Colombia's collections of its carbon tax on fossil fuels could surpass 2024 levels after a sharp increase in the first quarter of 2025 because of new contributions from coal-related industries and a limit on offsets.
Carbon tax collections were Ps217.1bn ($51.7mn) from January-March, about 40pc of the Ps551.99bn collected in all of 2024, figures from the tax office (Dian) show. Expectations are for the 2025 total to exceed that of last year, Pedro Arrieta, an adviser to Dian, told the Colombia Carbon Forum in Bogota.
Coal-fired power generators and industries that burn coal began having to also pay this tax in 2025, likely contributing to the increase.
The carbon tax had brought in Ps3.6190 trillion since its implementation in 2017 as of March 2025, Arrieta calculated.
Colombia's carbon tax, which aims to reduce greenhouse gas emissions, initially levied Ps15,000 ($5)/metric tonne (t) of CO2 equivalent (CO2e) produced by gasoline, kerosene, jet fuel, fuel oil and diesel as well as on petrochemical plants and refineries that use natural gas and LPG for industrial uses, among others. The tax is collected at the wholesale level and paid by the producer or importer of the fuel.
The tax rate now is Ps27,399.14/tCO2e, environment ministry adviser Angela Liliana Rodriguez said.
Colombia also created a voluntary carbon credit market for emitters to offset their tax. Initially, entities could offset their carbon tax liability by purchasing 100pc of carbon credits. But the limit for using carbon credits to offset the tax was reduced to 50pc in 2023 in a bid to bolster government tax revenue, taking some support from voluntary carbon credit market prices, said Camilo Trujillo, policy adviser to the International Emissions Trading Association.
The market price of national carbon credits has fluctuated from Ps12,000-16,000, equivalent to 46pc-58pc of the tax, sharply lower from a ceiling of Ps22,000 in the past, said Lina Gamboa, co-founder and chief operating officer at the carbon credit trader Neuttro.
The tax has had an effect in preventing CO2 emissions, speakers aid. The 236 projects certified to offer credits in Colombia's carbon market have reduced 231.29mn tCO2e since 2002, according to Colombia's carbon association Asocarbon. Another 167 mitigation efforts through the non-causation mechanism, that allowed entities to not pay the full tax in exchange for CO2 reduction efforts, prevented the emission of another 116mn t CO2e from 2017-2024, Rodriguez concluded.
