I left Wall Street in early 2007 to help structure a U.S. carbon market and develop financial incentives for efficient abatement.  My view on climate policy is quite simple:

1.  The nature of climate risk is such that it needs to be hedged.  The reason for hedging is that catastrophic outcomes are more likely than favorable ones.  Catastrophic risk derives from self-reinforcing feedback loops like melting (radiation-reflecting ice into radiation-absorbing oceans and permafrost thaw releasing methane) overpowering the various self-inhibiting loops.  

2.  The best way to hedge catastrophic (fat-tailed) climate risk is to limit the quantity of co2 emissions.  A carbon tax (or price cap) won't necessarily cut emissions to a level that takes catastrophe off the table.  And a carbon tax puts a price cap on low-carbon energy; capital will only be invested in technologies that are assured of being cheaper than the tax.  Of course, we could have a flexible tax...but that is sort of an oxymoron.

3.  If we want to hedge climate risk by capping emissions - and only do that - the CLEAR legislation by Senators Cantwell and Collins is a good solution.  In 2007 two papers opened the door to this Ocam's Razor type policy solution; Robert Repetto's on upstream cap and trade and Peter Barnes cap and dividend.  The melding of these two is simple - a (shrinking) supply of permits is sold to coal, oil, and natural gas producers and most of the revenues (75%) are returned per capita to citizens.  The permits are required for sales by "first sources" of the all fossil fuels, as well as imports.

4.  Only capping emissions means this:  that we don't want the Government picking winners or otherwise interfering in the marketplace.  We just want limits on a previously-believed harmless free good that has resulted in the kind of destructive free-riding explained by economist Paul Samuelson in his seminal 1954 paper.  And further that only capping emissions is loaded with coincident  benefits like energy independence, clean technology competitiveness, jobs, and maybe even a more efficient energy system.  If you believe in markets then the simplest corrections of failures sustains markets as our primary means of allocating resources.

5.  Failure to pass legislation like CLEAR is it's own tragedy of the commons.  Business long ago accepted decarbonization and has been planning future low carbon strategies accordingly .  But if their competitors start advocating for their interests in legislation, then others must do so as well (business generally engages in whichever pending bill might be handing out the most goodies).  But no legislative commons can survive this over-grazing by corporate lobbyists.  CLEAR  can only prevail if the keepers of the commons, Government (and particularly the Executive Branch), advocates it to such a strong degree that business returns to fighting their competitors.