The basic idea: Boosting the cost of anything containing carbon – the main greenhouse gas – would compel industries and consumers to seek cheaper alternatives. They’d switch to cleaner fuels or consume less – either by adopting more efficient technologies or simply reducing their activity. Presumably, the alternatives would be better for the environment.
The problem: No government appears willing to impose a cost high enough to actually change behaviour. And while several industry groups argue pricing carbon is a good idea, their enthusiasm is less than it seems.
For more, The Oil Drum.