Mar 09, 2021 Mark Hillsdon With its taxes, tariffs and trading schemes, the world of carbon pricing is complicated. It’s aim, however, is clear: to encourage organisations to clean up their act or pay for the pollution they cause. Carbon pricing falls into three broad areas, starting with the carbon tax, which has traditionally proved unpopular with both businesses and governments that have levied it. More common nowadays are emissions trading schemes, when governments cap the total level of emissions allowed over a given period, with companies required to buy permits to cover the greenhouse gases they emit. As a market-based system, the faster emissions drop, the cheaper permits become, while companies that surpass the cap are taxed and those cutting emissions are allowed to sell unused credits.