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Does carbon pricing reduce emissions? A review of ex-post analyses
Open accessAbstract
Carbon pricing has been hailed as an essential component of any sensible climate policy. Internalize the externalities, the logic goes, and polluters will change their behavior. The theory is elegant, but has carbon pricing worked in practice? Despite a voluminous literature on the topic, there are surprisingly few works that conduct an ex-post analysis, examining how carbon pricing has actually performed. This paper provides a meta-review of ex-post quantitative evaluations of carbon pricing policies around the world since 1990. Four findings stand out. First, though carbon pricing has dominated many political discussions of climate change, only 37 studies assess the actual effects of the policy on emissions reductions, and the vast majority of these are focused on Europe. Second, the majority of studies suggest that the aggregate reductions from carbon pricing on emissions are limited—generally between 0% and 2% per year. However, there is considerable variation across sectors. Third, in general, carbon taxes perform better than emissions trading schemes (ETSs). Finally, studies of the EU-ETS, the oldest ETS, indicate limited average annual reductions—ranging from 0% to 1.5% per annum. For comparison, the IPCC states that emissions must fall by 45% below 2010 levels by 2030 in order to limit warming to 1.5 °C—the goal set by the Paris Agreement (Intergovernmental Panel on Climate Change 2018). Overall, the evidence indicates that carbon pricing has a limited impact on emissions.
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“Most studies have confirmed the effectiveness of carbon pricing in reducing emissions.”
From The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union (2026) · cites this paper as Green 2021
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“These studies reveal a small impact of this type of policy on national emissions.”
From The Impact of Carbon Pricing on Corporate Sustainability: Evidence From the European Union (2026) · cites this paper as Green 2021
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“In the three papers that investigate technological change effects of the EU ETS (Hoffmann 2007; Rogge and Hoffmann 2010) (power sector) and Rogge et al. (2011a) (paper industry)), the findings are in line with LPB2021. These articles find weak effects on innovation, and weak effects on low-carbon investments – particu…”
BackgroundResultInfluentialFouquet, R., & O’Garra, T. (2022) · Energy Policy · doi:10.1016/j.enpol.2022.113278 · Cited by 24
Gao, J. X., Wang, Z., Wang, Z., Wang, C., Zhang, R., Xu, G., & Wu, X. (2022) · Energy Reports · doi:10.1016/j.egyr.2022.10.409 · Cited by 25
Colgan, J. D. (2021) · doi:10.1093/oso/9780197546376.001.0001 · Cited by 27
Role of carbon tax in the widespread integration of sustainable strategies in buildings
Elaouzy, Y., & Fadar, A. E. (2023) · Building and Environment · doi:10.1016/j.buildenv.2023.110182 · Cited by 24
COSTS AND BENEFITS OF THE PARIS CLIMATE TARGETS
Tol, R. S. J. (2023) · Climate Change Economics · doi:10.1142/s2010007823400031 · Cited by 24
Thube, S., Peterson, S., Nachtigall, D., & Ellis, J. (2021) · Environmental Research Letters · doi:10.1088/1748-9326/ac2b61 · Cited by 23
“Indeed, carbon pricing so far has had only limited effects on aggregate emission reductions (Green 2021).”
BackgroundMintz‐Woo, K. (2021) · Philosophy Compass · doi:10.1111/phc3.12803 · Cited by 25
“Some research suggests that, in the United States, such policies increase support for climate policies (Green, 2021a).”
BackgroundInfluentialPark, H., Khue, P. M., & Lee, J. (2022) · Journal of International Financial Management and Accounting · doi:10.1111/jifm.12211 · Cited by 34
How effective is carbon taxation on residential heating demand? A household-level analysis
Ott, L., & Weber, S. (2021) · Energy Policy · doi:10.1016/j.enpol.2021.112698 · Cited by 20
Ten new insights in climate science 2020 – a horizon scan
Pihl, E., Alfredsson, E. C., Bengtsson, M., Bowen, K., Broto, V. C., Chou, K.-T., Cleugh, H., Ebi, K. L., Edwards, C. M., Fisher, E., et al. (2021) · Global Sustainability · doi:10.1017/sus.2021.2 · Cited by 22
Climate Governance and Federalism
Fenna, A., Jodoin, S., Setzer, J., Seleguim, F. B., Rei, F., Harrison, K., Yi, H., Cao, S., Adela, Y., Worku, A., et al. (2023) · Cambridge University Press eBooks · doi:10.1017/9781009249676 · Cited by 22
Emissions trading scheme and energy consumption and output structure: Evidence from China
Zhang, J. (2023) · Renewable Energy · doi:10.1016/j.renene.2023.119401 · Cited by 22
The G20 emission projections to 2030 improved since the Paris Agreement, but only slightly
Nascimento, L., Kuramochi, T., & Höhne, N. (2022) · Mitigation and Adaptation Strategies for Global Change · doi:10.1007/s11027-022-10018-5 · Cited by 27
“Studies that investigate the effect of policies on specific mitigation options complement these analyses and help to translate high-level findings into policy advice (Carley 2009; Green 2021).”
BackgroundMintz‐Woo, K. (2023) · Wiley Interdisciplinary Reviews Climate Change · doi:10.1002/wcc.858 · Cited by 27
“Prices, 2017), and political scientists tend to oppose them (Green, 2021; Mildenberger, 2020; Mildenberger & Stokes, 2020; Rabe, 2018; Stokes, 2020).”
Carbon pricing and the food system: Implications for sustainability and equity
Habib, M., Singh, S., Bist, Y., Kumar, Y., Jan, K., Bashir, K., Jan, S., & Saxena, D. C. (2024) · Trends in Food Science & Technology · doi:10.1016/j.tifs.2024.104577 · Cited by 21
Metadata
- Authors
- Green, J. F.
- Affiliations
- University of Toronto (CA)
- Corresponding author
- Green, Jessica F
- ORCID
- Green, Jessica F
- Venue
- Environmental Research Letters
- Publisher
- IOP Publishing
- Published
- 2021-03-24
- Volume
- 16
- Issue
- 4
- Pages
- 043004
- ISSN
- 1748-9326 (ISSN-L)
- OpenAlex
- W3118647971
- Cited by
- 530
- References
- 87
- Citations by year
- 2026: 81 · 2025: 96 · 2024: 129 · 2023: 108 · 2022: 75 · 2021: 38
- FWCI
- 66.83
- Type
- journal article
- Language
- en
- Open access
- gold
- doi.org
- Licence
- Locations
- Environmental Research Letters (publishedVersion, cc-by)
- DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
- Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Energy, Environment, Economic Growth
- Keywords
- carbon pricing, carbon tax, emissions trading scheme, EU Emissions Trading System, emission reduction, climate policy effectiveness, ex-post evaluation, sectoral emissions, internalization of externalities
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