular oil and gas. This undermines the effectiveness of environmental policies by lowering the cost of emitting carbon and is a barrier to moving towards a more energy efficient and low-carbon economy. It can also impose a strain on government budgets.

The 50 OECD, G20, and Eastern Partnership economies covered by the OECD Inventory, provided around USD 183 billion in support for fossil fuels in 2020, a 10% decrease compared to the previous year. This was mostly the mechanical result of declining fuel prices and demand as the COVID-19 pandemic led to a lull in global activity. In today’s climate of rising energy prices, it is expected that consumption subsidies will increase again in 2021, aided by an uptick in economic activity.

The transport sector alone saw a 15% drop in support due to the slump in fuel use from restrictions on mobility during the pandemic. Petroleum saw the steepest drop in 2020, with support down 19% from 2019. On the production side (PSE), the data show a 5% rise in direct support for the production of fossil fuels, some of this being the result of large government bailouts to state oil and electricity companies.

The OECD Inventory of Support Measures for Fossil Fuels, which covers 50 OECD, G20, and Eastern Partnership economies, identifies and estimates policies that support the production or consumption of fossil fuels. It includes direct budgetary transfers and tax expenditures that may provide a benefit or preference for fossil-fuel production or consumption relative to alternatives. Unlike direct budgetary expenditures, where outlays can usually be measured, tax expenditures are estimates of the fiscal revenue that is foregone due to a particular feature of the tax system that reduces a tax rate relative to a benchmark tax rate. It is important to note that definitions of tax expenditures, and the benchmarks used to estimate their size, are nationally determined. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.

Measures appearing in the OECD Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.

Government support for the production and consumption of fossil fuels totalled USD 351 billion in 2020, according to OECD and IEA analysis of 81 economies. This analysis uses a combined OECD-IEA estimate of support for fossil fuels that merges OECD Inventory estimates and IEA price-gap estimates (IEA Energy subsidies - Tracking the impact of fossil-fuel subsidies).

The combined OECD-IEA estimate shows an 29% decline from USD 495 billion in 2019 that is due mostly the mechanical result of declining fuel prices and demand as the COVID-19 pandemic led to a lull in global activity. Record-low oil prices meant governments spent less subsidising energy costs for end-users. It does not reflect real efforts to phase out inefficient subsidies. However, the IEA estimates that consumption subsidies will more than double in 2021 due to higher fuel prices and energy use, coupled with hesitancy on fossil fuel pricing reforms.

  • Carbon pricing encourages the shift of production and consumption choices towards low-carbon options. It is not yet used to its full potential according to the latest data. Overall progress with carbon pricing remains modest. Around 60% of carbon emissions from energy use in OECD and G20 countries remained entirely unpriced in 2018.

  • With a Carbon Pricing Score of only 19%, the 44 OECD and G20 countries analysed still have 80% of the way to go to reach the EUR 60 per tonne of CO2 benchmark that would be needed to move towards a low-carbon economy. Less than a quarter of the countries studied are more than halfway to the EUR 60/tCO2 benchmark, and just three countries achieved more than two-thirds of the benchmark in 2018.

  • In most countries effective carbon rates (ECR) in the road transport sector are higher than in other sectors. About 53% of emissions from road transport are already priced above EUR 60/tCO2 and around 24% are priced at above EUR 120/tCO2. ECRs are particularly low in the electricity and the industry sectors. In the residential and commercial sector, there is significant heterogeneity, where a handful of countries price a significant share of carbon emissions above EUR 60/tCO2, but with very low carbon prices in other countries.

  • Public expenditures on energy-related research, development and demonstration (RD&D) increasingly target renewable energy in most OECD countries. At the same time, there have been sharp cuts in publicly-funded RD&D on fossil fuel energy.

  • OECD countries represent the vast majority of worldwide patents on climate change mitigation technologies. The share of “high-value” climate change mitigation inventions (filed for protection in at least two jurisdictions) in all technologies has increased from around 4% in the early 1990s to over 9% in latest years.

  • Among selected technologies, the increase in filed inventions since 1990 has been more marked for road transport and energy storage. Renewable energy generation technologies have increased the fastest up to 2011, to then decline. Overall, the number of filed patents in climate change mitigation technologies has increased till 2013, to then level off and stabilise.

