CONTENTS
Carbon pricing puts a monetary cost on greenhouse gas emissions through a carbon tax or emissions trading scheme, making high-emitting activities more expensive over time.
Example in context
You're modelling a carbon-intensive asset. A rising carbon price increases its operating costs and weakens its economics each year — feeding directly into transition risk and the chance of stranding.
Why it matters
Carbon pricing is one of the main mechanisms that turns climate policy into financial impact. It is also a key input in transition-risk and stranding analysis. Mitiga focuses on the complementary physical-risk dimension.
See physical and transition risk together
FAQ
How does carbon pricing create financial risk?
It raises the cost of emitting, eroding the economics of high-emission assets and accelerating transition risk.
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