<p>Global warming is a
serious problem which requires an urgent solution. In economics context, economists believe that
carbon pricing, specifically carbon tax and its mirror image, cap and trade,
are the best options and they suggest all countries should use it to address
global warming (Goulder & Schein, 2013). However, advantages and
disadvantages of carbon pricing have often resulted in some countries accepting
the idea and some rejecting it. Therefore, this literature explains how the
carbon tax, and cap-and trade work; the probability of their success,
specifically in reducing greenhouse gas emissions, and how to attract countries
that resist the idea of carbon pricing into implementing it. And finally, this
article explains why a carbon offset scheme, under cap and trade, best fits
developing countries and which Papua New Guinea can use to improve the lives of
its citizens while, at the same time, reducing the concentration of greenhouse
gases in the atmosphere. </p>