A cap-and-trade approach was effective in reducing SO2 emissions and largely eliminating North America's acid rain problem. This time around, one is dealing with a global scale issue. Without broad participation by the nations with the highest CO2 emissions, such an approach won't have the same level of effectiveness as the earlier program which dealt with a regional problem. China, for example, is not going to participate in a program that caps its CO2 emissions anytime soon. However, China does face a growing air pollution problem, highlighted by some recent spectacular outbreaks of smog in January, that is creating pressure for China to combat its growing air pollution problem.
Now, if one believes there is no link between CO2 and climate change, then one can freely dismiss policy options aimed at reducing CO2 emissions. However, most credible scientific work suggests that anthropogenic CO2 emissions are responsible for pushing annual emissions above annual absorption leading to the growing atmospheric share of CO2. Most credible scientific work suggests that anthropogenic factors (led by CO2) has created an energy imbalance that is responsible for most of the observed warming that has occurred since the mid-20th century.
Policy makers, of course, must balance many considerations. They do not make policy exclusively on economic terms or scientific terms. The 2009 stimulus package achieved less bang-for-the-buck because it included low multiplier items e.g., temporary tax breaks. That was done for political reasons (to build majority support) and social reasons (to cushion workers from some of the pain) at the trade-off of economic interests (substituting low multiplier items for high multiplier ones). The same will be involved in climate change policy. Energy supply realities (one can't readily and immediately replace fossil fuels, much less in a cost-effective fashion), economic ones (balancing growth with restraint on CO2 emissions), social ones (trying to avoid a situation analagous to a regressive tax), etc. Hence, the policy path will likely prove far slower than some of the scientists involved in climate change research might prefer based on today's scientific understanding.
