At a time when climate change has emerged as one of the major determinants of economic, social, and geopolitical trajectories in the 21st century, the question is no longer whether action is needed, but how to act effectively, credibly, and sustainably. Nationally Determined Contributions (NDCs), the operational pillars of the Paris Agreement, embody this collective commitment to keeping the rise in global average temperature well below 2 °C, with efforts to limit it to 1.5 °C [1]. Yet, despite the proliferation of pledges, a persistent gap remains between declared ambitions and actual global emission trajectories, which continue to rise at a pace incompatible with these goals [2]. It is within this gap between climate ambition and concrete implementation that the carbon tax establishes itself as a key strategic instrument capable of translating political will into tangible and measurable economic signals.
The Concept of Carbon Tax
The carbon tax is based on a fundamental economic principle: integrating the real cost of GHG emissions into the price of goods and services. For decades, global economic growth has relied on massive externalization of environmental costs, leaving society and future generations to bear the burden of climatic, health, and ecological impacts [3].
By applying the “polluter pays” principle, enshrined in major international environmental conventions, the carbon tax corrects this distortion and restores coherence between private interest and the public good [4]. This logic aligns fully with the spirit of the United Nations Framework Convention on Climate Change (UNFCC), which explicitly recognizes the role of economic instruments in guiding behavior toward low-carbon pathways [5].
For public decision-makers, the strategic value of the carbon tax lies in its ability to combine environmental effectiveness, economic flexibility, and long-term predictability. Unlike purely regulatory approaches, which are often costly to administer and sometimes rigid, carbon pricing allows economic actors the freedom to choose the most efficient ways to reduce emissions [6]. Companies can invest in energy efficiency, modify industrial processes, or adopt clean technologies, while households can adjust mobility and energy consumption choices. In all cases, the price signal acts as a progressive guidance mechanism, encouraging innovation and economic optimization rather than uniform constraint.
The Role of Carbon Tax in Fighting Climate Change
Within the framework of NDCs, the carbon tax plays a structuring role by transforming climate objectives often perceived as abstract into concrete, measurable, and verifiable mechanisms. It anchors emission reduction commitments in the daily reality of economic decision-making, facilitating their monitoring and integration into the transparency frameworks established by the Paris Agreement [7]. Analyses published on UNFCCC platforms indicate that countries implementing carbon pricing mechanisms generally demonstrate better alignment between their international commitments and national sectoral policies, particularly in energy, industry, and transport [8].
Another major advantage of the carbon tax lies in its capacity to generate domestic financial resources dedicated to climate transition. In a context marked by chronic insufficiency of international funding and increasing competition for climate finance, mobilizing domestic resources represents a strategic lever of economic sovereignty [9]. Revenue from the carbon tax can be allocated in a targeted manner to priorities identified in the NDCs: development of renewable energy, improvement of energy efficiency in buildings and industries, adaptation to climate change impacts, or strengthening of institutional capacities. This allocation transforms the carbon tax from a simple fiscal instrument into a structuring investment tool for the low-carbon transition [10].
The Barriers to Overcome
The issue of social acceptability, often cited as a major barrier to implementing a carbon tax, must be analyzed rigorously. International experience shows that social opposition is rarely linked to the principle of carbon pricing itself but rather to perceptions of unfairness in the distribution of efforts and benefits [11]. When designed progressively, accompanied by targeted compensation mechanisms for vulnerable households, and supported by transparent communication on revenue use, the carbon tax can reinforce the social contract around the climate transition [12]. This approach aligns fully with the United Nations’ concept of a “just transition,” which seeks to reconcile climate ambition, social equity, and economic development [13].
For developing countries and economies dependent on energy or industrial exports, the carbon tax takes on an additional strategic dimension in a context of shifting international trade rules. The emergence of carbon border adjustment mechanisms, particularly in the European Union, illustrates how climate is becoming a determinant of economic competitiveness [14]. By anticipating these changes through the establishment of national carbon pricing mechanisms, states can reduce exposure to external penalties, strengthen the resilience of their exports, and assert credibility in international climate negotiations [15].
In the case of Algeria, reflection on the carbon tax takes place within a specific national context, marked by strong dependence on hydrocarbons, an energy mix dominated by natural gas, and a firm commitment to economic diversification. The Nationally Determined Contribution sets clear emission reduction targets for 2030, both conditional and unconditional, which require robust and coherent implementation instruments [16]. Within this framework, the carbon tax can serve as a structuring lever to align energy, industrial, and fiscal policies with climate commitments, while considering imperatives of social justice and economic competitiveness.
