Implement effective compliance carbon-pricing mechanisms and integrate environmental considerations into trade policies

In addition, lawmakers can deter carbon-intensive activities by implementing carbon-pricing mechanisms and integrating environmental considerations into trade policies. Carbon taxes and emissions-trading schemes need careful design, as most existing programs are ineffective at driving companies and consumers to decarbonize. This may be due to low CO2 prices, and generous concessions to participants, such as tax-free allowances and free permits. By introducing trade policies like carbon border tariffs, policymakers can eliminate these concessions without the risk that companies relocate to regions with lower carbon prices or weaker environmental standards by introducing trade policies like carbon border tariffs. Both fossil-fuel subsidy reform and carbon-pricing mechanisms can raise government revenue that can then be reinvested in low-carbon support programs.