Carbon emissions have devastating impacts on environment as well as on human health. The severity of these is getting worst day by day with continuous rise in the level of carbon emissions. Current study aimed to investigate the effect of carbon tax on carbon emissions and economic growth of the provinces of Pakistan. The methods for instance panel unit root test, panel co-integration test and Autoregressive Distributed Lag (ARDL) test were used to find the relationship between carbon tax, carbon emissions and economic growth. Moreover, impulse response function (IRF) was used to project the dynamics of carbon emissions and economic growth till 2050. A carbon tax of $8 has applied to check its effect on carbon emissions and economic growth. Study concluded that carbon tax and carbon emissions are negatively associated while carbon tax and economic growth are positively associated. Besides, Impulse response function illustrated that increasing carbon tax by 2% every year will significantly reduce the carbon emissions and increase the economic growth. Correspondingly, study will pave the way for the formulation of comprehensive policy for the reduction of carbon emissions. While on the other side shifting their energy mix towards renewable/clean energy resources can make a fruitful policy to cope with over all emissions level. Supervisor:- Dr. Saud Ahmed Khan Co-Supervisor:- Dr. Aneel Salman