Explain the Social cost of carbon. How can carbon pricing help in reducing carbon emissions in the world?
Social cost is the economic damage that is caused on the society as a result of emission of one ton of carbon dioxide into the atmosphere. The idea of social cost is used to impose a certain price on carbon emitted by industries. In developed countries, this method has been utilized to raise awareness.
Carbon pricing
- Carbon pricing is a mechanism to impose a certain cost on industries dealing in natural gas, coal and oil to buy credits for every ton of carbon emitted.
- Many environmentalists argue that carbon pricing should be borne by every individual so that they are aware of their role in climate change.
Role of carbon pricing in reducing emissions
- EV subsidy
The amount collected can be utilized to provide subsidy for people adopting electric vehicles. It will help in reducing burden on common citizens.
- Migrate to renewable energy
The money collected by pricing emissions can be used to migrate to renewable energy. New solar parks, wind parks and bi-energy plants can be set up.
- Deterrent against pollution
It can act as deterrent against carbon emissions by industries such as coal and Iron and steel. They will be encouraged to adopt carbon capture methods.
- Carbon capture research
The fund can be used for research in carbon capture methods. The actual implementation to sequester carbon can also be covered using the fund.
Thus, carbon emission is not a short term phenomenon. The implications are intense and can affect the society negatively by causing economic losses.
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