In the current environment concerned world economy, environmental costs became the pervasive topic affecting local, national and global economic developments. Through using the Cause-Effect Analysis, the author found out that a consequence from the externality of environmental costs is the market failure. Considering various environmental costs need to be differently measured, the author selects a case of CO2 emission, which incontestably causes a kind of environmental costs. To internalize this kind of costs, CO2 trading is most valuable being concerned, and it has been successfully applied in some of developed countries, especially in EU. For China, the author suggests an integrated method of CO2 emission tax and CO2 trading, the Clean Development Mechanism to balance the worldwide CO2 credit trade, as well as the Green Manufacture to consolidate environmental costs during the production process. Those implementation approaches for internalizing the environmental cost incurred by CO2 emission in China are recommended in this book. The author hopes this research could be shared with scholars who are interested in environmental cost related subjects.