systematic thinking

• In the field of energy technology, there is a need to balance cost and environmental factors, especially reducing carbon emissions. While there are a variety of technologies to reduce carbon emissions, high costs remain a challenge.

• Comparing the LCOE (life cycle cost) and LCA (life cycle analysis) of different energy sources can reveal the trade-offs between cost and environment.

externality

• Refers to the impact of production or consumption of goods on third parties not directly related to the transaction.

• Can be positive or negative, related to the process of production or consumption.

• Externalities are considered a type of market failure, and internal costs need to be included through the carbon pricing mechanism to correct market failures.

• Carbon pricing tools are mainly divided into two types: carbon tax and emissions trading market. Carbon tax is the government's way of taxing carbon emissions, while emissions trading market allows companies to trade emissions quotas.

• A carbon tax provides certainty in price but less certainty in emission reductions. It is relatively easy to implement and can rely on existing tax structures.

• An emissions trading system provides more certainty about emissions reductions, but may be more complex in practice and requires the establishment of a sound market mechanism.