Market-based Climate Policies

Market-based climate policies use economic tools to reduce greenhouse gas emissions efficiently. They create financial incentives, like carbon pricing (e.g., carbon taxes or cap-and-trade systems), encouraging businesses and individuals to lower their emissions because it becomes more cost-effective to do so. These policies harness market forces, promoting innovation and cleaner technologies, while allowing the economy to adjust naturally. This approach aims to achieve environmental goals at the lowest overall cost, balancing economic growth with the need to address climate change effectively.