Firstly, some types of emissions are more damaging to the...
Market mechanisms provide a better means of tackling climate change at a global level. With the exc...
Because it is not possible to achieve a perfect market in carbon emissions, regulations are to be preferred. Firstly, some types of emissions are more damaging to the environment than others, but this is hard to recognise in a carbon tax or trading system. Regulations can be more targeted in order to deal with the biggest problems first. For example, government policy has required vehicle exhausts to become much less damaging to the environment over the past few years, and can also demand that companies (e.g. power generators) update their equipment and working methods. The deadlines and potential sanctions accompanying such government demands can also focus investment into research and development which the market alone would not provide. \ Secondly, the existing global marketplace is quite imperfect. Many countries (e.g. China, India) lack the kind of open economies needed for market mechanism to operate effectively. Unless efforts to curb carbon emissions are to be put on hold until their economies are sufficiently reformed for market incentives to have a chance of working, regulations will have to be the main method of emissions reductions in such places. And on a global scale market incentives are hugely distorted by such oddities as the exemption of aircraft fuel from taxation.