Carbon Pricing Structures For The New World 4 Years Left

Carbon pricing is a method used to reduce greenhouse gas emissions by assigning a monetary value to carbon emissions. This approach encourages polluters to decrease their emissions and invest in cleaner technologies.

Carbon Tax
Definition: A direct tax imposed on the carbon content of fossil fuels.
Purpose: To incentivize businesses and individuals to reduce their carbon emissions.

Mechanism: The tax increases the cost of carbon-intensive energy sources, making cleaner alternatives more attractive.

Emissions Trading System (ETS)
Definition: A market-based approach where a cap is set on total emissions, and companies can buy and sell allowances.
Purpose: To provide flexibility in how emissions reductions are achieved.
Mechanism: Companies that reduce emissions below their allowance can sell excess credits to others that exceed their limits.

Compliance Markets
Characteristics: Operate under regulatory frameworks, such as national or regional emissions trading schemes.
Participants: Entities are required to meet specific emissions reduction targets set by law.

Carbon pricing structures play a crucial role in the global effort to combat climate change by creating economic incentives for reducing greenhouse gas emissions.

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