Severin Borenstein, one of the high-candlepower sources in the energy/environment community, has an excellent post on things that make sense and things that don’t for improving energy behavior in transportation. Just read it.
I would only cavil at his easy identification of a climate charge (erroneously called a carbon tax) and a cap-and-trade scheme (which is not his main point). These are not Tweedledum and Tweedledee, no matter how many times economists assume the canopener of “when the market equilibrates we get the same result with either one”. Just one example of a Really Big Difference: to set a climate charge, the government needs to know how much greenhouse gases (GHG) are being emitted now, and the damage one more ton causes at that level, i.e., the marginal benefit of reduction over a narrow range around current conditions. This is not chopped liver, but consider that to set the cap for a cap-and-trade scheme the government needs to know this whole marginal benefit function for reducing discharges over a fairly wide range, and also the same function for costs of reduction, to see where they cross. The latter of these has been historically very difficult to construct, as it comprises mostly predictions of the cost of doing things we have never done. Remember in the seventies, when engineers and executives at all the car companies came to Washington and swore that the slightest messing with exhaust pollution would make all our cars stop in the middle of the street, cost a fortune, and generally cripple all of American culture. They probably believed it, but it doesn’t matter: they were wrong by a country mile. Estimates of the cost of GHG reduction will also be way too high, and one of the great advantages of the carbon charge is that it doesn’t require us to make them.