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The same sort of debate recently arose domestically, both in the United States when President Obama was elected in 2008 and in the EU in 2009 because of the many pitfalls of the Emission Trading Scheme (ETS) introduced in 2005.
appropriate long-run price signal to drive investment and at the same time avoid the most disturbing side effects of emissions trading, it would be necessary to install an EU system of harmonized carbon taxes and drop the ETS.
Others believe the ETS should be retained for carbon-intensive sectors, whereas a carbon tax should be used for the remain- ing diffuse sectors for which the emissions-trading approach would generate excessively high transaction costs.
In 2011 the European Commission tried to follow the trail of a revision of the directive on energy taxation, in parallel with fine-tuning the rules of the game of the ETS for the third commitment period (2013-2020).
In the EU, the directive creating the ETS required not unanimity but a qualified majority of member states.
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