A carbon tax puts a price on greenhouse gas emissions. Governments levy a fee per ton of CO2 released. Fossil fuels become more expensive in proportion to how much carbon they contain. Coal is hit hardest. Natural gas is hit least among fossil options. Renewables face no direct cost.

The logic is simple. Raise the price of pollution and people pollute less. They insulate homes, switch to electric vehicles, or choose cleaner power. Businesses invest in efficiency. The revenue can be used in different ways: to cut other taxes, fund clean energy, or send rebates to households.

Countries have taken different paths. Sweden introduced a carbon tax in 1991 and now charges over $100 per ton. Canada has a federal carbon price with rebates. The EU uses an emissions trading system rather than a pure tax. Australia passed a carbon price in 2012 and repealed it two years later amid political backlash. The policy works. The politics are hard.

Key questions

• What price per ton
• What is covered
• How revenue is used
• Border adjustments for trade
• Household impact and rebates