An input-output approach to study the impact of carbon taxes in (almost) every country

Some forty carbon tax initiatives have been adopted, and more countries are evaluating the possibility of implementing this instrument every year. However, there is significant heterogeneity in tax rates, type of covered emissions, and regulated sectors, which is explained by the different levels of environmental concern and cost that each country is willing to assume. In this context, the present study simulates various scenarios of carbon taxes in (almost) every country in the world to contribute to the global design of climate change policies. Specifically, input-output tables and sectoral CO2 emissions of each country are used to calibrate the environmental extension of the Leontief price model, obtaining the impacts on prices, production, and emissions at the sectoral, national, or global level. The results show that the same effective tax rate can have very different effects in each country, mainly explained by the composition of the energy matrix. In addition, global CO2 emissions would be reduced by 0.10%-0.23% for each dollar of CO2 tax applied to all sectors and countries. Finally, a more outstanding commitment from rich countries and larger developing countries is required to contribute more decisively to combating climate change in the short term.