Levying carbon tax on energy production turns out to be a simpler and cheaper solution in comparison to the more common cap and trade system of emissions trading. A ‘cap and trade’ approach consists of redistribution and trading of caps on sources, to segregate the sources that emit the total pollution load by collecting caps on all sources. Taxing would involve paying up for the production of carbon at the source, and be more efficient in terms of calculating decreasing emissions.
Decreasing carbon footprints, without even making an effort, except for spending some money through the Clean Development Mechanism, by buying carbon credits has been immensely criticized by most legislators.
Developing different green technologies and energy production and distribution are so widespread throughout countries, that it would be a task in itself to set in the cap and trade system. Carbon taxing, applicable only to fossil fuels on the other hand is definitely welcome since the concept is easy to understand and can be made popular if the revenue from the tax can be returned by reducing other taxes. All this being done to avoid the effects of global warming and climate change, would be a small price to pay.
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Source: Reuters