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- With a carbon tax, the money raised goes to the Government, whereas under an ETS money is traded by businesses as they buy and sell permits
- Under a carbon tax there is no limit to the amount of pollution companies create, as long as they're willing to pay for it, whereas under an ETS the Government sets a limit and if one company wants to go above that limit they have to buy enough permits from another company, which then has to cut back its pollution.
- While both carbon taxes and trading schemes have been shown to reduce emissions, it's only with an ETS that the reduction is guaranteed. The higher the target, the more expensive permits become.
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