For example, the introduction of new taxes and charges or increases in existing ones in the presence of a trading scheme would simply reduce demand for permits and push down the equilibrium price for permits and leave the total level of emissions unchanged. This calls for relevant taxes and other measures to be designed in a manner that provides consistent incentives for pollution mitigation. A higher carbon price would thus be needed to meet the policy goal of substantially reducing carbon intensity over the coming years. The results also highlight that as with any other reform that causes a change in relative prices, carbon pricing would lead to a reallocation of resources across the economy with relatively carbon-intensive sectors contracting and others expanding. It would also help promote further domestic and external rebalancing, thereby supporting broader policy objectives.