Carbon pricing – putting a price on pollution – is one of the most effective tools to combat climate change. It encourages cleaner choices, drives innovation, and generates revenue that is reinvested in people and communities to support a clean transition. But it is often misunderstood.

The EU uses carbon markets to set a price for pollution through the EU emissions trading systemand (EU ETS), which covers the energy sector, industry, shipping and some aviation emissions. In the future, a new ETS2 include emissions from road transport and buildings from 2027 to ensure that more parts of the economy contribute to the green transition.

Here are five key facts that show how carbon pricing works and why it benefits everyone. (More on climate.ec.europa.eu)