Vincent and Michelle discuss the relative merits of a carbon tax scheme and an emissions trading scheme (ETS). While they disagree on which is preferable overall, they at least agree that:
A an ETS and a carbon tax are both market-based instruments.
B an ETS generates less revenue for the government than a carbon tax.
C an ETS cannot be structured to keep the price of emissions falling too low, while a carbon tax may keep prices artificially high.
D an ETS incentivises industries to strictly limit emissions to a certain level, while a tax does not.