The Carbon Folly

Many experts think a carbon tax would be the better alternative. It's more straightforward and jargon-free, and would prevent much of the "gaming of the system" that's plaguing carbon trading. The problem, of course, is that new taxes are unpopular with voters. "A carbon tax would be far superior," says Yale's Esty, "but trading is a good second-best solution."

Legislators around the world are trying to fix the current trading schemes. Europe has set stricter carbon quotas for next year, U.S. politicians are talking about auctioning carbon credits instead of giving them away, and U.N. officials want to beef up renewable-energy projects. Emissions trading will succeed to the extent that world leaders can muster the political will to make the caps strict, and make them stick.

With Chris Stowers in Raipur

© 2007