Low carbon taxes often fail to target emissions reduction
Lead author Johan Lilliestam explained that such policies were often designed to raise revenue, reform tax systems, or meet international expectations rather than drive decarbonization. In 2023, 12 of the 19 countries still had carbon taxes below the level needed to significantly cut emissions, with many maintaining broad exemptions.
Only Switzerland, France, and Canada showed clear evidence of starting with a low politically feasible rate and increasing it later as support grew. Even so, such sequencing took decades in some cases. While some nations eventually raised their carbon taxes, the process was slow and uneven.
The study notes that almost half of the 25 national carbon tax systems worldwide remain below effective thresholds, casting doubt on whether they should be considered climate policy successes. The authors caution that countries may use the existence of a carbon tax to avoid implementing stronger measures.
The analysis excluded high initial carbon taxes, such as those in Sweden and Germany, as well as emissions trading schemes and subnational taxes. The authors call for further research into the motivations behind these other systems to better understand global climate policy design.
Research Report:"Sequencing, spending, and symbolism: Low carbon taxes primarily serve purposes other than emissions reduction"
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