Carbon Taxes in Europe

November 14, 2019

In recent years, several countries have taken measures to reduce carbon emissions using environmental regulations, emissions trading systems (ETS), and carbon taxes. In 1990, Finland was the world’s first country to introduce a carbon tax. Since then, 15 European countries have followed, implementing carbon taxes that range from less than €1 per ton of carbon emissions in Ukraine and Poland to over €100 in Sweden.

How do carbon taxes compare in Europe?

Sweden levies the highest carbon tax rate at €112.08 (US$ 132.17) per ton of carbon emissions, followed by Switzerland (€83.17, $98.08) and Finland (€62.00, $73.11). You’ll find the lowest carbon tax rates in Poland (€0.07, $0.08), Ukraine (€0.33, $0.39), and Estonia (€2.00, $2.36).

Carbon taxes can be levied on different types of greenhouse gases, such as carbon dioxide, methane, nitrous oxide, and fluorinated gases. The scope of each country’s carbon tax differs, resulting in varying shares of greenhouse gas emissions covered by the tax. For example, Spain’s carbon tax only applies to fluorinated gases, taxing only 3 percent of the country’s total greenhouse gas emissions. Norway, by contrast, recently abolished most exemptions and reduced rates, now covering over 60 percent of its emissions.

All member states of the European Union (plus Iceland, Liechtenstein, and Norway) are part of the EU Emissions Trading System (EU ETS), a market created to trade a capped number of greenhouse gas emission allowances. With the exception of Switzerland and Ukraine, all European countries that levy a carbon tax are also part of the EU ETS (Switzerland has its own emissions trading system).

The Spanish region Catalonia and the Netherlands are currently considering a carbon tax, and Turkey and the Ukraine are considering an ETS.

Carbon Tax Rates, Share of Covered Greenhouse Emissions, and Year of Implementation (as of 2019)

Notes:
*Portugal ties its carbon tax rate to the previous year’s EU ETS allowances price.
**The United Kingdom’s carbon tax is tied to the EU ETS’s allowances price. The tax rate is determined as the difference between the EU ETS price and the UK’s annual increasing carbon price floor target.

The carbon tax rates were converted into USD using the average 2018 USD-EUR exchange rate (0.848); see IRS, “Yearly Average Currency Exchange Rates,” https://www.irs.gov/individuals/international-taxpayers/yearly-average-currency-exchange-rates.

Sources: OECD, “Taxing Energy Use 2019: Figure 3.7, Explicit carbon taxes do not cover all energy-related emissions,” Oct. 15, 2019, http://www.oecd.org/tax/taxing-energy-use-efde7a25-en.htm, and World Bank, “Carbon Pricing Dashboard,” last updated Aug. 1, 2019, https://carbonpricingdashboard.worldbank.org/map_data.

  Carbon Tax Rate (per ton of CO2e) Share of Jurisdiction’s Greenhouse Gas Emissions Covered Year of Implementation
  Euros US-Dollars    
Denmark (DK) €23.21  $27.37 40% 1992
Estonia (EE) €2.00  $2.36 3% 2000
Finland (FI) €62.00  $73.11 36% 1990
France (FR) €44.60  $52.59 35% 2014
Iceland (IS) €27.38  $32.29 29% 2010
Ireland (IE) €20.00  $23.58 49% 2010
Latvia (LV) €5.00  $5.90 15% 2004
Norway (NO) €52.09  $61.42 62% 1991
Poland (PL) €0.07  $0.08 4% 1990
Portugal (PT)* €12.74  $15.02 29% 2015
Slovenia (SI) €17.00  $20.05 24% 1996
Spain (ES) €15.00  $17.69 3% 2014
Sweden (SE) €112.08  $132.17 40% 1991
Switzerland (CH) €83.17  $98.08 33% 2008
Ukraine (UA) €0.33  $0.39 71% 2011
United Kingdom (GB)** €20.34  $23.99 32% 2013

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