A simpler scheme to set up than emissions trading is to impose a tax (collected by the government) on all fuels that emit CO2. The tax is based on the amount of carbon emitted, so coal would have a higher tax per kWh than gas. This scheme, which was introduced in Sweden, Finland, The Netherlands, and Norway in the 1990s, provides an inducement for everyone to
11,6 STABILIZATION WEDGES FOR LIMITING C02 EMISSIONS
reduce emissions and applies to transport, domestic consumers, and industrial consumers. It also demonstrates the importance attached to reducing global warming by the government concerned. It is more costly for countries with less efficient energy usage, which was why the United States was in favour of emissions trading rather than a carbon tax.
