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

Author

Listed:
  • Daniel Nachtigall
  • Jane Ellis
  • Sofie Errendal

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.

Suggested Citation

  • Daniel Nachtigall & Jane Ellis & Sofie Errendal, 2022. "Carbon pricing and COVID-19: Policy changes, challenges and design options in OECD and G20 countries," OECD Environment Working Papers 191, OECD Publishing.
    • Handle: RePEc:oec:envaaa:191-en
    DOI: 10.1787/8f030bcc-en
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    Cited by:

    1. Herwig Immervoll & Cathal O’Donoghue & Jules Linden & Denisa Sologon, 2023. "Who pays for higher carbon prices?: Illustration for Lithuania and a research agenda," OECD Social, Employment and Migration Working Papers 283, OECD Publishing.
    2. Lee, Ju-Sung & Cherif, Ali & Yoon, Ha-Jun & Seo, Seung-Kwon & Bae, Ju-Eon & Shin, Ho-Jin & Lee, Chulgu & Kwon, Hweeung & Lee, Chul-Jin, 2022. "Large-scale overseas transportation of hydrogen: Comparative techno-economic and environmental investigation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 165(C).

    More about this item

    Keywords

    sustainable recovery; COVID-19; carbon pricing; carbon tax; emissions trading system; ETS; Fossil fuel subsidies; revenue recycling; climate change; climate mitigation; NDC;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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