Climate change mitigation requires urgent and innovative policy actions. Carbon pricing – putting a monetary cost on greenhouse gas emissions – has emerged as a key tool worldwide to drive emissions reductions and encourage cleaner practices. Over the past several decades, more than 70 carbon pricing initiatives (including ~37 carbon taxes and 36 cap-and-trade systems) have been implemented across national, regional, and sub-national levels. This global uptake reflects growing recognition that carbon pricing can align economic incentives with climate goals by making it costly to pollute and financially rewarding to reduce emissions. 

Policymakers favor carbon pricing because it is technology-neutral and can avoid the need for numerous sector-specific regulations. However, its effectiveness depends greatly on policy design and context – from setting a robust price to ensuring supportive infrastructure and institutions. Critics also note the political challenge of setting prices high enough to meet ambitious targets. These nuances underline the importance of capacity building and informed policy co-design when considering carbon pricing in any country.