Carbon Tax v Cap and Trade

An article dated 14 June 2007 in The Economist entitled "Doffing the cap" advocates for the use of carbon taxes rather than "cap and trade" to reduce CO2 emissions. Although there have been issues with how the European Union Emissions Trading Scheme (ETS) has been operating in practice, I did not think that this view in favour of such taxation was that widely shared by economists.

In any case, with respect to international aviation almost all international air services treaties prohibit the taxation of fuel.

On 8 May 2007 the New Zealand Minister Minister Responsible for Climate Change Issues, David Parker, announced that the New Zealand Government, having previously explored the option of a carbon tax, is now looking to introduce a "cap and trade" emissions trading scheme.