Stoats of the world can take pleasure in this proposal by outgoing senator Max Baucus to simplify the approximately one billion Amercian clean energy tax incentives and to provide instead a tax credit based on how much carbon reduction (above a threshold) is produced per unit of electricity or unit of transportation fuel.
There's no economic difference between providing a tax credit that reduces from a higher baseline, versus imposing a tax that increases from a lower baseline, so long as they're equally comprehensive. That is a problem with Baucus' proposal in that it's not comprehensive (e.g., no incentive for conservation and no incentive for carbon savings below the threshold) but I expect a similar problem would result from an overt carbon tax that went through political processing. So I disagree with the article's distinction between this credit and a tax. What the credit also does is make it easier poltically to do a trade at some point - we'll give up this carbon reduction tax credit in return for (hopefully) a more comprehensive carbon tax.
There's also a problem in the failure to reward technological development that's too distant to be commercially rewarding, but that could be handled differently.
Just a proposal, but a good one.
