Passage:
While market-based carbon pricing mechanisms like emissions trading schemes (ETS) are theoretically designed to internalize environmental externalities, their actual efficacy in developing economies hinges on institutional enforcement capacity and baseline market structures. In regions where informal economic sectors predominate and regulatory oversight is fragmented, high carbon compliance costs frequently induce industrial flight toward unregulated informal production rather than spurring capital investment in green technologies. Moreover, subsidized fossil fuel tariffs in these jurisdictions create contradictory economic signals, neutralizing the price disincentives imposed by carbon levies. Critics contend that implementing a stringent ETS framework without prior structural reforms to phase out fossil subsidies and formalize industrial monitoring simply redistributes carbon production to unmonitored sectors, leaving net national emissions unabated while shrinking the formal tax base. Consequently, climate policy experts emphasize that structural institutional alignment—specifically the removal of conflicting distortionary subsidies and the expansion of regulatory auditing capacity—is an indispensable prerequisite for market-based pricing tools to yield measurable decarbonization outcomes.
Based strictly on the arguments presented in the passage, which of the following statements must logically follow regarding market-based carbon pricing in developing economies?
- Carbon pricing mechanisms cannot guarantee national emission reductions if contradictory fossil fuel subsidies and unmonitored economic sectors remain unaddressed.Cevap
- BDeveloping nations should abandon market-based carbon pricing entirely and adopt command-and-control environmental regulations.
- CImposing high carbon compliance costs directly leads to a net decrease in national carbon output by reducing formal industrial production.
- DPhasing out subsidized fossil fuel tariffs is alone sufficient to ensure that emissions trading schemes successfully stimulate green technological investments.