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Carbon costs impact both the input side of economic sectors, as fossil inputs are used as raw materials, and the output side, as CO2 emissions are paid for in the form of emission allowances. The effectiveness of climate policies depends heavily on the total cost of fossil inputs and emissions, but the input side has typically been ignored so far. The aim of this paper is to present a model that quantifies the total private costs associated with the carbon use of economic sectors. The model presented in this paper is based on an environmentally extended input-output analysis. Total private carbon costs include costs associated with fossil inputs, including both energy and non-energy use, as well as costs associated with carbon emissions. China provides an instructive example, as its economy is heavily dependent on fossil energy sources. The results of the presented model highlight the problem of conflicting energy and climate policies. Reductions in input-side costs may offset the rising costs of carbon emission costs enforced by the climate policy. This article represents a stride in that direction. [ABSTRACT FROM AUTHOR]

Climate economists have long been concerned with setting the price of carbon emissions, which can provide a good basis for making climate policy decisions and be an effective incentive to reduce emissions. Nowadays, more and more countries have to pay for carbon emissions in the form of taxes or quota purchases, and the so-called internal carbon pricing of emissions has appeared and is spreading rapidly in the environmental management tools of large companies. This article provides an overview of the theory and practice of carbon pricing, its different applications and price developments. Official prices are expected to move closer to economically 'correct' values as climate policy tightens, and the main goal of corporate carbon pricing is to prepare companies for these changes. This article shows where this process is currently taking place. [ABSTRACT FROM AUTHOR]