  • About 27% of Official development assistance (ODA) targets climate action to some degree. In 2019, donors of the OECD Development Assistance Committee (DAC) committed USD 36.0 billion in bilateral allocable ODA that principally or significantly targeted climate action (screened against the Rio markers). This represents an increase in volume of 45% since 2014. 44% went to climate change mitigation activities, 33% to climate change adaptation, and 23% to projects that addressed both climate change mitigation and adaptation.

  • While this growth is promising, the majority of ODA flows have still not been aligned with the objectives of the Paris Agreement. The Intergovernmental Panel on Climate Change (IPCC) has estimated that limiting global warming to 1.5°C will require average investments in energy systems of between USD 1.6 and USD 3.8 trillion per year between 2016 and 2050.

Annual surface temperature change: Annual surface temperature change is measured in Celsius degrees (°C). It is calculated as the difference between the annual average temperature (in a given year) and the average annual temperature of the 1951-1980 period. Data are obtained from the FAOSTAT Temperature Change dataset of the Food and Agriculture Organization of the United Nations. Data are based on the publicly available GISTEMP data, the Global Surface Temperature Change data distributed by the National Aeronautics and Space Administration Goddard Institute for Space Studies (NASA-GISS).

Carbon dioxide (CO2) emissions from energy use (production-based CO2 emissions): Refer to gross direct CO2 emissions from fossil fuel combustion, emitted within the national territory. Human-caused emissions from other sources are not included. Emissions from oil held in international marine and aviation bunkers are excluded. CO2 removal by sinks, indirect emissions from land use changes and indirect effects through interactions in the atmosphere are not taken into account.

Carbon dioxide (CO2) emissions from transport: Transport contains emissions from the combustion of fuel for all transport activity, regardless of the sector, except for international marine bunkers and international aviation bunkers, which are not included in transport at a national or regional level (except for World transport emissions). This includes domestic aviation, domestic navigation, road, rail and pipeline transport, and corresponds to IPCC Source/Sink Category 1 A 3.

Carbon dioxide (CO2) emissions from international transport: Include international marine and aviation bunkers.

International marine bunkers contains emissions from fuels burned by ships of all flags that are engaged in international navigation. The international navigation may take place at sea, on inland lakes and waterways, and in coastal waters. Consumption by ships engaged in domestic navigation is excluded. The domestic/international split is determined on the basis of port of departure and port of arrival, and not by the flag or nationality of the ship. Consumption by fishing vessels and by military forces is also excluded.

International aviation bunkers contains emissions from fuels used by aircraft for international aviation. Fuels used by airlines for their road vehicles are excluded. The domestic/international split should be determined on the basis of departure and landing locations and not by the nationality of the airline.

Carbon footprint (demand-based CO2 emissions): Refer to the CO2 from energy use emitted during the various stages of production (in the country or abroad) of goods and services consumed in domestic final demand.

OECD Indicators on Carbon dioxide (CO2) emissions embodied in international trade (TECO2) are derived by combining the OECD Inter-Country Input-Output (ICIO) Database and the International Energy Agency (IEA) statistics on CO2 emissions from fuel combustion. Emissions from fuels used for international aviation and maritime transport (i.e. aviation and marine bunkers) are also considered.

For more information, see web page: http://oe.cd/io-co2.

Climate change-related tax revenue: Revenue raised from taxes and auctioning of tradable permits directed at climate change. These include specific taxes on i) energy products and revenue from auctioning of CO2 tradable allowances; ii) use of motor vehicles, iii) pollution (e.g. cement production); and iv) resource extraction (e.g. forestry taxes).

The information on taxes and the associated tax revenue is extracted from the OECD Policy Instruments for the Environment (PINE) database (http://oe.cd/pine). The PINE database, contains quantitative and qualitative information on over 3500 policy instruments in 110 countries worldwide. Policy instruments are tagged into 13 environmental domains that represent the focal issues (environmental externalities). Instruments can have both a direct and an indirect effect on several environmental domains; however, only the domain to which the instrument has a direct effect is considered. For more details, see the metadata to the OECD Environmentally related tax revenue dataset.

Effective carbon rates: The Effective Carbon Rate (ECR) is the sum of taxes and tradeable permits that effectively put a price on carbon emissions. More precisely, the ECR consists of three components: fuel excise taxes, carbon taxes and tradeable carbon emission permits.

The share of emissions priced above EUR Y per tonne of CO2 shows the share of emissions within a country or sector with a carbon price that exceed EUR Y in percent.

