Q&A: An EU carbon tax, more effective than the ETS?

With carbon allowances in the EU touching new lows this week, the merits of a market-based carbon reduction scheme are under the microscope.

Carbon allowances on Europe's Emissions Trading Scheme (ETS) hit new lows this week, reinforcing doubts about the system's usefulness as a driver of investment in low-carbon sources of energy.

Some commentators have said a tax could be more effective, but a major downside of that for the European Union is that the bloc would almost certainly fail to agree on it.

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