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Current Affairs

Carbon pricing

Date: 27 April 2022 Tags: Climate Change


A carbon pricing policy has been adopted by US state of Pennsylvania to address climate change across the world.



Carbon emissions are increasing flooding, droughts and other costly catastrophes, forcing government to put tag on the emissions.



  • Carbon pricing mechanism forces industries dealing in natural gas, coal and oil to buy credits for every ton of carbon emitted.

  • The US administration is also looking to impose tax based on social cost of carbon to justify tougher restrictions on polluting industries.

  • The social cost is estimated to be $51 for every ton of carbon being emitted. For a ton of carbon emitted today, $51 in economic damages will be incurred in coming years. 


Social cost

Social cost is the economic damage that is caused on the society from emitting one ton of carbon dioxide into the atmosphere.


Need for carbon pricing

  • The money collected by pricing emissions can be used to migrate to renewable energy. New solar parks, wind parks and bi-energy plants can be set up.

  • The amount can be given as subsidy for people adopting electric vehicles. It will help in reducing burden on common citizens.

  • It can act as deterrent against carbon emissions by industries such as coal and Iron and steel. They will be encouraged to adopt carbon capture methods.

  • The fund can be used for research in carbon sequestration methods. The actual implementation can also be covered.

  • Devastation caused by disasters due to long term carbon emissions can be compensated through the fund.