This very issue and some of the ideas that are talked about in the video above, were debated on this morning's Democracy Now! newscast between Frank Ackerman and Larry Lohmann. You can read and watch the debate in full here, but here is a snippet:
FRANK ACKERMAN: I’m not exactly for it. I don’t think either Hansen or Krugman got it right. I don’t think it’s necessarily a bad thing. It’s certainly not the only thing that we need. There’s undoubtedly a role for having a price on carbon, which can be done either through a tax or through cap and trade.
The big mistake in this debate, I think, is to pretend that a price on carbon is all that we need. Any time a price incentive like this has worked, it has needed many, many other things to be working with it. The image of a level playing field that economists sometimes suggest is exactly wrong. We need to be doing everything we can to tilt the playing field in the direction we want it to go.
LARRY LOHMANN: What we need is massive reinvestment away from fossil fuels, putting subsidies—instead of putting subsidies into fossil fuels, putting them into renewable energy. We need to overcome our addiction to fossil fuels in industrialized societies.
And the problem with cap and trade is, is that it stands in the way of doing that, in many ways. It’s a way of providing pollution rights to some of the worst polluters, so that they can delay the kind of structural change that’s necessary.