We need a price on carbon

On the weekend I travelled to Jervis Bay on the south coast of NSW to celebrate my father's 70th birthday. We had a BBQ lunch and after everyone enjoyed their BBQed chicken and salad we had 20 people sitting outside chatting. Each little group was having their own conversations about their holidays, kids, fishing and then down at my end of the table we starting talking about the emission trading system and the whole group went quiet and they lent forward to hear what was being said. 

The consensus from this little gathering was that we really didn't understand the emission trading system and how it was supposed to work. So I set myself the task to find out from old colleagues from the Australia National University where I used to work in the 1980s at the Centre for Resource and Environmental Studies, which is now called the Fenner School of Environment and Society.

As luck would have it, on my flight home I bumped into Professor Brendan Mackey from the Fenner school at the airport. He was off to Copenhagen and in the few minutes we had together before our respective lifts arrived I asked him for the quick explanation and this is what we told me.

We need to put a price on carbon pollution before substantial efforts will be made to reduce it. There are two ways to price carbon: have a tax on it or implement a cap and trade system. Sweden introduced a tax on carbon in the 1970s and have reaped the benefits ever since. Europe have had a cap and trade system for the last 10 years. Obama wants a cap and trade system. The emission trading scheme proposed by Labor was too generous to big polluters. That's why it wasn't supported by the Greens. Abbott is being disingenuous calling the ETS a tax because putting a tax on carbon is an altogether different approach. A point that hasn't been lost on Malcolm Turnbull.

I would like to know more about the ETS approach from people who don't have a political agenda. What are other researchers saying about this approach?