How do market based carbon pricing schemes work around the world?

New Zealand's carbon pricing system, the Emissions Trading Scheme, is a central tool in the country's climate change policy. Industries covered by the ETS must give the government a carbon unit for each tonne of emissions they produce. But the ETS has come under scrutiny after the government declined to follow Climate Commission advice late last year, to take action to keep the price of carbon units sufficiently high. The price plunged from nearly $90 to below $40 last month. After the government announced proposed changes to the ETS a fortnight ago, broadly in line with the Climate Commission's advice, the unit price recovered somewhat, to around $57 dollars. How do market based carbon pricing schemes work around the world ? Ian Parry is an international expert on climate mitigation strategies including carbon markets as Principal Environmental Fiscal Policy Expert in the IMF's Fiscal Affairs Department in Washington DC, and about to visit New Zealand.