Many economists argue that painful though it might be to consumers, the best way to address climate change is to put a "price" on carbon dioxide and other carbon-based emissions, thereby making fossil fuels more expensive and alternative energy sources more competitive.

The European Union established a trading program for carbon emissions in 2005. In the United States, a proposal for a similar system is at the center of the new administration's energy ­policy. Under such programs, a regulatory authority sets a cap on total carbon emissions, and tradable emissions allowances are issued or auctioned off to industries. But many economists advocate a far simpler approach: a carbon tax levied directly on the production of fossil fuels.