Internalising pollution externalities with a carbon price: a simplified visual guide Martin C. Jones The views expressed in this presentation are the author's personal opinion and are not intended to represent those of his employer or any third party.

When you purchase products whose production causes greenhouse gas emissions, that damages the environment, which affects everybody (not just the purchaser).

But these environmental costs arent reflected in the prices of the products... Price Damage Cost

Price Damage...making them seem cheaper than less polluting alternatives. Cost Price Damage

A price on pollution, via a carbon tax or emissions trading scheme... Price Damage Cost

...would slowly raise the price of products... Price Damage Price Damage Carbon Price Cost

...to reflect their true cost. Price Damage Price Damage Price Cost Carbon Price

This will make buying less polluting products and reducing emissions more attractive, encouraging people and companies to change their behaviour. Price Damage Price Cost Carbon Price

Price Clean energy product Dirty energy product Price Clean energy product Dirty energy product Price Before a Carbon PriceAfter a Carbon Price Cheaper option Cheaper option Carbon Price

And because the revenue is returned as compensation... Cost Price Compensation Price Carbon Price

...most people will be better off monetarily... Cost Price Compensation Price Carbon Price

...and everyone will benefit from reducing the effects of climate change.