Taxes on Energy Products in Some Selected Countries, in Purchasing Power Parity
Country	Petrol (gasoline) unleaded		Diesel		Diesel/Gas Oil (industrial use)		Coal (industrial use)		Natural Gas (industrial use)
	$PPP / 1000 l	$PPP / ton CO2	$PPP / 1000 l	$PPP / ton CO2	$PPP / 1000 l	$PPP / ton CO2	$PPP / 1000 kg	$PPP / ton CO2	$PPP / 1000 m3	$PPP / ton CO2
Denmark	395	164	272	95	206 (197 - 180)	72 (69 - 63)a	163 (153 - 136)	67 (63 - 56)	28 (21 - 6)	15 (11 - 3)
Finland	558	232	324	113	55	19	33	14	28	15
France	590	245	370	129	78	27	0	0	1	1
Germany	495	205	313	109	40	14	0	0	33	17
Netherlands	583	242	336	117	102	36	11	5	55	29
Norway	520	216	403	140	46 (23)	16 (8) b	46	19	93	49
Spain	490	203	356	124	104	36	0	0	8	4
Sweden	456	189	295	103	183	64 (19) c	126	52 (19)	105	56 (22)
Switzerland	356	148	372	129	1	1	0	0	0	0
UK	630	261	645	224	40	14	0	0	0	0
USAd	101	42	116	40	na	na	na	na	na	na
Japane	320	133	124	43	4	1	na	na	23 (8)	12 (4)
source: Baranzini, Goldenberg and Speck, 2000.

na: not available.
a Tax rate is for light processes and heavy processes.
b Tax rate is for gas oil used in the pulp and paper industry.
c Tax rate is for energy products used in the manufacturing industry and greenhouse horticulture sector.
d Figures for USA: 1996 (source OECD/IEA: Energy Prices and Taxes. Paris, 1997).
e Figures for Japan: 1996 for petrol and diesel; 1995: gas oil; 1994 natural gas (source OECD/IEA: Energy Prices and Taxes. Paris, 1997). Japan has a general petroleum excise tax on all crude oil refined in Japan: rate was 1996 2040 yen/1000 l - 12.1 $PPP/1000 l (this figure is not included in the above table).
Tax rates for European countries are for 1998 in national currencies and then converted with 1997 purchasing power parities (PPP) 1997 (PPP source: OECD Main Economic Indicators July 1998, Paris)

In countries where carbon/energy taxes have been implemented, several issues are generally considered in the course of developing overall tax policies. Often, carbon/energy taxes:

• are only one instrument in a package of measures aimed at reducing emissions.
• are often part of a general fiscal reform; replacing other taxes on energy and reducing the distortionary impacts of traditional taxes (e.g. on labour and capital).
• are usually gradually phased-in and adjusted over time to account for inflation.
• include exemptions and exceptions have been granted to energy-intensive industries or to industries facing international competition.

Data in the table also shows that there are large differences between the taxation levied on different energy products. Some fuels, like petrol and diesel, are heavily taxed. The main reason is that those energy products possess low demand elasticities, and thus taxing them is an easy way to collect fiscal revenues. With respect to the carbon content of energy products, it should also be noted that, in almost all countries (except Sweden and Denmark), coal has a particularly low implicit carbon tax. In fact, coal is even still heavily subsidised in countries like Germany and Spain. More in general, fossil fuels with higher carbon content often have lower implicit carbon taxes than those with lower carbon content. Therefore, with respect to the objective of reducing carbon emissions, a reform of the energy tax structure should accompany the eventual introduction of carbon taxes.

Empirical studies evaluating the environmental effectiveness of implemented carbon taxes are rather limited so far. The lack of appropriate studies can be ascribed to the fact that there are several methodological difficulties and complexities in doing such evaluation studies. The few evaluation studies demonstrate that carbon taxes are an effective instrument in reducing CO2 emissions.

An evaluation study of the Swedish CO2 tax carried out by the Swedish Environmental Protection Agency (SEPA) concludes that the CO2 tax "… has helped to reduce emissions of carbon dioxide in line with Swedish environmental policy" (SEPA 1997, p.52). The Danish Ministry of Finance estimated the effect of the carbon/energy tax regime a 4.7% reduction in CO2 emissions from 1988 levels in the year 2000.

Detailed information of environmental related taxes and charges and of energy taxes implemented in the EU Member States plus Norway and Switzerland can also be found in European Commission 1999.

Baranzini, Goldenberg, and Speck. "A Future for Carbon Taxes" in Ecological Economics. Forthcoming, March 2000.

European Commission. "Database of Environmental Taxes in the European Member States plus Norway and Switzerland - Evaluation of Environmental Effects of Environmental Taxes," Office for Official Publications of the European Communities, 1999. The database can also be downloaded from the homepage of DGXI http://europa.eu.int/comm/dg11/enveco/index.htm.

Swedish Environmental Protection Agency (SEPA) "Environmental Taxes in Sweden - Economic Instruments of Environmental Policy." Report 4745. Stockholm. 1997.

Ekins, P. and S. Speck. Competitiveness and Exemption from Environmental Taxes in Europe. "Environmental and Resource Economics." Vol.13. pp.369-396. 1999.