Putting a price on carbon emissions can be done by principally two methods: Cap and Trade and Carbon Tax. The essential difference between the two methods is where the government control is set and where the market control is set, as shown in the table. Hybrid models using elements of either are also possible.
There are three primary elements to any pricing scheme: 1) the pricing mechanism (cap and trade or carbon tax), 2) the emission sources included, and 3) how the revenue is used. Carbon pricing is growing both in use and support.