Meeting CO2 Targets with Carbon Pricing through Taxation and Trading

Abstract

We review various alternative sustainability strategies for combating climate change as goal posts for meeting CO2 reduction targets towards zero net economy periodically have to be replaced. Research on policy success in reducing CO2 emissions through taxation and emission pricing/trading in various countries is analyzed to provide insight for policy makers. Economies with large energy sectors may consider appropriately designed cap and trade system that will achieve emission intensity reduction. In addition, carbon tax will incentives energy efficient economic and consumer behavior. Any combination of strategies for mitigating climate change should be adjusted to specific aspects of local social, economic and environmental factor and should be periodically attuned to their changes.