1. carbon tax would raise revenue that could be used for other purposes.
2. In addition to India and China, a cap-and-trade framework provides incentives for developing nations to reduce deforestation also.
Nitin,
We are not "accepting" them altogether ! What made you think so ?
-Sanjay
Are you referring to the Paris agreement that was recently signed?
If I recall correctly, no carbon tax, nor cap-and-trade schemes were part of the agreement. It only states that nations commit to reducing GHG emissions. Each country will have to submit a plan that outlines how they intend to do so.
In any case, most of the carbon emission growth comes from large developing countries such as India and China. If substantial reductions in GHG emissions are to be achieved, it is essential for these important countries to be proactive.
Nitin,
if I understand you correctly, you are asking for arguments that support the implementation of carbon taxes (and possibly other similar instruments). In our study on international capital- and resource markets, my co-authors and I come to an interesting conclusion: Finance ministers should love carbon taxes, even if they do not take climate change into account. Not only do carbon taxes generate revenues efficiently, but they can also replace capital taxes, which are subject to harmful tax competition.
-Max
Article Why Finance Ministers Favor Carbon Taxes, Even If They Do No...
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