There are 46 countries, including China and over a third of the US, where some form of carbon pricing system has been implemented. Carbon pricing initiatives apply to about 22% of global greenhouse gas emissions.
Visit the World Bank’s Carbon Pricing Dashboard for an in-depth breakdown.
In Canada, the first province to introduce a carbon tax was British Columbia, in 2008. Five years later, Quebec passed a cap and trade system, another form of carbon pricing.
The passage of the Greenhouse Gas Pollution Pricing Act in 2018 created a carbon pricing standard that applies across Canada.
In 2008 British Columbia was the first Canadian province, and the first jurisdiction in North America, to implement a broad-based carbon tax. BC’s carbon tax rate currently stands at $40/tonne, higher than the federal backstop rate.
Revenue from the tax is refunded to households through tax credits, and invested in programs that incentivize clean technologies and industrial emissions reductions.
The BC carbon tax works. The greenhouse gas intensity of the BC economy has fallen dramatically since the tax was introduced. At the same time, the province’s economy has grown at one of the fastest rates in Canada, expanding more than 29% in real terms between 2007 and 2019.
Sweden was the first country to introduce a carbon tax in 1991, and currently charges the highest tax rate in the world, at around $177 Canadian dollars (1,190 Swedish krona) per tonne of carbon dioxide.
Between 1990 and 2017, Sweden’s net greenhouse gas emissions dropped 26%, while the country’s GDP grew by 78%, one of the highest rates of economic growth in Europe.
The largest reductions have come from changes to the way buildings are heated. The tax helped incentivize a switch from high-carbon oil and coal to carbon-neutral biofuels.
The UK has reduced its emissions faster than any other industrialized country—at a rate of 2.2% per year between 2000 and 2018. Carbon pricing has been a major contributor to their success, especially in the electricity sector. Coal-fired electricity generation dropped 93% between 2013 and 2019.
Until their departure from the European Union in 2020, the UK participated in the EU emissions trading system (ETS). But they also enforced a price floor for carbon emissions that kept the cost of UK emissions well above the EU minimum.
The UK is now in the process of determining how their carbon pricing system will function in the post-Brexit era.
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