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Dealing with corruption in adopting and implementing carbon taxes

Carbon taxes are receiving strong support in many jurisdictions, as a means for reducing carbon emissions and limiting global warming. But corruption undermines both their effectiveness and popularity. We address the corruption risks across the carbon tax policy cycle and outline the tools that can reduce those risks. These include increasing transparency, managing conflicts of interest, supporting tax authorities that are fit-for-purpose and ensuring effective penalties for corruption.

28 November 2021
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Main points

  • Corruption can reduce the effectiveness of carbon tax and make it harder to win the public support needed for government to adopt and maintain ambitious policies.
  • The risk of corrupt acts taking place arise at different stages of the policy cycle. During policy development, corrupt behaviour can undermine the integrity of the policymaking and legislative process. During policy implementation, corruption can facilitate underreporting of emissions, tax evasion and embezzlement of tax revenue.
  • Some of these risks are common across multiple policies, especially when they stem from broader governance issues, such as limited transparency and weak enforcement. Other risks, such as tax evasion and revenue embezzlement, are typical for any kind of tax system. But carbon tax also raises its own set of particular risks: measuring, reporting, and verifying (MRV) emissions creates opportunities for bribery; and the systems and entities needed for new options, such as allowing carbon offsets to pay tax liabilities, raise their own corruption risks.

Cite this publication

Conway, D.; Hermann, B.; (2021) Dealing with corruption in adopting and implementing carbon taxes. Bergen: U4 Anti-Corruption Resource Centre, Chr. Michelsen Institute (U4 Brief 2021:5)

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About the authors

Darragh Conway

Lead legal counsel at Climate Focus, where he leads the carbon pricing and forest governance practices. Darragh has advised a wide range of governments on how to effectively design, implement, and communicate carbon pricing instruments, and has co-authored several of the leading publications on the topic, including the World Bank’s Carbon Tax Guide, the Guide to Communicating Carbon Pricing, and the 2021 edition of State and Trends of Carbon Pricing. Darragh has also authored a number of leading publications on addressing governance and corruption in the forest sector. Twitter: @Climate_Darragh, @Climate_Focus_

Barbara Hermann

Legal consultant at Climate Focus, focusing on carbon pricing and governance. She was a co-author of the policy brief ‘Tipping the balance. Lessons on building support for carbon prices’ and has advised the World Bank and governments in countries such as Sri Lanka, Mexico and Colombia on how to effectively design and communicate carbon pricing. She has organised and delivered trainings on carbon taxes and on anti-corruption in a number of countries across Latin America.


All views in this text are the author(s)’, and may differ from the U4 partner agencies’ policies.

This work is licenced under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International licence (CC BY-NC-ND 4.0)


climate change, climate finance