This proposed research project has three sub-research questions. First question is “Is carbon tax policy effective in emission reduction?” Second question is “Can carbon tax spur innovation?” Last question is “What are the economic consequences of the policy?” Proving evidence-based answers to these questions will deepen our understanding of the costs and benefits of carbon pricing policies. This will help policymakers make more informed decisions on the future policy. Focusing on the British Columbia case provides me a unique opportunity as the policy is bundled with other non-environmental policy, such as personal and corporate income tax reduction, to minimize the distributional impacts. Thus, it helps us guide on how to design a carbon pricing policy so that it achieves the emission-reduction goal at the lowest economic costs. Ultimately, the insights of this project will help many jurisdictions including Japan to better implement carbon pricing policy.