Carbon prices are spreading throughout the world’s largest economies. The only problem for climate hawks: They’re nowhere near high enough to produce a meaningful reduction in carbon emissions.

That is the conclusion of a report issued yesterday by the Organisation for Economic Co-operation and Development (OECD). The findings echo the analysis of previous studies and underscore the challenges facing countries, states and cities coming out of the recent climate summit in San Francisco.

The analysis identified a gap of 76.5 percent between real climate costs and carbon prices implemented today across 42 OECD and Group of 20 countries. The gap has narrowed by 3 percent over the last three years, the report found.

At that rate, carbon prices would not accurately reflect climate costs until 2095.

“The gulf between today’s carbon prices and the actual cost of emissions to our planet is unacceptable,” OECD Secretary-General Angel Gurría said in a statement. “Pricing carbon correctly is a concrete and cost-effective way to slow climate change. We are wasting an opportunity to steer our economics along a low-carbon growth path and losing precious time with every day that passes.”

The analysis arrives at a critical time for international climate efforts, as carbon-cutting programs are rolled back in major economies like the United States and Australia and global fossil fuel consumption continues to rise.

Many economists have long favored carbon taxes as the most cost-effective way to tackle rising global temperatures. Making high-emitting technologies costlier to use prompts a shift to lower-emitting ones, they reason. Yet few countries have put in place the sort of carbon tax that would produce meaningful emission reductions.

An abundance of carbon credits and exemptions for major emitters has plagued emission-trading systems in Europe and California, making credits cheap and hindering their effectiveness.

“I don’t think that’s an issue with carbon prices as opposed to climate policies,” said Noah Kaufman, a research scholar at Columbia University’s Center on Global Energy Policy. “You just have weak climate policies around the world.”

Policies intended to boost renewables are partially to blame. There is little need for power companies to purchase carbon credits when they are required to buy wind and solar, said John Reilly, co-director of the Massachusetts Institute of Technology’s Joint Program on the Science and Policy of Global Change.

Those policies produce emission reductions—but at a higher cost than a carbon price.

“There is this odd reluctance of policymakers to let a carbon tax work so they put all these policies in place,” Reilly said.

He added, “By hiding the policies in the price of cars, the price of electricity and the price of other things, we don’t have a carbon tax. We just have high costs. People like to hide the costs because they don’t easily see it, whereas if you have a carbon price out there it is easily identified.”

A series of recent developments, though, have provided a glimmer of hope for would-be carbon taxes. The United Kingdom’s adoption of a carbon tax in the power sector produced a 58 percent drop in emissions from 2012 to 2016.

Carbon prices in the European Union also reached their highest level in a decade this summer following a series of reforms meant to limit the oversupply of credits and expand the number of industries subjected to the cap.

The biggest development of all may be in China, the world’s largest greenhouse gas emitter, which has taken steps toward its own emissions trading program. China’s move has the potential to narrow the gap between global carbon prices and climate costs to 63 percent in the early 2020s, OECD found.

The OECD report compared effective carbon rates—taxes on fossil fuels, carbon taxes and emission-trading credits—against estimated climate costs, which it projected at €30 ($35) per ton of carbon. The result is a carbon pricing gap, the difference between actual carbon rates and climate costs.

The organization found that countries with larger carbon pricing gaps tend to have more energy-intensive economies. Russia and China, for instance, have gaps of 100 percent and 90 percent, respectively, OECD found.

Less energy-intensive economies, by contrast, have less ground to make up. OECD measured the gap in Spain at 51 percent, Ireland at 42 percent and France at 41 percent.

The carbon pricing gap in the United States, the world’s second-largest emitter, was 75 percent.

Reprinted from Climatewire with permission from E&E News. E&E provides daily coverage of essential energy and environmental news at www.eenews.net.