You should read Paul Krugman’s new article, “Building a Green Economy: How we can afford to tackle climate change,” in the upcoming issue of The New York Times Magazine. The article is a good overview of the economics of carbon pricing. It includes good discussions of the cost of action versus inaction, of planing for the most likely outcome or a more dire scenario, and of how quickly action should be taken. Krugman mentions carbon tariffs along with domestic carbon pricing. This is something that I have been leaning toward for a while, but haven’t really seen others seriously mention due to the common belief that all tariffs are inherently bad.
Update 2010-04-11: See David Archer’s opinion on this article over at RealClimate.