The comments to my earlier post on David Frum suggest that some folks are pretty confused about the difference between a cap-and-trade plan and a carbon tax. The simple answer is that cap and trade fixes the quantity of carbon and a carbon tax fixes the price of carbon. So imagine you want to reduce carbon emissions by 80 percent in 2050. Using a tax, Congress would decide the price of carbon but the market's response would decide the total change in emissions. A cap is the reverse: Congress sets the total change in emissions and the market decides the price. That, at least, is the difference in a perfect world. There's also the argument that a tax is, in theory, simpler, and less likely to get mucked up with exemptions and off-ramps and so forth. For a good discussion of the relative merits, see this roundtable from the Bulletin of Atomic Scientists.
