Which one of the following countries is the first country in the world to propose a carbon tax for its people to address the global warming?

Answer: (d) New Zealand

New Zealand proposed a carbon tax in 2005 — the proposal behind this historical UPSC answer.

The idea

There are two ways to price carbon. A carbon tax fixes the price per tonne and lets the amount emitted adjust. Cap-and-trade fixes the amount and lets the price adjust. A tax is simpler to run; a cap gives certainty about the total.

Tax is put on each tonne of CO₂ → Coal, petrol and diesel cost more → People and firms use less or switch fuel → Emissions fall → Government gets revenue

Why the others are wrong

(a) Australia brought in a carbon price in 2012 (later repealed).

The trap

Sweden and Finland had early carbon taxes on fuels (1990s), but they are not options here.

Also know

Finland brought in the first carbon tax in 1990, followed by Sweden and Norway in 1991. The question follows the news of that year. New Zealand did not go ahead with its 2005 proposal and started an emissions trading scheme in 2008 instead. India has no carbon tax by name, but the coal cess (Clean Energy Cess, 2010) worked like one; in 2017 it became the GST Compensation Cess.