Carbon pricing

The polluter-pays principle is a fundamental tenet of environmental pricing policy to ensure that damage inflicted by an activity is reflected in the cost of doing business. Carbon pricing is the implementation of the polluter pays principle for greenhouse gases, usually in the form of either a carbon tax or a requirement to purchase permits to pollute, commonly referred to as a cap and trade or emissions trading scheme.

A robust, predictable and rising carbon price is needed to reflect the damage greenhouse gas emissions render to the atmosphere and the true cost this places on society. Broad coalitions for effective carbon pricing must galvanise support in order to send a clear signal to industry to reduce pollution more rapidly, invest in climate friendly alternatives, and spur further low-carbon innovation.

More and more countries have started to price carbon through cap and trade systems or a carbon tax as an incentive to reduce pollution, but the majority of carbon prices around the world are too low to reduce emissions fast enough to limit global warming to safe levels.

As a member of the Carbon Pricing Leadership Coalition, Carbon Market Watch works with international and local NGO’s, academics and policymakers to promote effective carbon pricing around the world as one of the key tools to fight climate change. In doing so we highlight best practice and inform carbon pricing debates about the lessons learned from existing carbon pricing systems.