Carbon Tax

Carbon Tax at a Glance

A carbon tax is a form of explicit carbon pricing; it is a tax directly linked to the level of carbon dioxide (CO2) emitted

Unlike an emissions trading system, a carbon tax does not guarantee a maximum level of emissions reductions. Instead, it provide certainty regarding the marginal cost of emitting CO2.

Since a carbon tax puts a price on each tonne of GHG emitted, it sends a price signal that gradually causes a market response across an entire economy, creating incentives for emitters to shift to less greenhouse-gas intensive ways of production and ultimately resulting in reduced emissions.

While the experience with direct carbon tax implementation is relatively new, this tool is being introduced quickly. Click here to see an overview of existing national and subnational jurisdictions using a direct carbon tax.

15 countries are implementing or have passed legislation for a direct carbon tax.


Country Case Study

South Africa

The Case for a Carbon Tax, November 2014

Carbon Tax Policy Paper (for public comment), 2013

Tax Policy to Reduce Carbon Emissions in a Distorted Economy: Illustrations from a South Africa CGE Model, 2011

Link(s) to General Resources

World Bank, Tax Policy to Reduce Carbon Emission in South Africa, 2009