Every time a ton of CO2 is emitted, the climate is damaged at the expense current and future generations. The carbon price system makes those who are responsible for emissions pay for them. In other words, it internalises the negative externality of climate change in the decision-making process of those creating the emissions. Carbon price gives an economic signal and disincentives to polluters who can decide when and how to reduce emissions. From an economic point of view, this is the most efficient way to reduce emissions by incentivising the private sector to invest in low-carbon technologies. Moreover, the revenue from pricing carbon could be used for equally redistributing the cost of mitigation and adaptation to climate change. There are two main ways of introducing a carbon price: through emissions trading systems (ETS), as described in the previous post, or through a carbon tax.