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    • What is the logic of providing credits at all? Why not just tax emissions and let the market sort out which economic activities are most favored? I think credits would create a kind of shelter for some unfavorable economic activities.

      Consider: I impose a blanket emission tax on smoke. Everyone has to expend various efforts to reduce their smoke emissions. If the tax does not reduce emissions enough, I raise it higher. Eventually the smokeless fires prevail. The smoky fire users are mightily disadvantaged.

      But wait, I also create a smoke tax credit system. So some previously advantaged smoke fire users have the resources to buy credits and continue emitting smoke. They buy credits instead of investing in low-smoke technology. Their inefficiencies are perpetuated and the air remains smoky.

    • When you say that we should "fund clean energy", who will be the arbiter of which technologies to fund? If we make the decision governmental, we know from experience that this tends to lock us into a conservative approach. For example, consider the technological innovation rates of private launch companies versus NASA-directed rocketry in recent years. But how do we promote the rocket science equivalent in energy production? We have to give private energy-providers some market incentives. We can hand out grants where there are high barriers to market entry - where risky investment is needed; but in much of the energy market we already have technological avenues forward. We just need to encourage adoption. For that kind of course change, a direct tax on the emission seems most efficient. Any behavior that reduces emissions is a good behavior (so far as we know). We don't need government to choose the "path".

      As for taking money, I suggest we also give most of it back. If the price of fuel skyrockets and you can't afford to drive your car without government assistance - what if you receive a fixed portion of the carbon tax as a tax credit? Then you have income which you can use to buy that more expensive fuel if necessary. But since the credit is not tied to your driving habits, you have the choice to change your driving habits and pocket the credit. That way, the tax does not debilitate those who most value their high emission lifestyle while motivating the low-emitting individuals financially.