Energy taxes are insufficiently used as policy tool to reduce negative impacts of energy use

According to a current OECD-study energy taxes in different countries do not cover the real environmental costs of energy use. The study analyzed the structure and level of energy taxes in 34 OECD-member states as well as seven G20-states, which consume 80% of global energy. The study shows in particular:

  • Taxes on energy use vary with purpose and type of fuel: in the transport sector each ton of CO2is taxed with 70€, while the generation of heat and electricity is taxed with only 3€ for one ton of CO2.
  • Some of the most harmful fuels are taxed either low or equal to zero: On average energy taxes apply to only 15% of coal used to generate heat.
  • On average the tax on energy use equals 14,80€ for one ton of CO2, which merely covers 50% of the resulting social costs of energy consumption.

The study concludes that governments are not sufficiently using energy taxes as a policy tool to reduce the negative environmental impacts of energy use. Angel Gurría, OECD Secretary-General, commented on the study results as follows: “Current taxes on energy use are low and incoherent. […] There is still considerable scope to use taxation to improve the environment and containing climate change.”

Source: OECD

Further information can be found here.