A carbon tax is levied on polluting industries to act as a disincentive against less fuel-efficient technologies. Sweden, Finland, the Netherlands, Norway and New Zealand are among the countries that have a carbon tax.
While a carbon tax is a disincentive, carbon credits are incentives where companies can earn by trading “credits” for using clean development mechanisms as defined by the Kyoto Protocol. Till March this year, the Centre had approved 550 projects complying with the Kyoto Protocol to earn carbon credits, and above 300 more are awaiting approval.
