In recent years, several countries have taken measures to reduce carbon emissions, including instituting environmental regulations, emissions trading systems (ETS), and carbon taxes. In 1990, Finland was the world’s first country to introduce a carbon tax. Since then, 18 European countries have followed, implementing carbon taxes that range from less than €1 per metric ton of carbon emissions in Poland and Ukraine to more than €100 in Sweden.
Sweden levies the highest carbon tax rate at €116.33 (US $137) per ton of carbon emissions, followed by Switzerland and Liechtenstein (€85.76, $101) and Finland (€62, $73.02). You’ll find the lowest carbon tax rates in Poland (€0.07, $0.08), Ukraine (€0.25, $0.30), and Estonia (€2, $2.36).
Carbon taxes can be levied on different types of greenhouse gases, such as carbon dioxide, methane, nitrous oxide, and fluorinated gases. The scope of each country’s carbon tax differs, resulting in varying shares of greenhouse gas emissions covered by the tax. For example, Spain’s carbon tax only applies to fluorinated gases, taxing only 3 percent of the country’s total greenhouse gas emissions. Norway, by contrast, recently abolished most exemptions and reduced rates, and now covers more than 60 percent of its greenhouse gas emissions.
All member states of the European Union (plus Iceland, Liechtenstein, and Norway) are part of the EU Emissions Trading System (EU ETS), a market created to trade a capped number of greenhouse gas emission allowances. With the exception of Switzerland, Ukraine, and the United Kingdom, all European countries that levy a carbon tax are also part of the EU ETS. (Switzerland has its own emissions trading system, which is tied to the EU ETS since January 2020. Following Brexit, the UK implemented its own UK ETS as of January 2021.)
Several European countries are considering or have announced the implementation of a carbon tax or an ETS. For example, Austria is considering the introduction of carbon pricing for sectors not covered by the EU ETS (transportation and buildings) and Turkey announced the implementation of a national ETS (but a possible start date is unclear).
| Carbon Tax Rates, Share of Covered Greenhouse Gas Emissions, and Year of Implementation in European Countries (as of April 1, 2021) | ||||
|---|---|---|---|---|
| Carbon Tax Rate (per ton of CO2e) | Share of Jurisdiction’s Greenhouse Gas Emissions Covered | Year of Implementation | ||
| Euros | US Dollars | |||
| Denmark (DK) | €23.78 | $28.00 | 35% | 1992 |
| Estonia (EE) | € 2.00 | $2.36 | 6% | 2000 |
| Finland (FI) | €62.00 | $73.02 | 36% | 1990 |
| France (FR) | €45.00 | $53.00 | 35% | 2014 |
| Iceland (IS) | €29.72 | $35.00 | 55% | 2010 |
| Ireland (IE) | €33.50 | $39.45 | 49% | 2010 |
| Latvia (LV) | €12.00 | $14.13 | 3% | 2004 |
| Liechtenstein (LI) | €85.76 | $101.00 | 26% | 2008 |
| Luxembourg (LU) | €20.00 | $23.55 | 65% | 2021 |
| Netherlands (NL) | €30.00 | $35.33 | 12% | 2021 |
| Norway (NO) | €58.59 | $69.00 | 66% | 1991 |
| Poland (PL) | €0.07 | $0.08 | 4% | 1990 |
| Portugal (PT)* | €24.00 | $28.26 | 29% | 2015 |
| Slovenia (SI) | €17.30 | $20.37 | 50% | 1996 |
| Spain (ES) | €15.00 | $17.67 | 3% | 2014 |
| Sweden (SE) | €116.33 | $137.00 | 40% | 1991 |
| Switzerland (CH) | €85.76 | $101.00 | 33% | 2008 |
| Ukraine (UA) | €0.25 | $0.30 | 71% | 2011 |
| United Kingdom (GB) | €21.23 | $25.00 | 23% | 2013 |
| €35.91 | $42.29 | 34% | ||
| Notes:*Portugal ties its carbon tax rate to the previous year’s EU ETS allowances price.The carbon tax rates were converted using the EUR-USD currency conversion rate as of April 1, 2021 (USD 1 = EUR 0.84913).Source: The World Bank, “Carbon Pricing Dashboard,” last updated Apr. 1, 2021, https://www.carbonpricingdashboard.worldbank.org/map_data. |
By Elke Asen
This article was originally shared by Tax Foundation.
