Climate Mechanisms and Instruments

Carbon pricing is an economic tool used to achieve reductions in greenhouse gas emissions. Its core principles are “Polluters Pay” and “Put a Price on Carbon”. The establishment of a carbon market can encourage companies and individuals to reduce carbon emissions, promote the development of clean energy and low-carbon technologies, and help address global climate change challenges.

Image: NatureFinance

Carbon pricing is an approach used by governments and regulators worldwide to reduce greenhouse gas emissions. It works by setting a price for carbon emissions, which incentivizes businesses to reduce their carbon footprint to avoid the associated costs. There are two main types of carbon pricing: carbon taxes and emissions trading systems (ETS), also known as cap-and-trade systems.

Map Source: World Bank