Question

What is carbon pricing? Why is carbon pricing regarded as an important policy in addressing the challenge of climate change?

Answer 1

The carbon pricing is a finacial toola that is used to reduce the green house gas emissions in the atmosphere. It is considered as a mechanism to measure the enviornmental and the economic costs in the climate change. In carbon pricing mechanism the government fixes a prices for those who emit green house gas into the air and another form this is the carbon taxing policy.

The carbon pricing is regarded as one of the important policy decisons because the individuals and the institutions does not care about the social costs of the economy, they will be only considered with the private costs and benefits. Also the carbon pricing may lead to the dynamic efficiency, the pricing will force the individuals and institutions to do research on less carbon emitting technologies. This may lead to the innovation and development of the new efficient technologies. The carbon pricing will make people the more enviornmentally conscious.