Carbon Taxes in Europe June 3, 2021 Elke Asen Elke Asen In recent years, several countries have taken measures to reduce carbon emissions, including instituting 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, 18 European countries have followed, implementing carbon taxes that range from less than €1 per metric ton of carbon emissions in Poland and Ukraine to more than €100 in Sweden. Sweden levies the highest carbon tax rate at €116.33 (US $137) per ton of carbon emissions, followed by Switzerland and Liechtenstein (€85.76, $101) and Finland (€62, $73.02). You’ll find the lowest carbon tax rates in Poland (€0.07, $0.08), Ukraine (€0.25, $0.30), and Estonia (€2, $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, and now covers more than 60 percent of its greenhouse gas 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, Ukraine, and the United Kingdom, all European countries that levy a carbon tax are also part of the EU ETS. (Switzerland has its own emissions trading system, which is tied to the EU ETS since January 2020. Following Brexit, the UK implemented its own UK ETS as of January 2021.) Several European countries are considering or have announced the implementation of a carbon tax or an ETS. For example, Austria is considering the introduction of carbon pricing for sectors not covered by the EU ETS (transportation and buildings) and Turkey announced the implementation of a national ETS (but a possible start date is unclear). Carbon Taxes in Europe, 2021 Carbon Tax Rates, Share of Covered Greenhouse Gas Emissions, and Year of Implementation in European Countries (as of April 1, 2021) Carbon Tax Rate (per ton of CO2e) Share of Jurisdiction’s Greenhouse Gas Emissions Covered Year of Implementation Euros US Dollars Denmark (DK) €23.78 $28.00 35% 1992 Estonia (EE) € 2.00 $2.36 6% 2000 Finland (FI) €62.00 $73.02 36% 1990 France (FR) €45.00 $53.00 35% 2014 Iceland (IS) €29.72 $35.00 55% 2010 Ireland (IE) €33.50 $39.45 49% 2010 Latvia (LV) €12.00 $14.13 3% 2004 Liechtenstein (LI) €85.76 $101.00 26% 2008 Luxembourg (LU) €20.00 $23.55 65% 2021 Netherlands (NL) €30.00 $35.33 12% 2021 Norway (NO) €58.59 $69.00 66% 1991 Poland (PL) €0.07 $0.08 4% 1990 Portugal (PT)* €24.00 $28.26 29% 2015 Slovenia (SI) €17.30 $20.37 50% 1996 Spain (ES) €15.00 $17.67 3% 2014 Sweden (SE) €116.33 $137.00 40% 1991 Switzerland (CH) €85.76 $101.00 33% 2008 Ukraine (UA) €0.25 $0.30 71% 2011 United Kingdom (GB) €21.23 $25.00 23% 2013 €35.91 $42.29 34% Notes: *Portugal ties its carbon tax rate to the previous year’s EU ETS allowances price. The carbon tax rates were converted using the EUR-USD currency conversion rate as of April 1, 2021 (USD 1 = EUR 0.84913). Source: The World Bank, “Carbon Pricing Dashboard,” last updated Apr. 1, 2021, https://www.carbonpricingdashboard.worldbank.org/map_data. Launch Carbon Tax Resource Center Stay informed on the tax policies impacting you. Subscribe to get insights from our trusted experts delivered straight to your inbox. Subscribe Share Tweet Share Email Topics Center for Global Tax Policy Business Taxes Data Global Tax Maps International Taxes Tags Carbon Tax Environmental and Energy Taxes Ukraine
