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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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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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