Virtually all allowances were handed out for free under the wildly successful sulfur dioxide trading program in the U.S.

—Nathaniel Keohane,

Director of Economic Policy and Analysis,

Environmental Defense Fund, 2008

Most economists, from left to right, agree that a carbon tax is best. But cap and trade still dominates political discussion. The public want their emission reductions certain and their taxes hidden, or so I’ve heard. Understand this saying, and you will know the secret of cap and trade.