Policy Brief #2021/02: Carbon needs a price – and proactive economic policy measures

Greenhouse gas emissions must be reduced if climate change is to be slowed. Charging a higher price for emissions is an effective way to achieve that goal. Making emissions more expensive reduces emissions-generating activities and increases incentives to develop and use low-emission technologies. To avoid social hardship, however, proactive economic policy measures are also required, especially in the areas of social welfare, industrial production and innovation, and foreign trade.