Carbon Pricing vs. Carbon Tax: Understanding the Difference
Economists worldwide point to carbon pricing as the most effective way to reduce emissions. Why? Because carbon pricing reduces greenhouse gas (GHG) emissions to the lowest cost possible, where that cost includes the monetary amount of efficiency measures a company takes on and the cost of the inconvenience resulting from making do with fewer goods and services that rely on fossil fuels.
Carbon pricing is exceptionally effective because it eliminates the chance of a market failure — the unknown cost of external carbon emissions — at the source by pricing these costs.