Carbon pricing and COVID-19: Policy changes, challenges and design options in OECD and G20 countries

Daniel Nachtigall, Jane Ellis and Sofie Errendal

No 191, OECD Environment Working Papers from OECD Publishing

Abstract: This paper assesses the role of carbon pricing in a sustainable recovery from COVID-19. It tracks the policy changes in carbon pricing within OECD and G20 countries between January 2020 and August 2021 of the COVID-19 pandemic. Carbon pricing as defined here includes emissions trading schemes, fossil fuel support and carbon, fuel excise or aviation taxes. The paper also highlights the need for the recovery to be sustainable and discusses the advantages, limitations and uses of carbon pricing therein. In addition, it describes additional challenges to as well as increased rationale for carbon pricing in the pandemic. It provides evidence on the effects of carbon pricing on the challenges and discusses carbon pricing design elements to help overcome those challenges. The paper concludes that there were more policy changes with an expected negative impact on climate. However, it is likely that the impact of the climate-positive changes – which are broader in coverage and scope - will outweigh the climate-negative changes.

Keywords: sustainable recovery; COVID-19; carbon pricing; carbon tax; emissions trading system; ETS; Fossil fuel subsidies; revenue recycling; climate change; climate mitigation; NDC (search for similar items in EconPapers)
JEL-codes: H23 Q54 Q56 Q58 (search for similar items in EconPapers)
Date: 2022-03-10
New Economics Papers: this item is included in nep-ene, nep-env and nep-tre
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:oec:envaaa:191-en

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