A policy that puts a price on greenhouse-gas (GHG)emissions will help to reduce emissions because

Question

Quizplus · Accepted Answer

A policy that puts a price on GHG emissions, such as a carbon tax or emissions trading scheme, creates a financial incentive for firms to reduce their emissions by switching to cleaner energy sources or investing in energy efficiency. This incentive is reflected in the higher cost of emitting GHGs, which will shift firms' marginal cost of abatement curves upwards. As a result, firms will adopt cleaner technologies and reduce their emissions to a level that balances the cost of reducing emissions against the benefits of emitting GHGs. This policy does not increase the energy intensity of GDP (E) or world energy intensity (C), but it does provide a clear incentive for businesses to lower emissions, which can lead to more efficient and sustainable use of resources.

A Policy That Puts a Price on Greenhouse-Gas (GHG)emissions Will