Spurred in part by this post from John, I was thinking a bit about carbon taxes vs. cap-and-trade as methods to reduce greenhouse gas emissions. Googling around a bit I found this article from the New York Times on the different experiences of countries that have actually implemented a carbon tax:

But a carbon tax isn’t a new idea. Denmark, Finland, Norway and Sweden have had carbon taxes in place since the 1990s, but the tax has not led to large declines in emissions in most of these countries — in the case of Norway, emissions have actually increased by 43 percent per capita. An economist might say this is fine; as long as the cost of the environmental damage is being internalized, the tax is working — and emissions might have been even higher without the tax. But what environmentalist would be happy with a 43 percent increase in emissions?

The one country in which carbon taxes have led to a large decrease in emissions is Denmark, whose per capita carbon dioxide emissions were nearly 15 percent lower in 2005 than in 1990. And Denmark accomplished this while posting a remarkably strong economic record and without relying on nuclear power.

What did Denmark do right? According to the article, rather than treating the new tax as a cash cow to fund all kinds of nifty new programs, they plowed the revenue back into environment-friendly innovations. The government had also already invested heavily in the development of clean energy, making it easier for industries to switch over.

I don’t know how applicable this would be to the US, but in light of some of the concerns John raises in his post about special interest capture under a cap-and-trade scheme, I wonder if a straight-up tax might not be more preferable. It would also, as I suggested in a comment to his post, jive a bit better with the principle–usually embraced by conservatives and libertarians–that you should take responsibility for your actions and externalities should be internalized as much as possible. No doubt better (and wonkier) minds than mine have already considered this.