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Principles and proposals for effective carbon pricing

• 4 December 2023

Proposals for effective carbon pricing – leakage and linkage considerations

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Since 2021, ICC has drawn on the experience of its global members to develop core principles and guidance for the effective design of carbon pricing instruments. In this third report, building on our past work, ICC provides guidance to governments and policymakers to address carbon leakage, promote linkage for greater international cooperation and make carbon pricing systems more efficient.

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Related reports on carbon pricing

• Raelene Martin Head of Sustainability Contact by email
• Sandra Hanni Global Policy Lead, Climate Contact by email
• Mélanie Laloum Lead Economist Contact by email

Why is carbon pricing considered important to reduce emissions?    

Putting a price on carbon represents an important way for governments to drive emissions reduction, needed to achieve the goals of the Paris Agreement. The goal is to discourage the use of carbon dioxide–emitting fossil fuels to protect the environment.

As a result, carbon pricing is gaining momentum globally, with over 70 carbon pricing systems in existence and studies showing that 80% of countries have expressed interest in using international market mechanisms to meet their climate targets. This broad range of carbon pricing systems has created a fragmented international climate policy landscape, compounded by administrative complexity.  

What is ICC doing to support policymakers in their approaches to carbon pricing?  

As local and regional carbon pricing instruments are being put in place, there is a growing risk of shifting emissions outside the countries that take action to mitigate emissions domestically. Several countries and regions, which have led change on carbon pricing, have introduced measures or are planning to do so to mitigate the risk.

Recognising the growing concern around the risk of leakage, ICC provides guidance for governments and policymakers to support the development of effective carbon pricing policies that allow countries to increase cooperation – which can ultimately lead to increased climate ambition. ICC is convinced that international cooperation is essential to develop a consistent and coherent international approach built on broader principles for effective emission reduction.Such an approach is key to creating a global framework that better facilitates cross-border trade, investment and economic growth.

ICC key messages on carbon pricing at a glance

• Carbon pricing is an essential tool for comprehensive climate policy packages. It can assist governments in achieving existing nationally determined contributions at the lowest possible cost, scaling up investment for further climate mitigation and adaption efforts and ratcheting up ambition.
• The overriding common objective of carbon pricing should be to reduce greenhouse gas emissions. The development of sustained and robust carbon markets maximises the effect of carbon pricing in achieving that objective.
• When developing, designing and implementing national carbon pricing approaches, governments are encouraged to build on the ICC Carbon Pricing Principles and other existing guidance to increase effectiveness, minimise risks related to carbon leakage and promote linkage for greater international cooperation and coordination.
• Any approaches to prevent carbon leakage should be considered and designed carefully and proportionately and without compromising trade rules.
• National legal, regulatory and policy frameworks for carbon pricing market mechanisms should consider (i) linkage across national and sub-national compliance mechanisms to prevent greenhouse gas emissions leakage between countries; (ii) broader linkages between domestic compliance mechanisms, Article 6 mechanisms and the voluntary carbon markets, and (iii) broader climate, energy, trade and taxation policies. 
• Article 6 of the Paris Agreement on cross-border emissions trading itself is not designed to lead to a global carbon price. However, with the right operating rules, it has the potential to create the necessary transparency to forge a more cohesive multilateral approach to carbon pricing.

Carbon pricing and inflation

This report, launched at the margins of COP28 in 2023, analyses the effect of carbon pricing on inflation and aims to determine whether higher carbon prices accelerate inflation and if so, for how long. It also considers the role of monetary and fiscal, as well as carbon pricing as part of a policy mix to mitigate inflationary shocks.

Critical design features for effective carbon pricing: A business perspective

This 2022 report carefully assesses select carbon pricing case studies from Canada, New Zealand, the European Union Emissions Trading System, Indonesia and South Africa through the lens of the foundational ICC Carbon Pricing Principles. It does so with a view to determine key design features and their significance for governments seeking to implement new carbon pricing mechanisms or improve existing measures.

ICC Carbon Pricing Principles

The foundational ICC Carbon Pricing Principles, released in 2021, propose core principles and recommendations to help policymakers design carbon pricing policies within effective climate policy frameworks for implementation at national, regional and international levels. The principles should form an essential part of national and international carbon pricing approaches including the development of market-based instruments under Article 6 of the Paris Agreement.

Browse the ten principles

What is carbon pricing?

Carbon pricing is an approach to reducing carbon emissions that uses market mechanisms to pass the cost of emitting on to emitters. The two principal carbon pricing mechanisms are carbon taxes and Emission Trading Systems (ETS). The goal is to discourage the use of carbon dioxide–emitting fossil fuels to protect the environment, address the causes of climate change, and meet national and international climate agreements. 

What is carbon leakage?

Carbon leakage is considered a result of asymmetrical and fragmented carbon policies, price differences, sector coverage and the resulting carbon cost. Carbon leakage occurs when businesses transfer their production to other countries with laxer emission constraints. If emissions are shifted to another jurisdiction with less stringent decarbonisation policies, carbon leakage can undermine a country’s unilateral efforts to reduce its emissions and the effectiveness of carbon pricing.

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How carbon pricing works

Pricing carbon pollution is one of the most effective ways to reduce the greenhouse gas emissions that cause climate change. It creates a financial incentive for people and businesses to pollute less. 

Putting a price on carbon pollution

Carbon pricing is about recognizing the cost of pollution and accounting for those costs in our daily decisions by choosing less carbon-intensive options.

Two pricing systems

Fuel charge: paid by fuel distributors and other registered persons, with varying rates by type .

As of April 1, 2024, the cost of fuel charge is $80 per tonne for gasoline. This means about 3 cents per litre more than in 2023. 

Output-based pricing system (OBPS): for industries, which gives a price incentive for industrial emitters to reduce their greenhouse emissions.

Systems by province and territory

Provinces and territories can choose the pricing system that fits their situation best. The system must meet certain minimum national standards, known as 'benchmark' criteria.

Federal fuel charge and federal Output-based pricing system (for industries):

• Prince Edward Island

Federal fuel charge and independent system for industries:

• New Brunswick
• Newfoundland and Labrador
• Nova Scotia
• Saskatchewan

Independent carbon pricing system:

• British Columbia
• Northwest Territories

Where the money goes

The money is returned to the province or territory where it is collected. Provinces and territories with their own carbon pricing systems will use their proceeds as they see fit. The Government of Canada does not keep any direct proceeds from pollution pricing.   

