Carbon Emission Tax or Carbon Emission Market: Which Is Better?

This research outlines the similarities and differences between the carbon tax mechanism and the carbon market mechanism to discuss their advantages and limitations. The carbon market mechanism has apparent advantages, including low cost, flexibility, cross-industry, and cross-territory. In turn, the carbon tax mechanism has the apparent advantage of low management costs. Some major carbon-emitting countries have piloted or implemented the carbon market mechanism. Based on the characteristics of the carbon market and carbon tax, it is more reliable to adopt carbon market policy and carbon tax policy. Specifically, the carbon market should be the main mechanism to stimulate more channels to actively reduce carbon emissions, while the carbon tax policy can be complimentary to “punish” those enterprises that are late in meeting the emission standards and cover the industries that the carbon market does not.