Beyond its direct impact on emissions, the carbon tax contributes to shaping a new political narrative around climate action. By making the cost of carbon visible, it fosters collective awareness of the climate impacts of individual and collective choices, and encourages sustainable behavioral changes [17]. It also provides decision-makers with a long-term planning framework, giving investors essential visibility on the future direction of public policies a prerequisite for stimulating private investment in low-carbon infrastructure [18].
Conclusion
Carbon tax is neither a panacea nor a standalone instrument. It must be part of a coherent set of public policies, including regulatory standards, innovation incentives, strategic public investments, and awareness-raising actions. When designed and implemented rigorously, however, it constitutes one of the most powerful pillars of the contemporary climate arsenal. For NDCs, it represents the missing link between ambition and action, between international commitment and national transformation. In a world where climate reshapes the rules of the economic game, the carbon tax now appears as a central lever for constructing credible, sovereign, and low-carbon development pathways.
References
[1] UNFCCC, 2015. Paris Agreement. United Nations Framework Convention on Climate Change, Bonn. https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement
[2] UNFCCC, 2023. Nationally Determined Contributions Synthesis Report. United Nations Framework Convention on Climate Change, Bonn. https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs/ndc-synthesis-report
[3] IPCC, 2023. Sixth Assessment Report (AR6): Synthesis Report. Intergovernmental Panel on Climate Change, Geneva. https://www.ipcc.ch/assessment-report/ar6/
[4] OECD, 2023. Effective Carbon Rates 2023: Pricing Greenhouse Gas Emissions through Taxes and Emissions Trading. Organisation for Economic Co-operation and Development, Paris. https://www.oecd.org/environment/tools-evaluation/effective-carbon-rates.htm
[5] UNFCCC, 1992. United Nations Framework Convention on Climate Change. United Nations, New York. https://unfccc.int/process-and-meetings/the-convention/what-is-the-united-nations-framework-convention-on-climate-change
[6] World Bank, 2024. State and Trends of Carbon Pricing. World Bank Group, Washington, DC. https://www.worldbank.org/en/topic/carbonpricing/publication/state-and-trends-of-carbon-pricing
[7] UNFCCC, 2018. Enhanced Transparency Framework under the Paris Agreement. United Nations Framework Convention on Climate Change, Bonn. https://unfccc.int/process-and-meetings/transparency-and-reporting/transparency-framework
[8] UNFCCC, 2022. Carbon Pricing and Implementation of Nationally Determined Contributions. United Nations Framework Convention on Climate Change, Bonn.
https://unfccc.int/topics/mitigation/workstreams/response-measures/carbon-pricing
[9] IMF, World Bank, 2022. Fiscal Policies for Climate Action. International Monetary Fund and World Bank Group, Washington, DC. https://www.imf.org/en/Topics/climate-change/fiscal-policies-for-climate-action
[10] OECD, 2021. Revenues from Carbon Pricing and Their Use. Organisation for Economic Co-operation and Development, Paris. https://www.oecd.org/environment/tools-evaluation/carbon-pricing-revenues.htm
[11] World Bank, 2019. Public Acceptability of Carbon Pricing. World Bank Group, Washington, DC. https://openknowledge.worldbank.org/handle/10986/31812
[12] OECD, 2020. Distributional Effects of Carbon Pricing Policies. Organisation for Economic Co-operation and Development, Paris. https://www.oecd.org/environment/tools-evaluation/distributional-effects-carbon-pricing.htm
[13] ILO, UNFCCC, 2015. Guidelines for a Just Transition towards Environmentally Sustainable Economies and Societies for All. International Labour Organization, Geneva. https://www.ilo.org/global/topics/green-jobs/publications/WCMS_432859/lang–en/index.htm
[14] European Commission, 2021. Carbon Border Adjustment Mechanism. European Union, Brussels. https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
[15] UNCTAD, 2022. Trade and Climate Change. United Nations Conference on Trade and Development, Geneva. https://unctad.org/topic/trade-and-environment/climate-change
[16] Government of Algeria, 2015. Intended Nationally Determined Contribution (INDC). United Nations Framework Convention on Climate Change. https://www4.unfccc.int/sites/NDCStaging/pages/Party.aspx?party=DZA
[17] UNEP, 2020. Behavioural Change and Climate Policy. United Nations Environment Programme, Nairobi. https://www.unep.org/resources/report/behavioural-change-climate-policy
[18] IPCC, 2018. Global Warming of 1.5°C. An IPCC Special Report. Intergovernmental Panel on Climate Change, Geneva. https://www.ipcc.ch/sr15/