Money from the federal fuel charge

All of the money (proceeds) collected through the fuel charge system is returned to Canadians.

For Yukon and Nunavut, the proceeds are returned to their governments. For all other provinces and territories, the money is returned directly to individuals, farmers, small- and medium-sized businesses and Indigenous governments. 

• Approximately 90% of the proceeds go right back to individuals through the Canada Carbon Rebate.
• The rest goes back to farmers, small- and medium-enterprises and Indigenous governments.

Canada Carbon Rebate (for individuals)

Payments are sent to individuals and families as Canada Carbon Rebate (formerly known as Climate Action Incentive payments).

• Who can get the Canada Carbon Rebate
• How to get your payments
• How much you can get
• When to expect your payments

Farmers tax credit

Recognizing that many farmers use natural gas and propane in their work, the federal government provides a  tax credit . This credit refunds the money they paid for fuel charges back to their farming businesses.

Canada Carbon Rebate for Small Businesses

We are delivering on our commitment to return proceeds to small- and medium-sized businesses by introducing the Canada Carbon Rebate for Small Businesses.

“ Budget 2024 proposes to urgently return fuel charge proceeds from 2019-20 through 2023-24 to an estimated 600,000 businesses, with 499 or fewer employees through a new refundable tax credit. This would deliver over $2.5 billion directly to Canada's small- and medium-sized businesses.” budget 2024

Indigenous governments

Environment and Climate Change Canada continues to consult with Indigenous governments on how best to directly return fuel charge proceeds to their communities, and will announce next steps soon.

Money from the Output-Based Pricing System

Proceeds from the Output-Based Pricing System are returned to the jurisdiction of origin to support industrial projects to cut emissions and use new cleaner technologies and processes. This is distributed through the Output-Based Pricing System Proceeds Fund .  

Reducing carbon pollution

Climate change has a cost and putting a price on carbon is one way to help reduce pollution to help our future generations.

A price on carbon pollution sends a clear signal that carbon-intensive products and activities are more costly than low-carbon ones. It works because there is a financial incentive for people and businesses to pollute less and pushes companies to offer more climate-friendly products and services for consumers.

In 2022, Canada's emissions would have been approximately 19 megatonnes higher without carbon pricing systems. That is almost the equivalent of Manitoba’s emissions in 2022.

Learn more about our greenhouse gas emissions .

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Pricing Carbon in the United States

A well-designed carbon price can be a key policy lever to spur innovation, create lasting economic growth and help the United States decarbonize its economy by mid-century. 

WRI's Pricing Carbon in the United States is part of U.S. Climate . For media inquiries, contact Matt Herbert. 

The impacts of climate change impose costs on society as a whole by increasing the risk of natural disasters that can lead to economic damage and worsening public health conditions. Pricing carbon can help factor those costs into decisions made by those responsible for the emissions, providing an incentive to reduce them. 

Pricing carbon across the economy will make the goods and services with the greatest impact on climate more expensive. Higher prices for carbon-intensive goods and services will encourage businesses and consumers to look for alternatives that meet their needs and have lower carbon-emission footprints. In this way, a carbon price can help the United States meet its near- and long-term climate goals.  

But a carbon price is more than a climate policy; it is an economic policy. Revenues raised by a carbon price can go toward supporting other policy priorities, including investing in communities affected by pollution, investing in clean energy, helping provide a just transition for communities dependent on fossil fuels or returning money to households. 

WRI’s experts are diving into the design choices and potential economic effects of carbon pricing and the associated uses of revenues. This includes preparing a series of issue briefs and publications that provide guidance on effectively mobilizing a carbon price to address climate change.  

In  Putting a Price on Carbon: A Handbook for U.S. Policymakers ,  WRI provides an overview of carbon pricing — the types of decisions that need to be made in designing a program, including the political decisions about the use of revenue, and the expected economic impacts of alternative approaches.  Putting a Price on Carbon: Reducing Emissions  dives deeper into how a national price on carbon would reduce emissions across key sectors of the economy using empirical evidence and real-world case studies.  

Other publications investigate the limitations of a carbon price and how they can be addressed through complementary polices and careful policy design.  Putting a Price on Carbon: Ensuring Equity  describes the differing effects of a carbon price on regional and socioeconomic groups across the United States. The analysis finds that the revenues from a carbon price can be used to address regional disparities and ensure that unfair burdens are not imposed on households that cannot afford them. Most recently,  

Putting a   Price on Carbon: Evaluating A Carbon Price and Complementary Policies for a 1.5° World  emphasizes that a carbon price is not a silver bullet for addressing climate change and complementary policies to a carbon price are needed. These policies and programs must address market barriers and drive deep emissions cuts over the long-term. 

WRI leverages this research  to cultivate a shared understanding among public and private sector partners that underscores economy-wide carbon pricing as an important lever to decarbonize the United States economy by mid-century. This understanding should also position carbon pricing as  a critical addition to investment-focused climate policy. To further promote this understanding, WRI serves as a resource for policymakers and engages as an environmental voice in coalitions with important private sector voices, like the  CEO Climate Dialogue .  

More Related

Putting a price on carbon: evaluating a carbon price and complementary policies for a 1.5° world, achieving u.s. emissions targets with a carbon tax, roundtable at the house committee on science, space and technology: embracing a 21st century, low-carbon economy, statement: “carbon dividend” proposal offers bipartisan, pro-market approach to climate change, carbon taxes on the table in us presidential campaign, west virginia imagines a future beyond coal, help for coal country from a carbon fee, putting a price on carbon: ensuring equity, media contacts.

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State and Trends of Carbon Pricing Dashboard

How to use the carbon pricing dashboard.

The Carbon Pricing Dashboard provides details about direct carbon pricing instruments and carbon markets around the world. The dashboard includes data published in the World Bank’s State and Trends of Carbon Pricing Report and is structured into two main sections: compliance instruments and carbon crediting markets. Click on the tabs below to access details on carbon taxes and emissions trading systems. This includes detailed information and visualizations on design attributes, GHG emissions coverage, price, and revenue. Click on the tabs underneath carbon crediting markets to access information and visualizations regarding crediting mechanisms (international, independent, and governmental), including issuances. This section also includes information regarding participation in cooperative approaches under Article 6.2 of the Paris Agreement.

compliance mechanisms

• Instrument Detail
• GHG Emissions Coverage

Carbon credit markets

• Cooperative Approaches

Instrument Type: Emissions Trading System , Carbon Tax, Crediting Mechanism Compliance instruments include ETSs and Carbon taxes. Compliance instruments are considered "Implemented" once they have been formally adopted through legislation and compliance obligations are in force and enforced. Crediting mechanisms are considered implemented if they have issued credits (or have frameworks in place to allow credits to be used domestically, such as in South Africa).

