Friday, October 6, 2023
Carbon (CO2) pricing is a fiscal instrument that governments use to encourage companies and other emitters to switch to renewable energy sources and adopt new technologies to reduce emissions, to achieve national and international climate goals. There are two main types of carbon pricing: emissions trading systems (ETS) and CO2 taxes. The CO2 tax directly determines the price of CO2 emissions, while the ETS sets the upper limit of CO2 emissions in certain sectors, requiring a permit for each ton of CO2 emitted. The choice of a combination of instruments and modalities for charging carbon emissions depends on political goals and circumstances and is only one of the necessary instruments for achieving national and international climate goals. CO2 price helps shift the burden of damage onto those who are responsible for it and who can reduce it.
The document is available here.