In-depth Analysis of Carbon Pricing Instruments
Below is a detailed breakdown of each carbon pricing mechanism with examples, analysis, pros, cons, and global insights: 1. Carbon Tax Definition : A direct tax imposed on the amount of carbon dioxide (CO2) or other GHG emissions a company emits. It is a fixed, straightforward method of pricing carbon. How it Works : The government sets a fixed price per ton of CO2 emitted. Companies must pay this amount on each unit of GHG they emit above any permissible limits. Examples of Carbon Tax in Practice : Sweden : Tax Rate : ~$140 per ton of CO2. Sweden uses this tax revenue to invest in renewable energy infrastructure, energy efficiency programs, and social welfare. The success story of Sweden showcases how carbon taxes can reduce emissions without harming economic growth. Canada : Canada implemented a national carbon tax in 2019 to ensure all provinces adhere to climate goals. Tax rate : Initially $30 CAD/ton, with a plan to increase to $50 CAD by 2022. Pros : Predictable pricing for co...