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Carbon Pricing 101

Published Jul 17, 2009 Updated Jan 8, 2017

When carbon emissions cost money, we produce less of them—but there's more to the story.

What is carbon pricing?

“Carbon pricing” is a market-based strategy for lowering global warming emissions. The aim is to put a price on carbon emissions—an actual monetary value—so that the costs of climate impacts and the opportunities for low-carbon energy options are better reflected in our production and consumption choices. Carbon pricing programs can be implemented through legislative or regulatory action at the local, state, or national level.

The fossil fuels (coal, oil, and natural gas) we use to generate electricity, power our vehicles, and heat our homes all produce carbon dioxide emissions, which are a leading cause of climate change . In most cases, the costs of climate impacts—including public health and damage costs of heatwaves, flooding, heavy downpours, and droughts—are borne by taxpayers and by individuals who are directly affected, but aren’t taken into account in decisions made by producers or consumers of carbon-intensive goods.

Putting a price on carbon helps to incorporate climate risks into the cost of doing business. Emitting carbon becomes more expensive, and consumers and producers seek ways to use technologies and products that generate less of it. The market then operates as an efficient means to cut emissions, fostering a shift to a clean energy economy and driving innovation in low-carbon technologies. Complementary renewable energy and energy efficiency policies are also critical to cost-effectively drive down emissions.

Carbon pricing is widely considered a powerful, efficient, and flexible tool for helping to address climate change, and is supported by an array of experts, businesses, investors, policymakers, civil society groups, states, and countries. Carbon pricing programs are already in use in many states and countries, including in California , the nine Northeast states that belong to the Regional Greenhouse Gas Initiative , and Europe .

How does carbon pricing work?

There are broadly two ways to put a price on carbon:

Under a cap-and-trade program , laws or regulations would limit or ‘cap’ carbon emissions from particular sectors of the economy (or the whole economy) and issue allowances (or permits to emit carbon) to match the cap. For example, if the cap was 10,000 tons of carbon, there would be 10,000 one-ton allowances. A declining emissions cap would help reduce emissions over time.

Every source of emissions subject to the cap (for example, power plants or refineries) would be required to hold allowances equal to the emissions they produce. Power plant operators could acquire allowances through an auction (where they bid for the allowances they need) or allocation (where they are given a set number of allowances for free).

Once these entities have allowances, they would be able to trade or sell allowances freely among themselves or other eligible market participants. Because the allowances are limited and therefore valuable, those subject to the cap will try to cut their emissions as a way to reduce the number of allowances they have to purchase. The resulting interaction between the demand and supply of allowances in the market determines the price of an allowance (also known as the carbon price). 

With a carbon tax , laws or regulations are enacted that establish a fee per ton of carbon emissions from a sector or the whole economy. Owners of emissions sources subject to the tax would be required to pay taxes equivalent to the per-ton fee times their total emissions. Those who can cut emissions cost-effectively would reduce their tax payments. Those subject to the tax would have an incentive to lower their emissions, by transitioning to cleaner energy and using energy more efficiently. A rising carbon tax would help ensure a decline in emissions over time.

Hybrid approaches include programs that limit carbon emissions but set bounds on how much the price can vary (to prevent prices from dropping too low or rising too high). Another hybrid approach adjusts the tax to ensure specific emission reduction goals are met. A third hybrid approach could be when a jurisdiction implements a carbon cap-and trade program for some sectors and applies a carbon tax on others. Carbon pricing programs can also work in a complementary manner with other renewable energy and energy efficiency policies, such as renewable electricity standards , energy efficiency standards , and vehicle fuel economy rules .

Gasoline taxes, severance taxes for coal mining and natural gas or oil drilling, or policies that incorporate a social cost of carbon are examples of other ways of indirectly factoring a price on carbon into consumer or business decisions.

From an economic perspective, both carbon tax and a cap-and-trade systems function in equivalent ways : one sets a price on emissions which then determines the level of emissions, the other sets the level of emissions, which determines a price for those emissions. The level of the tax or cap and its rate of increase (for a tax) or decline (for a cap) over time drives the degree to which emissions are cut. Designed well, both of these approaches can deliver on the main aim of a robust carbon pricing program, which is to help cut emissions cost-effectively in line with climate and energy goals. However, there may be important policy or political reasons to prefer one or the other in a particular context, such as voter preferences or limits on regulatory or legislative authority.

Economic benefits

Both a carbon tax and a cap-and-trade program with auctioned allowances can generate significant revenues. The use of these revenues has important implications for distributional fairness and economic growth. Potential uses of carbon revenues could include one or more of the following:

• Offsetting the disproportionate impacts of higher energy prices for low-income households (e.g. through rebates on electricity bills for low and moderate income households)
• Providing transition assistance to workers and communities that depend on fossil fuels for their livelihoods (e.g. funding for job training and investments in economic diversification)
• Investing in renewable energy; clean vehicles, fuels, and transit options; and energy efficiency to speed the shift to a clean energy economy and drive down consumer costs
• Investing in communities that face a disproportionate burden of pollution from fossil fuels
• Creating an opportunity to cut other taxes such as payroll, sales, or corporate taxes and make up for that through carbon revenues
• Reducing the deficit
• Per capita dividends (e.g. annual checks) for all Americans,  paid for by dividing some or all of the carbon revenues
• Investing in climate-resilient infrastructure (e.g. upgraded roads and sea walls) or relocation costs for communities at high risk
• Contributing to efforts to cut carbon and prepare for climate change in developing countries

A program that returns all the revenues directly to taxpayers is called revenue-neutral . Revenues can be returned in a variety of ways, including through tax cuts or per capita dividends.

