Carbon pricing

Carbon pricing assigns a monetary cost to greenhouse gas emissions through taxes or tradable permits, encouraging emitters to reduce emissions when doing so costs less than paying.

Carbon tax: A charge imposed on greenhouse gas emissions or the fossil fuels that produce them. It sets an explicit emissions price, unlike a market whose permit price fluctuates.
European Union Emissions Trading System: The European Union's cap-and-trade program for greenhouse gas emissions from major sectors. It is one of the largest and longest-running emissions trading systems.
Command-and-control regulation: Environmental regulation that requires specific technologies, practices, or emissions limits rather than relying primarily on price incentives. It directs compliance more explicitly than a price-based policy does.
Carbon pricing revenue: Public revenue collected through carbon taxes or the auction or sale of emissions allowances. How governments use this money influences the policy's distributional and political effects.
Emissions trading: A system in which regulated entities trade allowances that authorize specified emissions. Trading lets the market determine the price within a policy-set emissions limit.
British Columbia carbon tax: A broad provincial tax on fossil-fuel-related carbon emissions introduced in British Columbia in 2008. Its design illustrates a tax applied across many fuel uses.
Clean energy subsidy: Public financial support that lowers the cost of producing or adopting low-emission energy technologies. Subsidies reward selected alternatives, while carbon pricing makes emissions more costly.
Environmental justice: The fair treatment and meaningful involvement of all people in environmental policy and decision-making. Carbon pricing can distribute costs and benefits unevenly across communities.
Cap-and-trade: An emissions trading system that limits total emissions by issuing a fixed quantity of allowances. It is the principal permit-based form of carbon pricing.
Regional Greenhouse Gas Initiative: A cooperative cap-and-trade program among northeastern and mid-Atlantic U.S. states, focused on power-sector carbon dioxide. It demonstrates how subnational governments can coordinate a permit market.

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