Carbon tax rate — definition?
Fixed government price per ton of emissions.
Emission trading system (ETS) — role?
Creates a compliance market using tradable allowances.
Cap-and-trade — mechanism?
Sets a declining permit cap and allows trading.
Price signals — purpose?
Influence investment and abatement decisions.
Major ETS programs — examples?
EU ETS, California, China, Swiss ETS, others.
Allowances — unit?
Typically one metric ton of CO2 equivalent.
Fungibility — ETS permits?
Permits are not automatically interchangeable across markets.
Declining cap — effect?
Increases permit scarcity and prices.
Linking ETS markets — benefit?
Creates economies of scale and broader abatement options.
Carbon taxation — key factor?
Tax rate, demand elasticity, and cost pass-through.
Answer 10 questions on Introduction to Carbon Pricing and Emissions Trading.
1. What best describes a carbon tax rate?
2. Which factor is identified as affecting how effective a carbon tax will be?
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