Science considerations

A robust carbon cap or tax should put the economy on a trajectory toward the science-based deep cuts in emissions required to limit some of the worst impacts of climate change. Informed by the 2014 Intergovernmental Panel on Climate Change Fifth Assessment Report and the 2015 Paris Agreement reached under the United Nations Framework Convention on Climate Change, the overarching U.S. goal should be to reach net zero carbon emissions (i.e. any remaining emissions must be offset by increased biological or geological sequestration) by mid-century. The country can get on this pathway by setting strong interim emission reduction targets for major carbon-emitting sectors, implementing complementary renewable energy and energy efficiency policies, and through state or regional measures.

Equity concerns

Putting a price on carbon has an economy-wide effect, and good policy design requires addressing potential equity implications . These equity concerns include: the regressive impact of potential energy price increases on low-income households; the potential for carbon pricing policies to allow some fossil fuel-fired power plants or refineries to continue to operate and emit air and water pollutants in neighborhoods already burdened by pollution; and the economic hardship to workers and communities dependent on fossil fuel industries for livelihoods or for their tax base as we transition away from these resources.

Carbon revenues can provide a source of funding for helping to address these concerns, alongside other targeted policies. For example:

• Rebates and energy efficiency measures designed for low income or fixed income households can help ensure they do not pay a disproportionate share of the cost of cutting carbon.
• Disenfranchised communities are often hit hardest by pollution from the fossil energy sector. That pollution can be limited by pairing a carbon pricing policy with investments in local clean energy and efficiency initiatives, tighter controls of ambient air and water pollutants and toxics, and incentives for retiring coal-fired power plants.
• Workers and communities affected by the move away from fossil fuels should receive transition assistance through worker training programs, economic diversification initiatives, and funding for retiree benefits that may be adversely affected as fossil companies change their business models.

Carbon pricing in action

The U.S. sulfur dioxide trading program, established as part of the Acid Rain program , is a pioneering example of using the market to drive down pollution. Carbon cap-and-trade programs are already working successfully in California and the nine Northeast and Mid-Atlantic states that participate in the Regional Greenhouse Gas Initiative (RGGI). These states also have complementary renewable energy and energy efficiency policies that work together with the carbon price to cut emissions. Many more states are considering carbon trading programs as part of their compliance plans for the Clean Power Plan .

The world’s first carbon cap-and trade program, launched in 2005, is the European Union’s Emissions Trading Scheme (EU-ETS). The Canadian province of British Columbia implemented a carbon tax in 2008. China has also launched a number of pilot cap-and-trade programs at the provincial level and intends to launch a national trading program within the next few years.

Many big companies are already using an internal price on carbon to inform their business decisions. A growing list of companies have also voiced support for a policy to put a price on carbon, including Apple, Google, BP, Royal Dutch Shell, Unilever, and Nestlé. Companies and investors need to reorient their business models toward a low-carbon economy, while supporting the implementation of a robust carbon price.

With growing recognition of the urgent need to address climate change, momentum for adopting carbon pricing programs is likely to increase in the years ahead both in the U.S. and globally.

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Reducing our impact on the environment to build a more sustainable and resilient future.

Earth’s natural capabilities are being tested at an increasingly alarming rate — pushing planetary boundaries and threatening humanity’s very existence. To help ensure a just transition, where no one is left behind, there’s a need for sustainable and equitable practices across business, government and broader society.

KPMG is committed to reach net-zero carbon emissions by 2030. This requires halving our carbon emissions by 2030 — while continuing to look at how we address climate change, water pollution, deforestation and biodiversity loss. We’re implementing sustainable practices within our global organization and evaluating our supply chain to help ensure a healthy planet for generations to come.

To support our clients on their decarbonization journey, we created a global decarbonization hub focusing on:

• Emerging technology expertise that includes hydrogen, carbon capture utilization and storage, mobility and renewable fuels
• Decarbonization services delivering a wide range of climate and decarbonization support, including carbon offsets, circular economy, transition planning, energy efficiency, carbon removal and nature-based solutions
• A climate policy and an incentives dashboard to support clients in understanding the emerging legal regulatory landscape across their geographic and industry footprints

KPMG is working hard to help prepare clients for the impacts of climate change. We provide resources and insights to clients that help shape business models, products and services that address climate change and help clients reduce carbon emissions.

With offices in 145 countries and territories around the world, KPMG has a unique perspective, which enables us to contribute expertise to the following groups:

• The Financial Stability Board’s (FSB) Taskforce on Climate-related Financial Disclosures (TCFD)
• The Value Reporting Foundation’s Corporate Reporting Dialogue
• Taskforce on Nature-related Financial Disclosures (TNFD)
• Net Zero Financial Service Providers Alliance (NZFSPA) in support of the Glasgow Financial Alliance for Net Zero (GFANZ)

It is critical that we recognize the responsibility that we play in meeting the challenges that impact the future of our planet and threaten our quality of life, now and for future generations. We are committed to supporting the responsible transformation of organizations — including our own.

Our commitments

Decarbonization

• Achieve net-zero carbon emissions by 2030

Climate risk

• Give financial markets, clients and our leaders clear, comprehensive, high-quality information on the impacts of climate change

Nature and biodiversity

• Understanding and improving our impact on nature and biodiversity

As a global organization, we have a clear role to play in a just transition to net zero. In 2020, we committed to set a science-based target (SBT) aligned with a 1.5°C trajectory. Our own carbon reduction target was validated by the Science Based Targets initiative (SBTi) in 2021, committing us to reduce our emissions by 50 percent by 2030.

Grow your Impact — Actions speak louder than words

To help increase the positive impact our people have on the planet and society, KPMG has developed the Grow Your Impact platform — designed to drive and increase participation in sustainability campaigns globally.

Reducing our carbon footprint

Since 2019, our emissions have fallen by 18 percent across the global organization, which is a 24 percent reduction per individual. While this is in large part attributed to the COVID-19 pandemic, it’s also a result of efficiencies within our operations, such as investment in cloud servers, retrofitting lighting and central air systems.

Last year, as part of our SBT, we rebased our FY19 performance to include additional Scope 3 1 emissions, particularly emissions from our supply chain. As a result, our emissions increased to 1.8 million tCO2e 1 , which is the baseline for our 50 percent decarbonization commitment. The addition of our supply chain into our greenhouse gas (GHG) inventory increased our emissions footprint by over 900,000 tCO2e. And in 2021, our supply chain emissions increased by over 30 percent because of our investment in new digital capabilities and capacity.

