> When you start with a cap and work backwards towards the clearing price, you are guaranteed to be meet that cap. But when you start by setting a price, there is zero guarantee that you're going to meet your emissions target.
If you can't generate a good estimate of how much tax is needed to hit your target, hitting the target no matter what is actually a bit of a problem.
If the necessary tax would have been less than you expected then your emissions target is likely too conservative and you could reasonably have picked a more aggressive one.
And if the necessary tax is much higher than you expected then you could end up wrecking the economy, because the cost of credits will then be outrageously high and get passed on as high energy costs.
If you can't generate a good estimate of how much tax is needed to hit your target, hitting the target no matter what is actually a bit of a problem.
If the necessary tax would have been less than you expected then your emissions target is likely too conservative and you could reasonably have picked a more aggressive one.
And if the necessary tax is much higher than you expected then you could end up wrecking the economy, because the cost of credits will then be outrageously high and get passed on as high energy costs.