Carbon taxes, which impose a price per ton of CO2 emitted, have typically been favored by economists. They are a classic way of internalizing an externality by forcing emitters to pay for the social cost of their carbon emissions, and a tax in such an instance is the classic prescription from economic theory. Currently, carbon taxes exist in many jurisdictions, though they vary in scope: Japan’s carbon tax is at the lower end, less than USD10 per ton, whereas Sweden’s is currently the world’s highest, at around USD125 per ton.
The ESG space is changing day by day, creating more uncertainty for decision makers