In the past year — largely as a result of remote working — there was a 23 percent reduction in Scope 1 and Scope 2 1 emissions and since 2019, there was a 32 percent reduction in emissions.

It’s worth noting that we have seen significant reductions from Scope 3 emissions falling due to a reduction in business travel in the past 2 years. Overall, there has been a decline in emissions from business travel — 75 percent drop since 2020 and 89 percent since 2019.

Our challenge and our commitment are to help ensure we don’t allow business travel to return to pre-pandemic levels and we lock in the new ways of working that have allowed us to continue to deliver quality services to clients, while reducing the need to travel. We will continue to make investments in best-practice hybrid working.

Having a clear picture of our total carbon emissions helps benchmark our climate performance across the global organization and identify areas for improvement. Below is a breakdown of our total carbon emissions and emissions intensity ratio per individual:

Use below buttons to view data for each FY

Scope 1 emissions

(gross) in tCO2e

FY21 FY20 FY19

Scope 2 emissions

(location-based) (gross) in tCO2e

Scope 3 emissions

Total carbon emissions, tco2e per individual.

Financial year: 1 October — 30 September

Net Zero Readiness Index

To help organizations understand the challenges we face in the transition to net zero at a global level, KPMG IMPACT published the Net Zero Readiness Index , which analyzed the progress of 32 countries in reducing GHG emissions and their ability to achieve net zero by 2050.

Shifting to renewable energy

As part of our commitment to source 100 percent renewable electricity across the global organization by 2030, KPMG joined the global RE100 initiative. We will disclose information through our CDP (formerly the Carbon Disclosure Project) report. By October 2022, we’re committed to relying on 100 percent renewable electricity in our Global Board firms. Currently, 87 percent of the electricity consumed by our Global Board countries is from renewable sources.

KPMG’s renewable electricity usage across the global organization increased to 74 percent in 2021, up from 56 percent in 2020.

Renewable electricity

People of KPMG

“During a live stream event during COP26 where the Asian Development Bank (ADB) announced the launch of its ambitious, first-of-its-kind partnership to establish the Energy Transition Mechanism (ETM) for Southeast Asia, I was finally able to explain to my family why I get out of bed every morning to do the work I do.

Southeast Asia’s coal plants are one of the largest carbon emitting sources in the region. The ETM program is aimed at helping countries phase out coal plants and facilitate transition by adopting clean energy and has the potential to become the largest carbon reduction program in the world.

KPMG has been at the forefront of energy transition and ESG transformation. The ETM engagement with ADB is a significant opportunity for us to collectively drive the decarbonization agenda in the emerging markets. It has been a very rewarding experience personally to work on this project led by our Climate Change and Decarbonization Leader and colleagues in Singapore, Vietnam, Indonesia, Philippines and India.

It made my family proud knowing I’m involved in something important that has the potential to trigger significant change in the region, for a better world.”

WenBin Lim KPMG in Singapore

Setting an Internal Carbon Price

In FY22, KPMG agreed to set an Internal Carbon Price (ICP) to cover business travel and business operations globally.

Our ICP will help fund improvements across our value chain by setting a price on the emissions we generate. It will also influence investment decisions, incentivizing and, in some cases, providing the funds for KPMG firms to invest in new technologies and solutions. It will also help manage the change that’s needed across our business as we work towards our net-zero targets.

Decreasing supply chain emissions

KPMG established a global procurement ESG working group, with the objective of ensuring our suppliers are helping us achieve our commitments and are aligned with our Values. The group’s initial priority is to develop and enhance the work of our firms to deliver a net-zero supply chain.

“I’m very proud of the work KPMG China does to help improve biodiversity and fresh water, ocean, wetland and forest ecosystem restoration. Since 2020, we have collaborated with Conservation International on a community-based freshwater initiative to help protect water resources in Guangdong province’s Dongjiang Basin, a major water source for the region.

Currently, we are in the midst of a 2-year initiative with Shenzhen Mangrove Wetlands Conservation Foundation (MCF) to monitor and oversee the Shenzhen Bay ecosystem, by improving the ecological quality, protecting endangered species, and promoting environmental awareness.

In addition to raising funds, KPMG employees volunteer their time to help with vegetation and small mammal surveying and wetland preservation. This first-hand information will be published in a joint report with MCF, along with other government entities, to inform further protection measurements taken in the area.”

Wilson Pang KPMG China

We continue to report annually to CDP on our collective performance and management for climate-related issues, and this year, we maintained a B grade — displaying coordinated action on climate issues. To strengthen our rating, we’ll focus on quality assurance, supply chain engagement and further assessing climate risk.

KPMG plays an active role in the Taskforce for Climate-related Financial Disclosure (TCFD) to provide clear recommendations on how organizations should disclose consistent information on climate-related financial risk and the potential impacts.

We created a climate change resource center with tools and insights that help clients understand the financial reporting impacts a just transition to sustainability has on their business.

As part of Our Impact Plan, we review our climate approach and performance, and now present our progress annually to our Global Board. Risk oversight is an important part of the Global Board’s remit and it helps ensure we continue to improve our methods and services — while holding ourselves accountable.

Understanding climate risk

To understand the potential negative impact of climate change on our organization, we worked with our ESG professionals to commission a high-level physical risk assessment under a range of scenarios (RCP 2.6, RCP 4.5 and RCP 8.5) 1 on the majority of KPMG member firm offices and real estate assets around the world. Once completed, we will review the findings and develop an action plan.

KPMG Climate IQ

KPMG in the UK created KPMG Climate IQ , a multi-industry risk management tool that enables companies to identify, quantify and manage their physical and transition risks due to climate change. As we continue on our journey, we’ll conduct a full KPMG Climate IQ assessment to develop a more comprehensive understanding of our exposure to climate risk. We’ll use the outcomes of this process to enhance our CDP response and as a foundation for a full TCFD report, which we plan to issue later this year.

Being explicit in how we manage our impact on the natural world is a vital component of how we build a culture of sustainability across our business.

Shaping a nature-positive future

To help develop a risk management disclosure framework, we joined the Taskforce on Nature-related Financial Disclosures (TNFD). Over the next few years, we’ll help the TNFD to develop and deliver a risk management and disclosure framework for financial institutions, asset managers, insurance providers and organizations to report and act on evolving nature-related risks. This will help enhance the services we deliver for clients.

