Carbon tax
A carbon tax is a government-imposed fee on the carbon content of fossil fuels or on CO₂ emissions generated by certain activities. This could apply to fuel producers, energy companies, industrial manufacturers, or large transport operators, depending on how the national or regional tax is structured. The more a company emits, the more it pays.
Why do governments implement carbon taxes?
Governments use carbon taxes to encourage companies to:
- Reduce greenhouse gas emissions in line with climate goals
- Make polluting activities more expensive and clean technologies more attractive
- Create funds that can be reinvested in climate programs or offset social costs
What is the difference between a carbon tax and carbon credits?
A carbon tax is a government-mandated cost applied directly to emissions. Companies pay the tax whether or not they reduce their emissions. Carbon credits are market-based tools that allow companies to voluntarily (or sometimes mandatorily) compensate for emissions by supporting climate projects.
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Carbon tax
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