New ECLAC publication assesses the effectiveness and challenges of carbon pricing instruments in the region

Overview of carbon pricing policies in Latin America and the Caribbean, 2025: an analysis of their effectiveness and guidelines for implementation will be presented at COP30, to be held in Belém, Brazil.

The Economic Commission for Latin America and the Caribbean (ECLAC) has published the report Overview of carbon pricing policies in Latin America and the Caribbean, 2025: an analysis of their effectiveness and guidelines for implementation, which examines the progress, challenges and opportunities associated with carbon pricing mechanisms as a key climate policy tool for the region.

The study analyzes both explicit instruments - such as carbon taxes and emissions trading systems - and implicit mechanisms - including fuel taxes, the social price of carbon, and the reduction of fossil fuel subsidies. Drawing on a regional mapping exercise and econometric modelling, it evaluates the effectiveness of these instruments in reducing greenhouse gas emissions.

Among its findings, the report highlights that, in the five Latin American and Caribbean countries that have implemented a carbon tax (Argentina, Chile, Colombia, Mexico and Uruguay), the applied tax rate is statistically significantly correlated with reductions in emissions. However, ECLAC emphasizes that the effectiveness of these instruments depends on several factors, including the level of the tax or price, elasticities, complementary policies, and their alignment with other public policies - such as regulatory frameworks and fossil fuel subsidy reform - as well as on the strengthening of institutional and technical capacities.

The report sets out a series of guidelines to enhance the design and implementation of carbon pricing policies, ensuring their coherence with the Sustainable Development Goals and fostering just and equitable transitions.

In a global context that demands accelerated decarbonization and the transition towards more sustainable economies, this publication constitutes a relevant technical and policy input for the countries of the region. It contributes to the ongoing debate on how to design fiscal and environmental policies that promote green growth and climate justice.

With this study, ECLAC reaffirms its commitment to strengthening climate and fiscal policy frameworks in Latin America and the Caribbean, and to promoting a more productive, inclusive and sustainable development model.

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