Emissions Trading and Tax

The premise of setting and maintaining a price to business for the privilege of emitting carbon dioxide was one of the main themes running throughout the Government's energy white paper. This is a sensible approach using simple economics to control emissions levels. By making the right to emit CO2 a scarce resource market forces will in theory at least act to set a price for that right and enable industry to evaluate the costs of using cleaner methods and technologies by reference to that market price.

This end is being approached by a number of mechanisms. There are certificates issued under the clean development...