Carbon Tax Implementation in the Energy Sector: A Comparative Study in G20 and ASEAN Member States (AMS)

Abstract

1. This report shows that six G20 countries (Japan, South Africa, Argentina, France, Ireland, and Mexico) and one ASEAN Member States (Singapore) have implemented a carbon tax. 2. The energy sector is the primary GHG emissions contributor in most member states, except Indonesia. However, the energy sector in Indonesia will highly contribute to the national GHG emissions considering the rise of energy demand due to economic and population growth. 3. The effectiveness of carbon tax is specific to which sectors are taxed and which sectors are exempt to a country member. Specifically, a higher emissions price may not cover a large share of emissions in the country. The high carbon tax in France only covers 35% of total emissions in its jurisdiction. Meanwhile, Japan and Singapore’s low carbon tax covers 75% and 80% of total emissions in their jurisdiction, respectively. 4. The numbers of sectoral coverage by emissions price will impact the level of revenues generated from the carbon tax. France obtained the most significant carbon tax revenue for more than USD 9.6 billion. Meanwhile, Argentina generated less than USD 1 million, likely due to tax exemptions in natural gas commodities. 5. The contribution level of carbon tax revenue to the government’s total revenue varies for each country. France and Ireland’s carbon tax revenue contributes 0.71% and 0.53% of their total government revenue, respectively. Meanwhile, the rest of the countries’ carbon tax revenue contributed less than 0.3% each to their government revenue.