Where Is Carbon Taxed? Carbon Pricing by Country (2026)

Last updated: 23 October 2026

Which countries have a carbon tax or emissions trading system?

Carbon pricing is in place across Europe, much of East Asia and parts of the Americas and Africa. Most large economies now have a carbon tax, an emissions trading system (ETS), or one on the way.

There are two main types. A carbon tax sets a price per tonne of CO2e. An ETS caps emissions, or sets a benchmark, and lets companies trade allowances. Some countries use both. For how each works, see carbon pricing and its role in reducing CO2e.

Carbon pricing at a glance: major jurisdictions in 2026

Sources: World Bank Carbon Pricing Dashboard; ICAP Status Report 2026; European Commission, CBAM; Singapore NCCS, carbon tax; others as noted in the sections below. Rates and dates change often. Check the official source before making decisions.

How much of the world's emissions are covered by a carbon price?

Just over 29% of global greenhouse gas emissions are covered by a direct carbon price, across 87 policies. That's according to the World Bank's State and Trends of Carbon Pricing 2026 (May 2026). The average direct price is nearly US$21 per tonne, and revenue topped US$107 billion in 2025.

Emissions trading is the larger share. The International Carbon Action Partnership counts 41 ETSs in force in 2026, covering 26% of global emissions. Their jurisdictions account for 63% of global GDP. Japan, India and Vietnam are all launching national systems in 2026.

Where is carbon taxed in Europe?

Europe has the most mature carbon pricing. The EU ETS has run since 2005, and many EU countries add national carbon taxes on fuels outside the ETS.

The biggest change for non-EU companies is the Carbon Border Adjustment Mechanism (CBAM). Since 1 January 2026, importers of covered goods must buy CBAM certificates priced in line with the EU ETS. Exporters are being asked for verified emissions data on what they ship. The EU's separate ETS2, covering fuels for buildings and road transport, is due to start in 2028. The UK runs its own ETS.

Where is carbon taxed in Asia?

Asia now has the fastest growth in carbon pricing, led by China, Japan, India and Southeast Asia.

• China runs the world's largest ETS by emissions covered. It began with power in 2021, added steel, cement and aluminium in 2025, and plans absolute caps for some sectors from 2027.
• Japan made its GX-ETS mandatory from 1 April 2026 for companies with average direct emissions of 100,000 tCO2 or more a year (ICAP).
• South Korea has run the K-ETS since 2015.
• Singapore was the first Southeast Asian country with a carbon tax. It rose to S$45 per tonne in 2026 (NEA). Facilities can offset up to 5% of taxable emissions with eligible international carbon credits.
• Indonesia, Vietnam, Malaysia and Thailand are at different stages. See our guide to carbon pricing in Southeast Asia.

Where is carbon taxed in the Americas, Africa and Oceania?

Carbon pricing in these regions is mostly regional or limited to industry.

• United States: there's no federal carbon price. California's cap-and-trade programme was extended to 2045 and renamed cap-and-invest in 2025. The Regional Greenhouse Gas Initiative (RGGI) prices power-sector CO2 in several north-eastern states, and Washington runs its own cap-and-invest programme.
• Canada: the federal consumer fuel charge was set to zero from 1 April 2025. Industrial carbon pricing continues (EY tax alert, March 2025).
• South Africa: a carbon tax has applied since 2019.
• Australia: there's no carbon tax. The Safeguard Mechanism sets declining baselines for large industrial facilities.

What are the challenges of carbon taxes?

The main challenges are setting a price that changes behaviour, stopping carbon leakage and keeping costs fair.

• Price level. Many prices are still too low to drive deep cuts, and free allowances weaken the signal.
• Carbon leakage. Production may move to places without a price. CBAM and free allocation for trade-exposed industries are the main responses. Expect more border measures. The UK plans its own CBAM from 2027.
• Patchwork rules. Companies operating in many countries face different prices, scopes and reporting formats.
• Data. Taxes and border charges need verified, facility-level emissions data, which many suppliers don't yet have.

What do carbon taxes mean for businesses?

Carbon prices add a direct cost to your own emissions and an indirect cost through energy and materials. Exporters also face border charges.

• Know your exposure: list sites in priced jurisdictions and their Scope 1 emissions.
• Watch pass-through: your power and material suppliers will pass on part of their carbon cost.
• Prepare for CBAM: if you export steel, aluminium, cement, fertilisers, hydrogen or electricity to the EU, your customers need verified embedded emissions.
• Price carbon internally: apply expected future prices when you assess new plant, sourcing and products.

Terrascope customer example: CBAM compliance

BBR-VT, a supplier to the EU market, used Terrascope to reach 100% CBAM compliance and to screen 100% of its suppliers.

How Terrascope helps

Terrascope gives you the verified, facility-level emissions data that carbon taxes, ETSs and CBAM are charged on.

• Footprint by site: the Terrascope carbon footprint platform measures Scope 1, 2 and 3 emissions by facility and country, so you can see your exposure in each scheme.
• Reporting and CBAM: Terrascope climate reporting prepares emissions data for disclosure rules and CBAM declarations.
• Business case: estimate the value of better carbon data with the carbon management ROI calculator.

For disclosure rules by country, start with our guide to the sustainability reporting alphabet soup. If you export to the EU or operate in a priced market, talk to our team about your carbon exposure.

FAQs

Which country has the highest carbon tax?

The highest carbon taxes are in Europe. Recent World Bank reports list Uruguay, Switzerland, Liechtenstein and Sweden near the top, at well over US$100 per tonne. Check the World Bank Carbon Pricing Dashboard for current rates, because they change every year.

Does the United States have a carbon tax?

No. The US has no federal carbon tax or ETS. California runs a cap-and-invest programme extended to 2045. Several north-eastern states price power-sector emissions through RGGI, and Washington has its own cap-and-invest scheme.

Is there a carbon tax in Asia?

Yes. Singapore has a carbon tax (S$45 per tonne in 2026–2027), and Japan plans a levy on fossil fuel importers from 2028. China, South Korea and Japan run emissions trading systems. India and Vietnam launched national ETSs in 2025–2026. Malaysia has announced a carbon tax.

How many countries have a carbon price?

The World Bank counts 87 direct carbon pricing policies in 2026, at national and sub-national level, covering just over 29% of global emissions. ICAP counts 41 emissions trading systems in force.

What is the difference between a carbon tax and CBAM?

A carbon tax charges domestic emitters for their own emissions. CBAM is a border charge. Importers into the EU pay for the emissions in certain goods, at a price linked to the EU ETS, so imports face a similar carbon cost to EU production.

Does a carbon tax apply to my company if I'm not a heavy emitter?

Usually not directly. Most schemes cover only large facilities or fuel suppliers, such as Singapore's 25,000 tCO2e threshold. But you'll likely pay indirectly through electricity and material prices. EU customers may also ask for your product emissions under CBAM.