"The main difference between a carbon tax (emissions tax) and an emissions trading scheme is this. With a carbon tax, the price of emitting a unit of greenhouse gases is fixed but the total level of emissions is unknown. With an emissions trading scheme, the level of emissions is fixed (capped) but the price is unknown.
It follows that choosing one over the other is partly an issue of whether you want certainty in your environmental outcome or certainty in the cost to industry (Oikos)."
Update: more about uncertainty's role in determining climate change policy.
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