Cap and Trade: Consider the Risks

"With a carbon tax, you trade off that "benefit certainty" for a price certainty. With a tax, you"d place a stable price upon the emission of carbon. You don"t know to what extent firms will reduce their emissions given that price signal. But you"d have price stability, price "certainty."" "If we didn"t have to have the central bank operating this market for bank reserves in order to stabilize the value of the U.S. dollar and how that relates to U.S. economic growth, we wouldn"t walk into doing it willingly, today. (Even though) that"s exactly what we"re doing under cap and trade." "I certainly hope we"ll see some kind of even minor tax placed on carbon in the meantime. I think there are very real concerns about carbon emissions. Whether or not you"re a doom-and-gloomer, I think restrained carbon emissions are good for the environment, for the economy and promote efficient production. There"s nothing wrong with nudging incentives, as a carbon tax could as early as next year."