Carbon Pricing

Carbon pricing assigns a monetary cost to greenhouse gas emissions, creating economic incentives for reduction. Two main mechanisms exist: carbon taxes (fixed price per tonne CO₂e) and emissions trading systems (cap-and-trade, where the market sets the price). Internal carbon pricing (ICP) is used by companies to guide investment decisions. As of 2024, 73 carbon pricing instruments operate globally, covering ~23% of global GHG emissions. Prices range from <$1 to >$150/tonne.