How does the carbon tax reduce emissions?

Question

It seems to me it just makes people pay more tax and doesn’t actually help climate change. I researched the Canadian carbon tax btw

In: Other

Answer 1

It make solution that emit less carbon more competitive. For example, let say that your product cost 500$ to produce and create some carbon emission. You could switch to a method that produce less carbon, but that would cost 520$ to produce it. Now if your carbon taxe is 35$ and by using the new method you can drop that to 12$, then the old method actually cost you 535$, while the new method would cost you 532$ which is cheaper and incentive you to switch to the method that cost less carbon.

Of course this work overtime, it doesn’t reduce carbon the moment you create that tax, it just slowly change the way people do business and consumer buy product.