What is the purpose of carbon pricing in decarbonization strategies?

• A. To impose a direct limit on emissions
• B. To subsidize fossil fuels
• C. To assign a price to carbon emissions to incentivize reductions
• D. To ban all carbon emissions immediately

Answer: (C)

Assigning a price to carbon emissions creates a financial incentive to reduce pollution. By turning the social cost of carbon into a market signal, carbon pricing makes emitting greenhouse gases more expensive and cleaner options more attractive. This motivates businesses and households to invest in energy efficiency, cleaner technologies, and switching to lower-carbon energy sources, with the price providing a predictable driver over time. There are different forms, such as a carbon tax or a cap-and-trade system, but the common goal is the same: make polluting activities carry a cost that reflects their climate impacts, encouraging gradual decarbonization. It is not about setting a hard emission limit, subsidizing fossil fuels, or banning emissions instantly.