Anyway, this whole issue seems to have become more academic than practical. Or at least this is how it’s looking to me.

Do you think everything concrete will come out of this ETS?

Having said that, I understand your concerns about the trading scheme being a license for intermediaries to make money. At this point, however, it does have the advantage of being advanced to the point of having legislation prepared. Getting a tax done now would take much longer.

In the end, all these schemes imply a cost. Still, I tend to prefer the carbon tax one.

Firstly, the idea of creating a new financial instrument that can be manipulated by investment banks gives me the creeps.

Second, if you remember your post about the Prisoner’s Dilemma/Tragedy of the Commons, the idea most neoclassical economists have to solve the puzzle is to give property rights to a group, that will take care of the commons. The introduction of carbon emission permits is one step in this direction: they give emitters a right over a part of the environment. Once this step is taken, what is to keep from similar things being adopted in other areas?
It didn’t work too well in Bolivia, where water rights were given to a corporation that owned even rainwater.

Third, tax are more transparent and understandable than these permits, whose price dynamics will be entirely whimsical.

Finally, all these schemes allow for a redistribution of the proceeds among the population. Rudd has used this idea as a sweetener, in the few occasions he went into selling his idea.

Anyway, that’s just my 2 cents worth