What Is Carbon Pricing?

Carbon pricing is a climate policy tool that assigns a cost to greenhouse gas emissions, aiming to incentivize polluters to reduce their use of carbon-intensive fuels like coal, oil, and gas. By putting a price on carbon through mechanisms such as carbon taxes or emissions trading systems—governments can encourage cleaner energy choices and promote innovation in low-carbon technologies. It is widely regarded as one of the most efficient and cost-effective ways to drive emissions reductions.