In economics, an externality [0] is a cost that is not paid for by the buyer or the seller but generally society bears the cost. For example, when buying a pollution machine - the cost to the environment may not be factored into the purchase price despite it being there.

Internalizing the externalities refers adding an additional cost to the purchase price to cover for the externality. In the example above for the pollution machine, this could be a carbon tax or a carbon offset.

[0] https://en.wikipedia.org/wiki/Externality