Green taxes across Europe: a country comparison

Green taxes vary widely from one European country to another. Finland was, in 1990, the first country in the world to introduce a carbon tax; Sweden today applies the highest carbon tax in the world (around 130-140 euros per tonne of CO₂); and at EU level, the European emissions trading market (EU ETS) and the new Carbon Border Adjustment Mechanism (CBAM) set the direction. This comparison reviews the main national models and their role in the green transition.

Green taxation is one of the pillars of European environmental policy. Although member states share objectives, the instruments they choose differ in form, scope and rate.

Shared objectives, different instruments

Despite the diversity, EU green-taxation policies pursue common goals:

1. Reducing emissions of CO₂ and other greenhouse gases.
2. Incentivising renewable energy and energy efficiency.
3. Discouraging air, water and soil pollution.
4. Promoting the circular economy through taxes on waste and single-use plastics.

How they get there varies: some countries opt for an explicit carbon tax, others for emissions trading, and most combine both with sector-specific charges.

The Nordic countries: pioneers and benchmarks

The Nordic countries have led on environmental taxation for three decades:

• Finland: the first country in the world to introduce a carbon tax, in 1990.
• Sweden: brought in its own in 1991 and has raised it to become the highest in the world (around 130-140 euros per tonne of CO₂). Its success is attributed to a design that raised the price gradually and predictably.
• Norway: has applied a carbon tax since 1991 which, together with strong purchase incentives, has made Norway a world leader in electric mobility.

These countries tend to apply a tax shift: they offset green taxes with cuts in other taxes to achieve a fairer overall effect.

Germany: a national carbon price and the Energiewende

Germany is known for its Energiewende (energy transition), based on phasing out nuclear power and driving renewables.

• National CO₂ price: since 2021, Germany has applied a price to the carbon in heating and transport fuels not covered by the EU ETS, through its national system (BEHG). The price rises each year on a set path.
• Charges on electricity: aimed at encouraging saving and efficiency.

France: a carbon contribution and transport taxation

France combines taxation and funding of the green transition:

• Climat-Énergie contribution: a component of the fossil-fuel tax based on the carbon emitted.
• Transport taxation: it taxes air tickets and the most polluting vehicles (the malus), encouraging the purchase of electric and hybrid cars.

This strategy has reduced dependence on fossil fuels, although it has also sparked debate about its social acceptance.

United Kingdom: landfill and plastic taxes

Although it is no longer in the EU, the United Kingdom maintains relevant green policies:

• Landfill Tax: taxes the disposal of waste in landfills to drive recycling.
• Plastic Packaging Tax: penalises producers and importers that fail to reach a minimum of recycled plastic in their packaging.

Spain: progress on green taxation

Spain has introduced several instruments and continues to align its taxation with EU guidelines:

• Plastic tax: since 2023 it levies 0.45 euros per kilo on the non-recycled plastic of non-reusable packaging.
• Grants and reliefs for renewables and efficiency, such as those described in tax incentives for installing solar power in your business.
• Regional taxes: some autonomous communities apply their own charges on waste or emissions, creating a heterogeneous tax map.

The EU level: EU ETS and CBAM

Above national taxes, the EU has two key instruments:

• EU ETS: the emissions trading market puts a price on the carbon of industry, power generation and intra-European aviation. The new ETS2, scheduled for 2027, will extend the system to road transport and buildings.
• CBAM: in force in its definitive regime since 1 January 2026, it taxes the carbon footprint of imports of emission-intensive products (steel, aluminium, cement, fertilisers, hydrogen and electricity) to prevent carbon leakage and level the playing field with European producers.

Towards greater harmonisation

The difference in approaches fuels the debate about the need for greater fiscal harmonisation to stop companies relocating to countries with lower taxes. Initiatives such as the Just Transition Fund and the NextGenerationEU funds help finance the reconversion of the most polluting sectors and reduce territorial inequalities.

Frequently asked questions

Which European country has the highest carbon tax?

Sweden, with a rate of around 130-140 euros per tonne of CO₂, the highest in the world.

Which was the first country with a carbon tax?

Finland, which introduced it in 1990. Sweden and Norway followed in 1991.

Is a carbon tax the same as the EU ETS?

No. A carbon tax sets a price per tonne emitted; the EU ETS sets a cap on emissions and lets the market determine the price of allowances. Many countries combine both.

Fiscal diversity and future convergence

The comparison of green taxes across Europe shows the diversity of approaches used to drive the green transition. As climate urgency grows, greater coordination at EU level can be expected. For companies, getting ahead of these developments is key; Manglai's carbon footprint platform helps measure emissions and prepare for instruments such as the EU ETS and CBAM.