I will be the first to admit that the emissions trading scheme is a vastly complex system. However the premise is actually pretty simple. A carbon price, if high enough, provides companies with an incentive to reduce pollution whenever doing so would cost less than paying for permits to pollute—what we call emissions units. In other words, when it works, it encourages businesses to innovate and to invest in solutions. Together with the introduction of transitional mechanisms like a price floor and a cost containment reserve, the price of carbon will not only be sufficiently high to incentivise investment but predictable enough to give companies the confidence that they need to make those investments.