Cap and Trade is More Economical Than a Carbon Tax  "The efficiency [of a cap-and-trade system] comes with the "trade" part. Let's say you have two power plants, each emitting 100 tons of carbon per hour. The first can reduce its emissions by 20 tons at a cost of $5 per ton, and the second can reduce its emissions by only 10 tons, at a cost of $30 per ton. Clearly the efficient thing to do is to make the former reduction rather than the latter, with the owner of the second plant paying the owner of the first plant to offset the first owner's extra costs [by buying carbon credits and the "right" to pollute from the first plant]." [1]  This technique allows effective emissions reductions to occur at the lowest cost. Hence as this is less disruptive to business they are more likely to be on board and not try to get around a cap and trade system using accounting methods in the same way that they might with a tax.  A cap-and-trade system is more flexible in the global economy. Nations that adopt a cap-and-trade system can later link that system into other cap-and-trade systems around the world. It would not be as easy for a carbon tax to achieve this. This is important in today's global economy, where multinational companies exist across borders.  As such cap-and-trade is the most viable solution that if implemented could lead to a long term solution and agreement between countries regarding reductions in emissions. [2]  [1] Nast Conde, “Why a Cap-And Trade System Beats a Carbon Tax.” Portfolio.com 19/04/2007   [2] Nast Conde, “Why a Cap-And Trade System Beats a Carbon Tax.” Portfolio.com 19/04/2007