CARBON TAX

A government-imposed fee on businesses and individuals based on their greenhouse gas emissions. Emitters pay a set price for each ton of emissions, incentivizing them to reduce their carbon footprint. Unlike cap-and-trade, a carbon tax provides cost certainty without specifying the level of emission reduction. It can be applied directly to emissions or on goods and services with high greenhouse gas intensity. In the U.S., several carbon tax proposals have been introduced in Congress, with ongoing discussions about incorporating it into legislative initiatives like the Build Back Better Act.