Carbon Pricing Around the World

The Global Effort to Combat Carbon Emissions

Climate change is one of the biggest challenges facing our planet today. The scientific community has identified excessive carbon emissions as the primary cause of global warming. As a result, countries across the world are now actively pursuing strategies to reduce their carbon footprint. One of the most successful approaches to this global issue is to implement carbon pricing strategies.

Carbon tax, cap and trade, and other carbon pricing policies are being implemented across the globe. Carbon pricing policies are designed to incentivize people and organizations to reduce their carbon footprint by increasing the cost of emitting carbon. The scheme has been implemented in various forms in countries across the world. In this article, we will explore carbon pricing strategies from different nations.

A Look at Carbon Pricing Strategies Across Nations

Carbon pricing policies come in different forms in different countries. Here, we will look at various implementations of the policy from nations across the globe.


Europe has been at the forefront of carbon pricing initiatives. The EU Emissions Trading System (EU ETS) was established in 2005, making it one of the world’s first carbon pricing schemes. The system employs cap and trade; this approach imposes a cap on the total amount of CO2 emissions and then allows companies with excess emissions to buy additional permits from those who have lower carbon output.

Apart from the EU ETS, several countries in Europe have also introduced their own carbon pricing policies. In 2012, the United Kingdom, for instance, established its Carbon Price Floor, which sets a minimum price for carbon emissions, currently set at £18 per tonne. Likewise, Sweden has a carbon tax of SEK 1200 (equivalent to $140) per tonne, making it one of the highest carbon pricing policies worldwide.


In Canada, carbon pricing is a provincial matter, and each province has implemented its own carbon pricing strategy. One such initiative is British Columbia’s Carbon Tax, established in 2008, which now charges $40 per tonne of carbon. Moreover, the federal government introduced a national carbon tax in 2018. The tax is in effect in provinces that do not have their own pricing policies, such as Ontario and Saskatchewan.

United States

The US does not have a national carbon pricing policy, but many states have embarked on initiatives aimed at regulating carbon emissions. California’s cap and trade policy is today the fourth-largest carbon pricing initiative worldwide, with a cap on CO2 emissions and a trading program. Likewise, the Regional Greenhouse Gas Initiative (RGGI) implemented by nine northeastern US states is another primary carbon pricing program. The initiative offers permits to companies to emit a limited amount of CO2.


China, the world’s largest carbon emitter, has implemented a mandatory cap and trade policy in several cities and provinces. Even as the event is being implemented cautiously and on a pilot basis, the initiative is projected to cover the country entirely in the coming few years.


Australia implemented the Carbon Pricing Mechanism in 2012, including a fixed price for carbon emissions before transitioning to a cap and trade policy. After three years, the program was repealed by the government. However, some states, including New South Wales, Victoria, and Queensland, have introduced their initiatives.


In 2012, Japan established a carbon tax that aimed at reducing greenhouse gas emissions. The policy targeted fossil fuel consumption, and since its introduction, the tax has been successively increased, with the current tax rate at 11.2 JPY per litre of gasoline.


Korea introduced a cap and trade system in 2015, which is primarily implemented in the power and heavy industry sectors. To date, the program has successfully lowered the country’s carbon emissions and is significantly contributing to the Korean government’s climate change policy.

New Zealand

New Zealand established the New Zealand Emissions Trading Scheme (NZ ETS) in 2008. The scheme primarily uses a cap and trade policy and has a range of greenhouse gases. The program impacts multiple sectors across the economy.


India implemented a unique carbon pricing policy in 2010. Under the National Clean Development Mechanism (CDM), businesses can use carbon credits to offset their carbon emissions. The scheme has been predominantly utilized by the renewable energy sector, with the UN providing certification of these credits.


In 2014, Mexico implemented its first carbon pricing policy. The program uses the carbon tax, primarily targeting fossil fuels, and generates revenue, implementing the policy further.

Carbon pricing policies are an essential tool for countries around the world to combat climate change. Different countries are utilizing various strategies that align with their economic, environmental, political, and social priorities. The measures taken by these countries will go a long way in supporting the global effort to reduce carbon emissions and to mitigate the impact of climate change.

Youssef Merzoug

I am eager to play a role in future developments in business and innovation and proud to promote a safer, smarter and more sustainable world.