Two appointees from KPMG Australia were selected as TNFD members and will play an active role, as members of the Taskforce, in shifting global financial flows away from nature-negative outcomes and toward nature-positive ones.

Case study: Boosting biodiversity, KPMG in the UK

Since 2014, the roof of KPMG in the UK’s London office has been home to two honeybee colonies, hosting a total of 80,000 bees. Before the pandemic, our colleagues had the opportunity to swap their work-suits for beekeeper-suits to visit our friends on the roof. Led by KPMG’s ‘urban bee head beekeeper’, our colleagues were able to learn about the positive impact pollinators have on boosting biodiversity, both across the UK office and in their own homes. To support the UK Department for Environment, Food & Rural Affairs’ (DEFRA) National Pollinator Strategy, we help solitary bees by placing bee hotels and planting pollinator flowers across our office. In support of the 2021 World Environment Day theme of Ecosystem Restoration, we held an employee learning session on the important role of bees and pollinators, and the ways colleagues can continue to support these insects at home. By encouraging bees to thrive, we’re strengthening the growth of plants, food and healthy ecosystems.

Becoming nature-positive and creating circularity

To address nature loss, we assessed the locations of KPMG firms around the world to better understand the impact we’re having on key biodiversity and protected areas 1 . KPMG is now working with our ESG professionals to develop a roadmap to become a nature-positive organization.

We’re also developing a plan to promote circularity and help KPMG become a circular organization. A circular economy — a system that does not consider used products as waste, but as raw material for reuse — is aimed at decoupling economic growth from resource consumption, helping to create long-term value. Circularity is also a critical enabler to achieve our net-zero objectives.

Case study: Fairphone circularity, KPMG in the Netherlands

KPMG’s Product Circularity Improvement Program (PCIP), in collaboration with Circular IQ, was put into action by KPMG in the Netherlands’ recent work with their client, a Dutch telecom operator, and one of their key suppliers of more sustainable and circular smartphones, Fairphone.

As one of the first telecom operators to actively work on circularity with its suppliers, the client sought a way to measure and visualize the circularity of products. Based on Fairphone's product data and insights on trade-offs in responsible material sourcing, KPMG and Circular IQ refined the product circularity report. The newly found insights sparked an in-depth discussion between the client and Fairphone, allowing both parties to understand better where their sustainability and circularity agenda’s meet.

An example of this is the trade-off between focusing on recycled content or fair mined materials (e.g., Fairtrade gold). The data-backed insights helped steer the conversation to understand Fairphone’s efforts better and the reasoning behind them, since only assessed and well-addressed impacts can lead to more sustainable and circular products like the recently launched Fairphone 4.

1: Please refer to the Appendix available for download at the bottom of this page.

KPMG: Our Impact Plan 2022

Jane lawrie.

Global Head of Corporate Affairs

Richard Threlfall

Global Head of KPMG IMPACT and Global Head of Infrastructure

Eliza Albronda

Global Head of Our Impact Plan

Throughout this webpage, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.

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How Is the US Pricing Carbon? How Could We Price Carbon?

In this section, hks affiliated authors.

October 2022, Paper: "Economists have for decades recommended that carbon dioxide and other greenhouse gases be taxed—or otherwise priced—to provide incentives for their reduction. The United States does not have a federal carbon tax; however, many state and federal programs to reduce carbon emissions effectively price carbon—for example, through cap-and-trade systems or regulations. There are also programs that subsidize reductions in carbon emissions. At the 2022 meetings of the American Economic Association, the Society for Benefit-Cost Analysis brought together five well-known economists—Joe Aldy, Dallas Burtraw, Carolyn Fischer, Meredith Fowlie, and Rob Williams—to discuss how the United States does, in fact, price carbon and how it could price carbon. Maureen Cropper chaired the panel. This paper summarizes their remarks." Read Via NBER Or free via HKS Working Papers

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BTN's What to Watch 2024

Internal carbon pricing solidifies business travel as critical tool in climate action.

As 2024 begins, we know how important sustainability remains on the global stage and for business.  More than 7,000 companies are taking action, including 2,500 small- and midsize businesses, in Science Based Targets . Corporate travel programs, which are already integral to business success, can also be a key partner to deliver enterprise sustainability goals and engage with stakeholder across the value chain. When it comes to measuring carbon, travel programs are already tracking and reporting carbon emissions, displaying emissions in booking tools, and using qualitative questions and quantitative rankings to inform sourcing decisions. In 2024, there is an opportunity for travel managers to further elevate their travel program as a key organizational tool by launching an internal carbon pricing scheme and aligning with enterprise sustainability programs.

What Is a Carbon Price?

Governments use carbon pricing to identify the costs of greenhouse gas emissions, link them to their source and apply a fee, either as a flat fee or a dynamic carbon amount. Think of the Danish government’s recent announcement to implement a fee of 50 Danish crowns (US$7.35) by 2030 for European flights, or governmental programs like the EU’s emissions trading scheme which priced emissions at 100 euros per tonne in February 2023. This isn’t just a European trend: In September, the Biden administration ordered the U.S. government—the world’s single largest purchaser—to consider the social cost of carbon in agency budget processes and to start building climate costs into government procurement.

Companies are embracing carbon pricing, too, as a way to assess climate-related risks and opportunities. They may use real carbon pricing to create funds and make investment decisions, or they may use a flat fee to educate stakeholders. The global reporting framework CDP , formerly known as the Carbon Disclosure Project, reports that “nearly half of the world’s 500 biggest companies by market cap either put a price on carbon or plan to do so in next five years.”

Carbon Pricing Will Elevate Business Travel

We have seen the role of business travel managers become more elevated in recent years as they leverage their remit to navigate change or challenging, fast-evolving landscapes. Climate change is the opportunity we face today, with business travel once again playing a critical role in how enterprises meet the moment. Through carbon pricing, the purchasing power of business travel can be wielded and enable an enterprise to meet its sustainability objectives and take climate action.

Educates Travelers – Simple, accessible information is key to better decision making and behavior change. A carbon price for an air ticket engages travelers about the impact of their trip and gives a common metric across the business. It can complement online booking tool displays of carbon emissions generated from air travel and provide an actual cost. A carbon price can also be a common metric for engaging with supplier stakeholders and discussing services and options in a value chain.