Aiming to limit global temperature increases to 1.5°C, as called for in the Paris Agreement, requires decarbonisation by about mid-century.5,6 Against this background, Effective Carbon Rates 2021 employs three carbon price benchmarks:

  • EUR 30 per tonne of CO2 , a historic low-end price benchmark of carbon costs in the early and mid-2010s.7 A carbon price of EUR 30 in 2025 is also consistent with a slow decarbonisation scenario by 2060 according to Kaufman et al (2020).

  • EUR 60 per tonne of CO2 , a low-end 2030 and mid-range 2020 benchmark according to the High-Level Commission on Carbon Pricing. A carbon price of EUR 60 in 2030 is also consistent with a slow decarbonisation scenario by 2060 according to Kaufman et al (2020)

  • EUR 120 per tonne of CO2 , a central estimate of the carbon price needed in 2030 to decarbonise by mid-century under the assumption that carbon pricing plays a major role in the overall decarbonisation effort). EUR 120 is also more in line with recent estimates of overall social carbon costs.

The Carbon Pricing Score (CPS) measures the extent to which countries have attained the goal of pricing all energy related carbon emissions at certain benchmark values for carbon costs. The more progress that a country has made towards a specified benchmark value, the higher the CPS. For example, a CPS of 100% against a EUR 30 per tonne of CO2 benchmark means that the country (or the group of countries) prices all carbon emissions in its (their) territory from energy use at EUR 30 or more. A CPS of 0% means that the country does not impose a carbon price on any emissions at all. An intermediate CPS between 0% and 100% means that some emissions are priced, but that not all emissions are priced at or above the benchmark price.

Energy public RD&D budget, % total energy public RD&D: Public budget directed at research, development and demonstration (RD&D) related to renewable energy, including hydro, geothermal, solar (thermal and PV), wind and tide/wave/ocean energy, as well as combustible renewables (solid biomass, liquid biomass, biogas) and other renewable energy technologies (all supporting measuring, monitoring and verifying technologies in renewable energies). It is expressed as a percentage of total energy RD&D public budget (directed at all forms of energy).

Public budget directed at research, development and demonstration (RD&D) related to fossil fuels, including oil, gas and coal and excluding RD&D related to CO2 capture and storage (CCS). They are expressed as a percentage of total energy RD&D public budgets (directed at all forms of energy).

RD&D budgets of public entities (government, public agencies and state-owned enterprises, as defined by the IEA) cover research, development and demonstration related to the production, storage, transportation, distribution and rational use of all forms of energy. This covers basic research (oriented towards the development of energy-related technologies), applied research, experimental development and demonstration. Deployment is excluded from IEA Energy RD&D. Estimates of RD&D are reported from the funder perspective as budget (rather than as expenditure from the performer perspective).

Public energy RD&D includes all programmes that focus on: (i) sourcing energy; (ii) transporting energy; (iii) using energy; and (iv) enhancing energy efficiency. As collected by the IEA, these programmes concern one of the following seven main branches of energy-related developments: (i) energy efficiency; (ii) fossil fuels (oil, gas and coal); (iii) renewables; (iv) nuclear fission and fusion; (v) hydrogen and fuel cells; (vi) other power and storage techniques; and (vii) other cross-cutting technologies or research.

Data on public RD&D are obtained from the RD&D Budget Dataset from the IEA Energy Technology RD&D Statistics Database.

The energy RD&D data collected by the IEA should not be confused with the data on government budget appropriations or outlays on R&D (GBAORD) collected by the OECD Directorate for Science, Technology and Industry for the socio-economic objective “Production, distribution and rational utilisation of energy”, as defined in the Frascati Manual, which is a narrower concept.

Climate-related technology development (patents): Include only higher-value inventions (with patent family size ≥ 2). A patent family is defined as the set of all patent applications protecting the same ‘priority' (as defined by the Paris Convention), also referred to as ‘simple patent family’. Data refer to inventors’ country of residence.

