At the core of the cap-and-trade approach is a new financial market in carbon permits. The economics of a cap mean that permit prices will be very volatile, inviting a frenzy of financial speculation by Wall Street. As Americans suffer through the worst recession in their lifetimes, they will find it hard to trust the fate of the planet to the same individuals who brought us credit default swaps, subprime mortgage securities and other exotic financial instruments. The more voters hear about cap-and-trade, the more they are likely to flinch and the more politicians are likely to back off. Consequently, we all need an alternative, a “Plan B.” Washington would be well-suited to go back to Al Gore’s original idea — tax carbon and cut payroll taxes. This is the preferred policy for most economists and for many environmentalists too. Once Congress looks past the word “tax” in the title, it’s easy to see the important political advantages this policy has over a cap-and-trade system.
Kamarck, Elaine. "Gore’s Carbon ‘Tax Shift’ Beats Cap-and-Trade." Roll Call. August 3, 2009.