Economic policy instruments for reducing greenhouse gas emissions have emerged as essential tools in the global fight against climate change. Unlike command-and-control mechanisms that rely on strict regulations and mandates, economic instruments harness market dynamics and financial incentives to alter behavior, encouraging both producers and consumers to make environmentally sustainable choices. The overarching goal is to reduce emissions efficiently and cost-effectively while fostering innovation, competitiveness, and long-term sustainable growth. These instruments are grounded in the principle of internalizing environmental externalities, meaning that the costs of pollution and climate damage should be borne by those responsible for emissions rather than society at large. They can broadly be classified into market-based instruments, fiscal policies, and subsidy reforms, all of which play complementary roles in mitigating greenhouse gases. One of the most prominent economic instruments is carbon pricing, which includes carbon taxes and cap-and-trade systems. A carbon tax directly imposes a fee on the carbon content of fossil fuels, thereby sending a price signal to emitters. By making carbon-intensive activities more expensive, carbon taxes encourage industries and households to shift toward cleaner energy sources, adopt energy-efficient technologies, and change consumption patterns. The effectiveness of carbon taxes lies in their predictability; businesses can calculate costs over the long term and plan investments in low-carbon technologies accordingly. For example, countries such as Sweden and Canada have successfully used carbon taxes to reduce emissions while maintaining strong economic performance. However, the design of carbon taxes requires careful attention to equity, as increased energy prices can disproportionately affect low-income households. Revenue recycling, in which governments redistribute the tax revenue through rebates or investments in green infrastructure, can mitigate these concerns. Cap-and-trade systems, or emissions trading schemes (ETS), represent another cornerstone of economic policy instruments. In this system, the government sets a cap on total emissions and issues allowances that firms can trade in the marketplace. Companies that reduce emissions below their allowances can sell excess permits to others that are struggling to meet their limits, thereby creating a financial incentive to cut emissions cost-effectively. The European Union Emissions Trading System is the largest such program and has demonstrated the potential of this approach in creating a functioning carbon market. The dynamic pricing mechanism ensures that emission reductions occur where they are cheapest, fostering overall efficiency. However, challenges such as overallocation of permits, price volatility, and enforcement issues must be managed for