Carbon Price
Also called: carbon tax, cap and trade, emissions trading, ETS
A carbon price makes emitting cost money, either through a tax or a cap-and-trade system where a fixed number of permits are traded. It's the textbook remedy for an externality: it internalises the damage into the price without dictating how firms respond. The design questions that decide effectiveness are coverage, the level, and whether permits are auctioned or given away free.