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Colombia plans to introduce a carbon tax set at US$4.8/tCO2eq

10 Aug 2022

The Colombian Ministry of Finance and Public Credits has submitted the draft Tax Reform Law for Equality and Social Justice, which is expected to raise COP25,000bn (US$5.8bn) in 2023. The proposal includes a carbon tax, which is set at COP20,500/tCO2eq (US$4.8/tCO2eq), corresponding to a taxation level of COP52,215/t (US$12.1/t) for coal, COP181/gallon (US$4.2c/gallon or US$1.1c/l) for gasoline and COP42/cm (US$1c/cm) for natural gas. The tax is expected to represent 0.02% of the national GDP.

In addition, the country plans to introduce a 10% tax on income earned from exports of oil and coal earned when each commodity exceeds a certain price threshold. The threshold would be set at US$48/bbl for oil and US$87/t for coal. In 2021, Colombia exported 499 kbl/d of crude oil (-10% compared to 2020) and 56 Mt of coal and lignite (-18%).

In its Nationally Determined Contribution (NDC) update (2020), Colombia pledged to cut greenhouse gas (GHG) emissions by at least 51% in 2030 compared to a BAU scenario. It is also committed to reducing black carbon emissions by 40% compared to 2014 levels. Since 2021, the country targets carbon neutrality by 2050. CO2 emissions from energy combustion increased by 47% (3.6%/year) between 2005 and 2016 and have been fluctuating since then between 70 and 80 MtCO2.

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