The Economist has a good article discussing the likely trade conflicts arising from cap and trade measures. They talk about the problem of countries reducing emissions by varying amounts, and the possibility of companies relocating production to "carbon havens." According to the article, studies suggest that the scope of the problem is not as great as some fear, but nonetheless many countries have proposed border tax adjustments to address the perceived harms. The article notes that the application of such measures is quite difficult in practice.
All good points, but I was disappointed to see no mention of the carbon consumption tax alternative, which can reduce or eliminate a lot of the trade conflict.
