Query: The benefits of a price on carbon outweigh the costs several times over.

Relevant passages:
Carbon tax <=SEP=> A carbon tax is a tax levied on the carbon content of fuels . It is a form of carbon pricing . Carbon is present in every hydrocarbon fuel ( coal , petroleum , and natural gas ) and converted to carbon dioxide and other products when combusted . In contrast , non-combustion energy sources -- wind , sunlight , geothermal , hydropower , and nuclear -- do not convert hydrocarbons to . is a heat-trapping `` greenhouse '' gas which represents a negative externality on the climate system ( see scientific opinion on global warming ) . Since GHG emissions caused by the combustion of fossil fuels are closely related to the carbon content of the respective fuels , a tax on these emissions can be levied by taxing the carbon content of fossil fuels at any point in the product cycle of the fuel .   Carbon tax offers social and economic benefits . It is a tax that increases revenue without significantly altering the economy while simultaneously promoting objectives of climate change policy . The objective of a carbon tax is to reduce the harmful and unfavorable levels of carbon dioxide emissions , thereby decelerating climate change and its negative effects on the environment and human health .   Carbon taxes offer a potentially cost-effective means of reducing greenhouse gas emissions . From an economic perspective , carbon taxes are a type of Pigovian tax . They help to address the problem of emitters of greenhouse gases not facing the full social cost of their actions . Carbon taxes can be a regressive tax , in that they may directly or indirectly affect low-income groups disproportionately . The regressive impact of carbon taxes could be addressed by using tax revenues to favour low-income groups .   A number of countries have implemented carbon taxes or energy taxes that are related to carbon content . Most environmentally related taxes with implications for greenhouse gas emissions in OECD countries are levied on energy products and motor vehicles , rather than on emissions directly .   Opposition to increased environmental regulation such as carbon taxes often centers on concerns that firms might relocate and/or people might lose their jobs . It has been argued , however , that carbon taxes are more efficient than direct regulation and may even lead to higher employment ( see footnotes ) . Many large users of carbon resources in electricity generation , such as the United States , Russia , and China , are resisting carbon taxation .

Carbon price <=SEP=> Carbon pricing -- the method favored by many economists for reducing global-warming emissions -- charges those who emit carbon dioxide ( CO2 ) for their emissions . That charge , called a carbon price , is the amount that must be paid for the right to emit one tonne of CO2 into the atmosphere . Carbon pricing usually takes the form either of a carbon tax or a requirement to purchase permits to emit , generally known as cap-and-trade , but also called `` allowances '' .   Carbon pricing solves the economic problem that , a known greenhouse gas , is what economics calls a negative externality -- a detrimental product that is not priced ( charged for ) by any market . As a consequence of not being priced , there is no market mechanism responsive to the costs of CO2 emitted . The standard economic solution to problems of this type , first proposed by Arthur Pigou in 1920 , is for the product - in this case , CO2 emissions - to be charged at a price equal to the monetary value of the damage caused by the emissions . This should result in the economically optimal ( efficient ) amount of CO2 emissions . Many practical concerns mar the theoretical simplicity of this picture : for example , the exact monetary damage caused by a tonne of CO2 is uncertain .   The economics of carbon pricing is much the same for taxes and cap-and-trade . Both prices are efficient ; they have the same social cost and the same effect on profits if permits are auctioned . However , some economists argue that caps prevent non-price policies , such as renewable energy subsidies , from reducing carbon emissions , while carbon taxes do not . Others argue that an enforced cap is the only way to guarantee that carbon emissions will actually be reduced ; a carbon tax will not prevent those who can afford to do so from continuing to generate emissions .   The choice of pricing approach , a tax or cap-and-trade , has been controversial . A carbon tax is generally favored on economic grounds for its simplicity and stability , while cap-and-trade is often favored on political grounds . Recently ( 2013 − 14 ) economic opinion has been shifting more heavily toward taxes as national policy measures , and toward a neutral carbon-price-commitment position for the purpose of international climate negotiations .

Carbon credit <=SEP=> A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent ( tCO2e ) equivalent to one tonne of carbon dioxide .   Carbon credits and carbon markets are a component of national and international attempts to mitigate the growth in concentrations of greenhouse gases ( GHGs ) . One carbon credit is equal to one tonne of carbon dioxide , or in some markets , carbon dioxide equivalent gases . Carbon trading is an application of an emissions trading approach . Greenhouse gas emissions are capped and then markets are used to allocate the emissions among the group of regulated sources .   The goal is to allow market mechanisms to drive industrial and commercial processes in the direction of low emissions or less carbon intensive approaches than those used when there is no cost to emitting carbon dioxide and other GHGs into the atmosphere . Since GHG mitigation projects generate credits , this approach can be used to finance carbon reduction schemes between trading partners and around the world .   There are also many companies that sell carbon credits to commercial and individual customers who are interested in lowering their carbon footprint on a voluntary basis . These carbon offsetters purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects . Buyers and sellers can also use an exchange platform to trade , which is like a stock exchange for carbon credits . The quality of the credits is based in part on the validation process and sophistication of the fund or development company that acted as the sponsor to the carbon project . This is reflected in their price ; voluntary units typically have less value than the units sold through the rigorously validated Clean Development Mechanism .