Solving climate change is essentially an economic problem: How do you force companies and consumers to pay for the damage caused by the fossil fuels they consume?
Let me explain: Without a price on carbon emissions, big polluters don’t pay for the greenhouse gases that they release into the atmosphere. The real cost of that pollution is borne by the planet in the form of global warming. So one of the most common strategies for reducing emissions is “cap-and-trade”: Polluters purchase or bid on a limited number of permits, which allow them to emit a certain amount of CO2. A regulated market is then created in which permits can be bought and sold. The cost of the permits—in other words, the carbon price—creates an incentive to reduce carbon pollution.