Carbon pricing, explained with chickens

Carbon pricing is a policy tool used to put a price on the carbon emissions produced by individuals, businesses, and governments. The goal is to make the cost of emitting carbon more transparent and to encourage individuals and companies to reduce their emissions. There are two main types of carbon pricing: a carbon tax and a cap-and-trade system. A carbon tax involves placing a tax on every unit of carbon emitted. At the same time, a cap-and-trade system sets a limit or "cap" on total emissions and allows companies to buy and sell permits to emit a certain amount of carbon. Both approaches provide a financial incentive for companies to reduce their carbon emissions and promote a shift towards cleaner and more sustainable forms of energy.

Check out this map to visualize the countries that have put a price on carbon. And if you're interested to see how carbon pricing has spread since the early 90s, check this out.

The devil is in the details. Check out this article for a deeper dive into the technical aspects of carbon pricing, how the carbon pricing instruments work, how to effectively structure a carbon pricing mechanism, and the challenges of effective carbon pricing,