Carbon pricing is an economic approach aimed at reducing greenhouse gas emissions by assigning a cost to emitting carbon dioxide and other greenhouse gases. It internalizes the environmental cost of emissions, encouraging businesses and individuals to reduce their carbon footprint. The two primary mechanisms are carbon taxes, which set a fixed price per ton of carbon emitted, and cap-and-trade systems, which establish a limit on total emissions and allow trading of emission permits. Policy implications of carbon pricing include incentivizing cleaner technologies and energy efficiency, driving innovation, and generating government revenue that can fund climate initiatives or offset impacts on vulnerable populations. However, its effectiveness depends on the price level, scope, and implementation design. Carbon pricing can face political resistance due to concerns over economic competitiveness, potential increases in energy costs, and equity issues. Complementary policies, such as regulations, subsidies for renewable energy, and support for affected workers, are often necessary to address these challenges. Overall, carbon pricing is considered a critical tool in climate policy frameworks, aligning economic incentives with environmental goals to achieve significant emissions reductions cost-effectively.