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Saket Sambhav
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ADJUVA LEGAL® • 1m
DBA Lessons for Founders - Market-Based Instruments (MBI) Lesson 2: The MBI Playbook (Tax vs. Trade) The government can send you this "invoice" in two main ways. As a founder, you need to know the difference. MBI Type 1: The Carbon Tax (A Price-Based Instrument) 💸 This is the government setting a fixed price on pollution. It’s a direct, predictable cost. Think of it like an "MRP on Pollution." If the government adds a tax to every litre of industrial diesel, your logistics and generator costs go up. The price signal is clear: find fuel efficiencies, or pay more. MBI Type 2: Emission Trading Scheme or ETS (A Quantity-Based Instrument) 📈 This is the government fixing the amount of pollution, not the price. This is the "Pollution Stock Market." Think of all the data centres in Bangalore. The government could cap their total combined energy consumption. An efficient data centre that uses less power can then sell its unused "energy rights" to an older, power-hungry one. This is cap-and-trade.
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