The Adoption–Effectiveness Gap in Carbon Pricing: Global Evidence from Policy Adoption and Emissions Outcomes

Carbon pricing is the textbook instrument for climate mitigation, yet its global diffusion is uneven and its real-world effect on emissions—outside advanced economies—remains debated. This paper asks which conditions lead countries to adopt carbon pricing and whether adoption reduces emissions. Using a country-year panel of nearly 200 economies (1990–2022) that combines the World Carbon Pricing Database with emissions, economic, and governance indicators, we model adoption with a discrete-time hazard model and estimate the emissions effect with a staggered difference-in-differences estimator (Callaway and Sant’Anna), complemented by event-study, doubly-robust, and subsample analyses. Adoption is strongly predicted by income and EU/EEA membership and deterred by natural-resource rents and high per-capita emissions: the fossil-dependent economies with the most to gain are least likely to price carbon. Where adopted, carbon pricing is associated with lower per-capita CO2 emissions; unconditional estimates average about 26%, but our preferred covariate-adjusted estimate is about 11%, matching meta-analytic evidence, with effects that grow over time and flat pre-trends. The reduction survives excluding European adopters and remains significant (about 13%) among emerging economies. The findings reveal an “adoption–effectiveness gap”: carbon pricing is associated with measurable reductions, but the political economy of fossil dependence blocks it where mitigation is most needed.