If properly designed environmental taxes could be more holistic than regulations and more efficient and easier to enforce.
Regulations can be narrow, prescriptive, complex and difficult to enforce.
For instance, regulations may try and deal with air pollution without acknowledging the wider benefits of recycling e.g. point source emission limits for CO 2 may penalise a steel producer who refines longer to produce lighter steel, which improves vehicle miles per gallon. But we always need regulations to back up other measures. The social costs of environmental action must be acceptable. Economic instruments should deliver real environmental gains cost effectively. Environmental policies must be based on sound evidence and must not threaten competitiveness.