The combined effects of these highly polluting sectors is detrimental to the climate and to public health. Moreover, continued high emissions from these sectors undermines the ‘polluter pays’ principle. 

Pricing carbon emissions for power generation and heavy industry can prod these sectors to decarbonise more rapidly. It also helps ensure that polluters pay for the environmental and societal cost of their pollution, which can then be reinvested in climate action and facilitating a fair transition.

A growing number of countries, regions and blocs are imposing a carbon price on the industrial and power sectors through systems that limit overall emissions but allow companies to trade their savings (cap and trade systems) or through carbon taxes. However, most carbon prices around the world are too low to reduce emissions fast enough to limit global warming to safer levels.