Carbon pricing is a policy tool used to reduce greenhouse gas emissions by putting a price on carbon dioxide (CO2) and other pollutants that contribute to climate change. The idea behind this approach is to make polluters pay for the environmental damage they cause, thereby encouraging them to find ways to reduce their emissions or invest in cleaner technologies.
There are several ways to implement carbon pricing, including cap-and-trade systems and carbon taxes. In a cap-and-trade system, governments set an overall limit on greenhouse gas emissions (the "cap") while allowing companies to buy and sell permits to emit CO2 (the "trade"). A carbon tax is a fee imposed by the government on polluters for each ton of CO2 they release into the atmosphere.
Carbon pricing has gained support from governments, businesses, and organizations around the world as an effective way to combat climate change while promoting sustainable economic growth.