This is not, by the way, a critique of Chowdhury. Nor do I insist that you must prefer my plan to his. Rather, I want to explain that we live in what is called a “second best” world. One in which the better solution sometimes is not because of other features of the society around us.
The thing being that I have seen an emissions scheme being set up – the European Union one. And it was a morass, an orgy almost, of rent seeking and string pulling. Everyone who even knew the name of a politician was demanding the free issue of extra credits just to them. The result of those being that so many were issued that the price has been, for well over a decade, effectively zero. And prices of nothing tend not to limit people making emissions which is the point of the whole process in the first place. Thus my recommendation of the second best policy, set the price through a tax and make the world adjust to that. Simply on the grounds that “Here’s the price, get on with it” is politically easier than having to fight one’s way through every special interest group demanding favourable treatment.
Which is a sad commentary on politics perhaps but then this is a second best world.