Aligns Travel with Enterprise Initiatives – Carbon pricing is a key element of clients’ CDP reports. Many companies already report in that framework and information is already available for travel programs to use.  Aligning the travel program with the enterprise ensures a consistent approach to sustainability across an organization and provides more collaboration with key stakeholders within the business, ultimately enhancing the travel program. 

Creates Budgeting Opportunities – The pressure and urgency for companies to do more on sustainability and achieve emissions targets continues to increase. But just like carbon, everything has a cost. To help overcome budget constraints, companies can use carbon pricing to create a centralized budget to make investments in decarbonization activity such as purchasing sustainable aviation fuel or participating in carbon compensation programs. By launching a carbon fee, a travel program can co-fund key sustainability projects with the broader business and prove that travel powers environmental progress.

The number of companies implementing carbon pricing is growing daily, and they aren’t contained to a certain sector. I’m currently having carbon pricing conversations with companies that cross pharma, professional services, heavy industry, tech, finance and more. As they each evolve their approach to business travel sustainability, carbon pricing can be a first step, and I encourage companies to create an initial fee and then scale up quickly. Ultimately, carbon pricing helps companies create a plan for the future, and it’s not one-size-fits-all. You can evaluate different pricing schemes from regional or industrial activity, but laying a solid foundation that simultaneously educate travelers, aligns travel with company initiatives and contributes to climate investments can only make business travel a more strategic player as companies strive to reach 2030 climate goals.

Library » Publication

Carbon pricing proposals in the 118th congress.

There are various market-based approaches to pricing carbon (e.g., carbon tax, cap and trade, clean energy standard). All of these approaches can reduce emissions cost-effectively while driving clean energy innovation. This factsheet compares two carbon tax proposals introduced in the 118th Congress (2023–2024).

Carbon pricing offers a cost-effective way to reduce greenhouse gas emissions. Fourteen states are already pricing carbon, and a number of states are considering similar action. This factsheet summarizes and compares two federal carbon pricing proposals that have been introduced so far in the 118th Congress (2023–2024), highlighting similarities and differences. Two of these proposals would establish a carbon tax (or “carbon fee”). They are:

• The Energy Innovation and Carbon Dividend Act of 2021 ( H.R. 5744 ) introduced by Rep. Salud Carbajal (D-Calif.) on September 27, 2023
• The Modernizing America with Rebuilding to Kickstart the Economy of the Twenty-first Century with a Historic Infrastructure-Centered Expansion Act of 2023 (MARKET CHOICE Act, H.R. 6665 ) introduced by Reps. Brian Fitzpatrick (R-Pa.) and Salud Carbajal (D-Calif.) on December 7, 2023

Download Publication (pdf, 185 KB)

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Carbon pricing worldwide - Statistics & Facts

What is carbon pricing, the cost of carbon, the future of carbon pricing, key insights.

Detailed statistics

Carbon pricing mechanisms in operation worldwide 1990-2024, by type

Share of global GHG emissions covered by carbon pricing instruments 2005-2024

Global average annual direct carbon prices 2000-2023

Editor’s Picks Current statistics on this topic

EU-ETS allowance prices in the European Union 2022-2024

UK ETS carbon pricing in the United Kingdom 2022-2024

Annual global emissions of carbon dioxide 1940-2023

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Global GHG emissions 1990-2022, by sector

Annual greenhouse gas (GHG) emissions worldwide from 1990 to 2022, by sector (in million metric tons of carbon dioxide equivalent)

Global atmospheric carbon dioxide concentration 1959-2023

Average carbon dioxide (CO₂) levels in the atmosphere worldwide from 1959 to 2023 (in parts per million)

Number of carbon pricing mechanisms in operation worldwide from 1990 to 2024, by type

Share of annual greenhouse gas emissions worldwide covered by carbon pricing instruments from 2005 to 2024

Sectoral coverage of carbon pricing mechanisms worldwide 2023

Share of greenhouse gas emissions covered by carbon pricing mechanisms worldwide in 2023, by sector

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Number of carbon pricing mechanisms in operation worldwide as of 2024, by type

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Share of greenhouse gas emissions covered by carbon pricing mechanisms worldwide in 2023, by sector and mechanism

Share of jurisdiction's GHG emissions covered by ETS 2024

Estimated share of selected jurisdiction's greenhouse gas emissions covered by emissions trading systems (ETS) as of 2024

Share of global GHG emissions covered by ETS 2005-2024

Share of annual global greenhouse gas emissions under an emissions trading system (ETS) from 2005 to 2024

Share of select jurisdiction's GHG emissions covered by carbon taxes 2024

Estimated share of greenhouse gas emissions covered by carbon taxes in selected jurisdiction'worldwide as of 2024

Carbon prices

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Weighted average direct carbon price worldwide from 2000 to 2023 (in U.S. dollars per metric ton of CO₂ equivalent)

Prices of implemented carbon taxes worldwide 2024, by jurisdiction

Carbon tax rates in selected jurisdictions worldwide as of April 2024 (in U.S. dollars per metric ton of CO₂ equivalent)

Prices of carbon trading worldwide 2024, by jurisdiction

Carbon trading prices covered by Emission Trading Systems (ETS) in selected jurisdictions worldwide as of April 2024 (in U.S. dollars per metric ton of CO₂ equivalent)

Average annual EU-ETS emissions allowance prices 2020-2023

Annual average price of European Union Emissions Trading System (EU ETS) allowances from 2020 to 2023 (in euros)

Carbon prices trends in China 2014-2024, by instrument

Carbon prices for emissions trading systems (ETS) in China from 2014 to 2024 (in U.S. dollars per metric ton of carbon dioxide equivalent)

Carbon prices trends for the RGGI 2010-2024

Carbon prices under the Regional Greenhouse Gas Initiative (RGGI) on April 1 from 2010 to 2024 (in U.S. dollars per metric ton of carbon dioxide equivalent)

Carbon price trends for the UK ETS 2022-2024

Carbon prices under the United Kingdom Emissions Trading Scheme (UK ETS) on April 1 from 2022 to 2024 (in U.S. dollars per metric ton of CO₂ equivalent)

Carbon prices trends for the California CaT program 2012-2024

Carbon prices trends for the California Cap-and-Trade program on April 1, from 2012 to 2024 (in U.S. dollars per metric ton of CO₂ equivalent)

Global average selling price per metric ton of CDR 2022-2023, by method

Average selling price of carbon dioxide removals (CDR) worldwide in 2022 and 2023, by method (in U.S. dollars per metric ton of CO₂ removal)