The number of climate change mitigation inventions is expressed as a percentage of all domestic inventions (in all technologies). Changes in ‘environmental’ technological innovation can then be interpreted in relation to innovation in general. The counts used include only higher-value inventions (with patent family size ≥ 2). A patent family is defined as the set of all patent applications protecting the same ‘priority' (as defined by the Paris Convention), also referred to as ‘simple patent family. Data refer to inventors’ country of residence

The number of environment-related inventions is expressed as a percentage of all domestic inventions (in all technologies). Changes in ‘environmental’ technological innovation can then be interpreted in relation to innovation in general. Indicators of technology development are constructed by measuring inventive activity using patent data across a wide range of environment-related technological domains (ENVTECH), including environmental management, water-related adaptation, and climate change mitigation technologies. The counts used here include only higher-value inventions (with patent family size ≥ 2). A patent family is defined as the set of all patent applications protecting the same ‘priority' (as defined by the Paris Convention), also referred to as ‘simple patent family

Greenhouse gas emissions statistics: The following sources of greenhouse gas statistics are used in this document:

  • National GHG inventories: OECD Environment Statistics (database) based on national inventory submissions to the United Nations Framework Convention on Climate Change (UNFCCC, CRF tables), and replies to the OECD State of the Environment Questionnaire. These statistics come from official submissions of GHG emissions data by Parties to the UNFCCC. Complete data sets including and excluding land use, land-use change and forestry (LULUCF) are available for Annex I Parties to the UNFCCC and partial data sets are available for non-Annex I Parties.

  • IEA statistics on CO2 emissions: IEA estimates of CO2 emissions from fuel combustion are calculated using IEA energy data and the default methods and emission factors from the Revised 1996 IPCC Guidelines for National Greenhouse Gas Inventories.

  • IEA/EDGAR statistics on total GHG emissions: This dataset combines IEA statistics on CO2 from fossil fuel combustion with data for CO2 from non-energy-related sources and gas flaring, and emissions of methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulphur hexafluoride from the Emissions Database for Global Atmospheric Research (EDGAR). The EDGAR database includes partial coverage of emissions from land use, land-use change and forestry (direct emissions from forest fires, emissions from decay of aboveground biomass that remains after logging and deforestation, emissions from peat fires and decay of drained peat soils).

Greenhouse gas emissions by source (territory principle): Greenhouse gas (GHG) emissions refer to the sum of GHGs that have direct effects on climate change and are considered responsible for a major part of global warming: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), chlorofluorocarbons (CFCs), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulphur hexafluoride (SF6) and nitrogen trifluoride (NF3).

Greenhouse gas emission estimates are divided into main sectors, which are groupings of related processes, sources and sinks:

  1. 1 Energy (energy industries, manufacturing industries, transport and other energy uses)

  2. 2 Industrial Processes and Product Use (IPPU)

  3. 3 Agriculture

  4. 4 Waste

  5. 5 Other (e.g., indirect emissions from nitrogen deposition from non-agriculture sources).

They refer to GHGs emitted within the national territory and exclude CO2 emissions and removals from category 4 - Land use change and forestry. They do not cover international transactions of emission reduction units or certified emission reductions.

Greenhouse gas emissions by sector (residence principle)Greenhouse gas emissions by sector are data from Air Emission Accounts (emissions from the national economy).

Data refer to total emissions of CO2 (CO2 emissions from energy use and industrial processes, e.g. cement production), CH4 (methane emissions from solid waste, livestock, mining of hard coal and lignite, rice paddies, agriculture and leaks from natural gas pipelines), N2O (nitrous oxide), HFCs (hydrofluorocarbons), PFCs (perfluorocarbons), (SF6 +NF3) (sulphur hexafluoride and nitrogen trifluoride), SOx (sulphur oxides, NOx (nitrogen oxides), CO (carbon monoxide), NMVOC (non-methane volatile organic compounds), PM2.5 (particulates less that 2.5 µm), PM10 (particulates less that 10 µm) and NH3 (ammonia).

The OECD Air Emission Accounts present data based on ISIC rev. 4.

The System of Environmental-Economic Accounting (SEEA) Central Framework is an accounting system developed around two objectives: "understanding the interactions between the economy and the environment" and describing "stocks and changes in stocks of environmental assets". The SEEA combines national accounts and environmental statistics in a statistical framework with consistent definitions, classifications and concepts allowing policy makers to evaluate environmental pressures from economic activities at macro- and meso-levels.

For Japan and the United States, data are OECD estimates.

The OECD methodology takes the emission data from the national greenhouse gas inventories submitted under the United Nations Framework Convention on Climate Change (UNFCCC) as a starting point. The emission data in the inventories are allocated to ISIC rev. 4 industries and households using the correspondence table proposed by Eurostat.

