Matt Steinglass wants both cap and trade and a carbon tax. He makes his case for C&T:
The carbon tax reduces carbon emissions by making it more expensive to burn fossil fuels. But it does nothing about all these other sources of greenhouse-causing emissions. Only cap and trade does.
Cap and trade systems do this by creating tradable carbon credits. Under the Kyoto Protocols’ Clean Development Mechanism (CDM), greenhouse-emissions-reducing projects like forest preservation can submit their projects for stringent review by UNFCCC-licensed assessors. If their projects pass review, they are granted certified carbon credits measured in an equivalent reduction of CO2. Ongoing projects are granted permanent credits, subject to periodic review; projects which reduce a fixed amount of CO2 are granted credits which expire after a period of time. The tradable credits are worth money on the European carbon emissions credit exchange and other trading floors, where they are purchased by coal-fired electric plants and other carbon emitters. There are currently 1431 certified CDM projects, which reduce greenhouse gas emissions by the equivalent of 220 million tons of CO2 per year about 5% of the total annual emissions of the European Union. These projects owe their existence to the European CEC exchange; a US cap-and-trade system would create many more of them. Thus cap-and-trade encourages reduction of greenhouse emissions in all sorts of ways that wouldn’t happen with only a carbon tax.