• Premium Statistic Global carbon market value 2023, by key market
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Global carbon market value 2023, by key market

Carbon market value worldwide in 2023, by key market (in billion euros)

Breakdown of global carbon market size 2023, by market

Distribution of carbon market size worldwide in 2023, by market

Global revenue from carbon pricing 2006-2023

Total annual revenues from carbon taxes and Emission Trading Systems (ETS) worldwide from 2006 to 2023 (in billion U.S. dollars)

Global carbon tax revenues 2023, by country

Revenues generated by carbon taxes worldwide in 2023, by select jurisdiction (in million U.S. dollars)

Global Emission Trading Systems (ETS) revenues 2023, by jurisdiction

Revenue generated by Emission Trading Systems (ETS) worldwide in 2023, by jurisdiction (in million U.S. dollars)

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Global average annual direct carbon price targets 2023-2050

Weighted average direct carbon price targets worldwide to limit global warming to 1.5 degrees Celsius from 2023 to 2050 (in U.S. dollars per metric ton of CO₂ equivalent)

EU-ETS carbon price forecasts 2024-2035

Forecast European Union Emissions Trading System (EU-ETS) average carbon allowance prices from 2024 to 2035 (in euros per metric ton of CO₂ equivalent)

Average carbon price projections worldwide 2022-2030, by trading system

Average carbon price expectations worldwide from 2022 to 2030, by trading system (in euros per metric ton of CO₂)

Forecast carbon offset prices worldwide 2030-2050, by scenario

Forecast voluntary carbon offset (VCO) prices worldwide in 2030 and 2050, by scenario (in U.S. dollars per ton of carbon dioxide)

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Global Carbon Pricing Generates Record $84 Billion in Revenue

Global carbon pricing revenues increased by 60% over past year, according to latest World Bank report

WASHINGTON, May 24, 2022 — Global carbon pricing revenue in 2021 increased by almost 60 percent from 2020 levels, to around $84 billion , providing an important source of funds to help support a sustainable economic recovery, finance broader fiscal reforms, or invest in communities as part of the low-carbon transition future, according to the World Bank’s annual “State and Trends of Carbon Pricing” report released today.

The report, which presents the latest carbon pricing developments around the world, finds that there are 68 direct carbon pricing instruments operating today: 36 carbon taxes and 32 Emissions Trading Systems (ETSs). Four new carbon pricing instruments were implemented since the release of the 2021 State and Trends of Carbon Pricing report: one in Uruguay and three in North America (Ontario, Oregon, New Brunswick). Countries announcing plans for new carbon pricing policies include Israel, Malaysia, and Botswana.

Carbon prices hit record highs in many jurisdictions, including the European Union, California, New Zealand, the Republic of Korea, Switzerland and Canada. However, the report finds that less than 4 percent of global emissions are currently covered by a direct carbon price in the range needed by 2030 to meet the temperature goal of the Paris Agreement.

“The past year has seen some very positive signs, such as the significant increase in revenue that can be invested in communities and in supporting the low carbon transition.There is also good progress towards resolving cross-border issues related to carbon pricing and the adoption of new rules for international carbon markets that was agreed at COP26 in Glasgow, which helps set a clearer policy direction,"   said Bernice Van Bronkhorst, Global Director for Climate Change at the World Bank.   “It is important now to build on this momentum and really ramp up both the coverage and the price levels to unlock the full potential of carbon pricing in supporting inclusive decarbonization.”

Key topics covered in the State and Trends of Carbon Pricing 2022 include cross-border approaches to carbon pricing, challenges and opportunities from rising energy prices, and new technologies and governance frameworks shaping carbon markets.

The report was launched at Innovate4Climate, the World Bank Group's flagship annual event on climate finance, investment, and markets, held virtually this year from May 24 to 26. Now in its sixth year, the conference brings together leaders from government, business, policy, and finance to discuss innovative climate finance solutions.

To read the report, click here .

To access the report series, click  here .

Visit the Carbon Pricing Dashboard website for up-to-date information on existing and emerging carbon pricing initiatives around the world:  https://carbonpricingdashboard.worldbank.org/

Download: State and Trends of Carbon Pricing 2022

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New Zealand Carbon Prices Jump to 5-Month High on Overhaul Plan

By Heesu Lee

New Zealand carbon prices surged after the government announced plans to overhaul the national trading system, which has been in limbo due to persistent oversupply.

The spot price of carbon units climbed as much as 9% to NZ$61 ($37) a ton Tuesday, the highest since March. The government plans to more than halve the number of units to 21 million from 45 million between 2025 and 2029 to stimulate businesses to reduce emissions.

“This is a positive move for carbon markets and for the climate,” said Rich Gilmore , chief executive officer of investment manager Carbon Growth Partners. “It will ...

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News Analysis

On Harris’s Price-Gouging Ban, Allies and Foes May Have the Wrong Idea

The plan does not appear to amount to government price controls. It also might not bring down grocery bills anytime soon.

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By Jim Tankersley

Jim Tankersley covers economic policy in Washington.

Vice President Kamala Harris threw her support behind a federal ban on price-gouging in the food and grocery industries last week. It was the first official economic policy proposal of her presidential campaign, and it was pitched as a direct response to the high price of putting food on the table in America today.

“To combat high grocery costs, VP Harris to call for first-ever federal ban on corporate price-gouging,” the Harris campaign proclaimed in the subject line of a news release last week, ahead of a speech laying out the first planks of her economic agenda.

It is still impossible to say, from publicly available details, what exactly the ban would do. Republicans have denounced the proposal as “communist,” warning that it would lead to the federal government setting prices in the marketplace. Former President Donald J. Trump has mocked the plan on social media as “SOVIET Style Price Controls.”

Progressives have cheered the announcement as a crucial check on corporate greed, saying it could immediately benefit shoppers who have been stunned by a 20 percent rise in food costs since President Biden took office.

But people familiar with Ms. Harris’s thinking on the ban now say it might not resemble either of those characterizations. The ban, they also suggest, might actually not do anything to bring down grocery prices right now. Those who spoke about the strategy behind the emerging policy did so on the condition of anonymity.

Ms. Harris’s campaign has created the space for multiple interpretations, by declining to specify how that ban would work, when it would apply or what behaviors it would prohibit.

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