What Is carbon Pricing – Short Note On Carbon pricing -types – UPSC notes
What Is carbon Pricing – Short Note On Carbon pricing -types – UPSC notes – The phrase put a price on carbon has now become well known with momentum growing among countries and business to put a price on carbon pollution as a means of bringing down emissions and drive investment into cleaner options.
So what does it mean to put a price on carbon, and why do many government and business leaders support it?
There are several paths governments can take to price carbon, all leading to the same result. They begin to capture what are known as the external costs of carbon emissions – costs that the public pays for in other ways, such as damage to crops and health care costs from heat waves and droughts or to property from flooding and sea level rise – and tie them to their sources through a price on carbon.
A price on carbon helps shift the burden for the damage back to those who are responsible for it, and who can reduce it. Instead of dictating who should reduce emissions where and how, a carbon price gives an economic signal and polluters decide for themselves whether to discontinue their polluting activity, reduce emissions, or continue polluting and pay for it. In this way, the overall environmental goal is achieved in the most flexible and least-cost way to society. The carbon price also stimulates clean technology and market innovation, fuelling new, low-carbon drivers of economic growth.
There are two main types of carbon pricing: emissions trading systems (ETS) and carbon taxes