When the correspondence table requires the allocation of an inventory item to more than one industry, the OECD opted for using an allocation method based on output data since output closely correlates with emissions. Specifically, the allocation from one inventory to more-than-one industry is made according to the output share of each industry relative to the total output of those industries involved in the split*.

Data refer to total emissions of carbon dioxide (CO2 emissions from energy use and industrial processes), methane (CH4 emissions from solid waste, livestock, mining of hard coal and lignite, rice paddies, agriculture and leaks from natural gas pipelines) and nitrous oxide (N2O emissions) for greenhouse gas (GHG) emissions.

More detailed information available in the working paper "Towards global SEEA Air Emission Accounts".

*Note that the official air emission accounts for these countries are included in OECD database on air emission accounts (http://stats.oecd.org/Index.aspx?DataSetCode=AEA), thus allowing to assess the accuracy of the OECD estimation methodology.

Official Development AssistanceTotal ODA comprises both screened and non-screened ODA bilateral commitments. ODA data are obtained from the Aid Activities Targeting Global Environmental Objectives dataset of the Creditor Reporting System of the OECD International Development Statistics Database.

Environmentally related Official Development Assistance (ODA) is expressed as a percentage of total ODA. Environmentally related ODA is identified using marker "Environment" and the set of “Rio Markers”. The Rio Markers specifically screen for policy objectives of a cross-sectorial nature, including climate change, biodiversity and desertification. This variable includes only data on bilateral commitments and is calculated by aggregating up from the level of the individual projects in order to avoid double-counting. ODA commitments identified using the "Environment" marker (principal or significant objective) include activities that are intended to produce an improvement in the physical and/or biological environment of the recipient country, area or target group concerned or include specific action to integrate environmental concerns with a range of development objectives through institution building and/or capacity development. The “Environment” marker was introduced in 1992.

  • Climate change mitigation-related aid is defined as activities that strengthen the resilience of countries to climate change and that contribute to stabilisation of GHG concentrations by promoting reduction of emissions or enhancement of GHG sequestration. The climate change mitigation marker was introduced in 1998.

  • Climate change adaptation-related aid, approved by OECD-DAC members in December 2009, is defined as aid in support of climate change adaptation and complements the climate change mitigation marker, thus allowing presentation of a more complete picture of aid in support of developing countries’ efforts to address climate change. The climate change adaptation marker was introduced in 2010

Total fossil fuel support: Comprises Consumer Support Estimates (CSE), Producer Support Estimates (PSE) and General Services Support Estimate (GSSE), for petroleum, coal and natural gas. Measures that benefit individual producers are classified under the PSE, while those that benefit individual consumers are classified under the CSE. Measures benefitting producers or consumers collectively are classified under the GSSE, as are measures that do not increase current production or consumption of fossil fuels but that may do so in the future. The definition of support encompasses policies that can induce changes in the relative prices of fossil fuels in the support estimate level.

Fossil fuel support by type of support refer the share of consumption, production and general services support in total fossil fuel support.

Fossil fuel support by fuel refer to the share of petroleum, coal and gas support in in total fossil fuel support.

Total energy supply: Total energy supply (TES) is made up of production + imports – exports – international marine bunkers – international aviation bunkers ± stock changes. Primary energy comprises coal, peat and peat products, oil shale, natural gas, crude oil and oil products, nuclear, and renewable energy (bioenergy, geothermal, hydropower, ocean, solar and wind). Electricity trade is included in total primary energy supply, but excluded from the calculation of the breakdown by source.

The share of renewables in the production of electricity. The main renewable forms are hydro, geothermal, wind, biomass, waste and solar energy.

Total fossil fuel support: Comprises Consumer Support Estimates (CSE), Producer Support Estimates (PSE) and General Services Support Estimate (GSSE), for petroleum, coal and natural gas. Measures that benefit individual producers are classified under the PSE, while those that benefit individual consumers are classified under the CSE. Measures benefitting producers or consumers collectively are classified under the GSSE, as are measures that do not increase current production or consumption of fossil fuels but that may do so in the future. The definition of support encompasses policies that can induce changes in the relative prices of fossil fuels in the support estimate level.

Fossil fuel support by type of support refer the share of consumption, production and general services support in total fossil fuel support.

Fossil fuel support by fuel refer to the share of petroleum, coal and gas support in in total fossil fuel support.

IEA, "Emissions of CO2, CH4, N2O, HFCs, PFCs and SF6", IEA CO2 Emissions from Fuel Combustion Statistics (database), https://doi.org/10.1787/data-00431-en.

