Carbon Pricing

Carbon pricing is an economic policy instrument that assigns a cost to greenhouse gas emissions based on the damage they do, creating a financial incentive for businesses and individuals to reduce their carbon footprint. There are two main types of carbon pricing mechanisms: carbon taxes, which impose a fixed price per unit of emissions, and cap and trade systems, which set a cap on total emissions and allow entities to buy and sell emission allowances from one another. Carbon pricing aims to internalise the environmental costs of emissions and encourage the adoption of cleaner technologies and practices.