From the New York Times Green Inc. blog an article on the options being debated for either totally replacing the current carbon cap and trade system or tweaking our current set-up. On one side of the argument, many are saying that giving carbon emission credits to big business amounts amounts to rewarding polluters. (Given the fact some companies have been selling off carbon credits they got for free, it’s not hard to see that point.)

Some environmental groups favor a ‘carbon tax’ which would be applied to all non-renewable carbon-based energy sources. The revenue generated from levying this tax would be used to fund renewable energy development and offset current tax burdens.

There is no doubt a carbon tax would have an immediate effect on the behavior of the business community (and consumers who would end up paying the tax in the form of increased prices for all products and services using CO² emitting fuels in their manufacture or provision.)

A carbon tax, while it is working in places like the UK, has always had a difficult time getting support in the US Congress due to the unknown impact it would have on our economy in the short term. The Obama Administration has put it back on the table, however. In the end it might be used to negotiate lower cap limits and perhaps charge for the carbon credits the government is currently handing out for free. Read the comments section on the NY Times article for other perspectives on this issue.