IEA, "Detailed CO2 estimates", IEA CO2 Emissions from Fuel Combustion Statistics (database), https://doi.org/10.1787/data-00429-en.

IEA, "World energy statistics", IEA World Energy Statistics and Balances (database), https://doi.org/10.1787/data-00510-en.

ITF, "Transport performance indicators", ITF Transport Statistics (database), https://doi.org/10.1787/2122fa17-en.

OECD, "Air and climate: Greenhouse gas emissions by source", OECD Environment Statistics (database), https://doi.org/10.1787/data-00594-en.

OECD, "Air and climate: Air and greenhouse gas emissions by industry", OECD Environment Statistics (database), https://doi.org/10.1787/data-00735-en

OECD, “Carbon dioxide embodied in international trade”, OECD Structural Analysis Statistics: Input- Output (database), http://stats.oecd.org/Index.aspx?DataSetCode=IO_GHG_2019.

OECD, "Creditor Reporting System: Aid activities targeting Global Environmental Objectives", OECD International Development Statistics (database), https://doi.org/10.1787/9c778247-en.

OECD, "Environmental policy: Effective carbon rates", OECD Environment Statistics (database), https://doi.org/10.1787/108c55c1-en

OECD, "Environmental policy: Environmentally related tax revenue", OECD Environment Statistics (database), https://doi.org/10.1787/df563d69-en

OECD, "Green growth indicators", OECD Environment Statistics (database), https://doi.org/10.1787/data-00665-en.

OECD, “OECD Inventory of Support Measures for Fossil Fuels” (database), http://www.oecd.org/fossil-fuels.

OECD, "Patents in environment-related technologies: Technology development by inventor country", OECD Environment Statistics (database), https://doi.org/10.1787/data-00760-en

OECD, “Policy Instruments for the Environment (PINE)” (database), http://oe.cd/pine

References and further reading

IEA (2021), World Energy Outlook 2021, https://www.iea.org/reports/world-energy-outlook-2021.

IPCC (2018), Special Report : Global Warming of 1.5°C, Chapter 2, https://www.ipcc.ch/sr15/

OECD Data Portal, https://data.oecd.org/environment.htm.

OECD work in support of climate action: http://oe.cd/climate-action

OECD Climate-related Development Finance Data: https://www.oecd.org/dac/financing-sustainable-development/development-finance-topics/climate-change.htm

OECD (2021), OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021, OECD Publishing, Paris, https://doi.org/10.1787/e670c620-en.

OECD (2021), Effective Carbon Rates 2021: Pricing Carbon Emissions through Taxes and Emissions Trading, OECD Publishing, Paris, https://doi.org/10.1787/0e8e24f5-en

OECD (2020), Climate Finance Provided and Mobilised by Developed Countries in 2013-18, OECD Publishing, Paris, https://doi.org/10.1787/f0773d55-en. (and http://oe.cd/cf-2013-18)

OECD/IEA (2021), "Update on recent progress in reform of inefficient fossil-fuel subsidies that encourage wasteful consumption", https://www.oecd.org/fossil-fuels/publicationsandfurtherreading/OECD-IEA-G20-Fossil-Fuel-Subsidies-Reform-Update-2021.pdf.

OECD (2019), Revenue Statistics 2019, OECD Publishing, Paris, https://doi.org/10.1787/0bbc27da-en

OECD (2019), Taxing Energy Use 2019: Using Taxes for Climate Action, OECD Publishing, Paris, https://doi.org/10.1787/058ca239-en.

OECD (2018), Effective Carbon Rates 2018: Pricing Carbon Emissions Through Taxes and Emissions Trading, OECD Publishing, Paris, https://doi.org/10.1787/9789264305304-en.

OECD (2015), Aligning Policies for a Low-Carbon Economy, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264233294-en.

OECD (2015), Climate Change Mitigation: Policies and Progress, OECD Publishing, Paris. http://dx.doi.org/10/1787/9789264238787-en.

United Nations Framework Convention on Climate Change, https://unfccc.int/.

Wiebe, K.S. and N. Yamano (2016), “Estimating CO2 Emissions Embodied in Final Demand and Trade Using the OECD ICIO 2015: Methodology and Results”, OECD Science, Technology and Industry Working Papers, No. 2016/05, OECD Publishing, Paris, http://dx.doi.org/10.1787/5jlrcm216xkl-en.

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