Carbon tax or trade? Debate loses steam as world embraces both

Wed May 27, 2015 9:55am EDT
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* Some in business prefer tax

* Emissions trading can be more closely linked to targets

* World Bank figures find $14 bln of carbon pricing is tax

By Barbara Lewis and Susanna Twidale

BARCELONA, May 27 (Reuters) - Tax versus trade is an issue that has stalked the EU Emissions Trading System (ETS) over its 10 years of existence, but is fading in importance as the world moves towards increased use of both methods of cutting greenhouse gas pollution.

The European Union set up the ETS in 2005 as a way of getting round policy-making rules that require the unanimity of member states to decide on a tax.

Following years of legislative fine-tuning to overcome problems such as a glut of carbon allowances, they say it is on track and has advantages over a tax because it can be linked to a political target to cut emissions.

China, the world's biggest carbon emitter, is convinced.

It aims to launch a national ETS next year, following on from pilot regional schemes.   Continued...