A carbon tax is a tax levied on the carbon content of fuels. It is a carbon pricing. Carbon is present in every hydrocarbon fuel such as coal, petroleum and natural gas and is released as carbon dioxide CO2 when they are burnt.
Carbon taxes offers a costeffective means of reducing greenhouse gas emissions. Products produced through dirty processes will became more expensive thereby making it possible for other products produced through cleaner processes to compete on price. By raising the cost of using fossil fuels, a carbon tax would tend to increase the cost of producing goods and services especially things such as electricity or transportation that involve relatively large amounts of CO2 emissions.
Carbon credit is a permit representing the right to emit one tonnes of carbon dioxide or the mass of another green house gas with a carbon dioxide equivalent. One carbon credit is equal to one metric otonne of carbon dioxide.
Carbon market can be divided into two
1)The voluntary market.
2) Regulatory or compliance market. In the compliance market carbon credits are generated by projects that operate under one of the UN framework convention on climate change (UNFCCC) approved mechanism such as the clean development mechanism (CDM). Credits generated under this mechanism are known as certified emissions reductions (CERs)
In voluntary market carbon credits are generated by projects that are accredited to independent International Standards.
This week Canada ‘s Federal Govt took the latest step when it extended its carbon pricing program Nation wide. More than 40 Govts world wide have now adopted some sort of price on carbon. Economists suggests this is a way to curb emissions.
Now the COVID 19 pandemic has so far slashed global carbon emissions by more than 8 %. But this is only temporary