A carbon tax would have similar incentives. Green producers and products get taxed less than brown producers. It also doesn’t matter if the product comes from Timbuktu or Savannah, it just matters how green or not green it is.
Carbon trading would result in billionaires and large funds finding a new way to make more money at the expense of everyone else and solve little.
Carbon trading is a huge subside to the current polluters at the expensive of future polluters, indifferent to future polluters polluting more or less than current ones.
It is a great way to destroy a market (and a very important one), creating monopolies everywhere.
By limiting the number of certificates, you can steer exactly how much CO2 will be emitted in any given year.
And the cost of CO2 means that procedures that reduce CO2 emissions become financially viable, starting with the most effective ones.
Assuming you can track CO2 emissions correctly, it’s a genius instrument.