2022
This paper discusses the choice policymakers need to make between and in the design of carbon taxes versus emissions trading systems (ETSs), providing guidance, broader considerations, and quantitative analyses. The paper posits that policymakers considering introducing or scaling up carbon pricing face technical choices between carbon taxes and ETSs and in their design. This includes administration, price levels, relation to other mitigation instruments, use of revenues to address efficiency and distributional objectives, supporting measures to address competitiveness concerns, extension to broader emissions sources, and coordination at the global level. Political economy considerations also affect the choice and design of instruments.
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