Energy taxation in OECD countries: effective tax rates across countries, users, and fuels

Energy use, while critical for modern economies and lifestyles, can have significant environmental consequences through emissions of CO2 and local air pollutants. Taxes on energy are a key tool available to governments by which they can influence energy use, and consequently emissions of CO2 and local air pollutants from energy use. Energy taxes, in particular, if levied on fossil fuel tax bases, implicitly tax these pollutants. Since energy taxes can send important price signals that influence energy consumption patterns, energy taxation is often used by governments to reduce emissions (Vollebergh 2012; Parry et al. 2012, 2014; OECD 2013b). Taxes on energy are in fact an important source of government revenue. In some countries these revenues are even earmarked for specific purposes like road infrastructure or non–fossil-fuel support measures. Understanding the structure and level of energy taxes in a country is therefore central to policy discussions regarding energy use. Given the centrality of energy to the economy and the environment, such an understanding is a key reference point for consideration of how policy can best support green growth (OECD 2009).