A livable climate can (probably) survive the burning of almost all of the world’s conventional oil and gas — but not if we also burn even half the coal (see here and figure below).
So the top priority for any climate policy must be to stop the building of traditional coal plants — which is why that has become the top priority of NASA’s James Hansen (see here). The next priority is to replace existing coal plants with carbon free power, which could include coal with carbon capture and storage (CCS), as fast as possible. And that means a related priority is to encourage the introduction of CCS as quickly as possible, to see if that is a viable large-scale solution.
A climate policy that does not start by achieving at least the first goal, a moratorium on coal without CCS, must be labeled a failure. By that measure, the cap and trade system currently being employed by the Europeans looks to be a failure, as we’ll see.
So that means the first major climate policy we should adopt is not a cap & trade, but
Requiring all new coal power plants to meet an “emission performance” standard that limits CO2 emissions to levels achievable with CCS systems.
This is the 2007 recommendation of Ken Berlin and Robert M. Sussman in a Center for American Progress Report, Global Warming and the Future of Coal: The Path to Carbon Capture and Storage (summary here). It is also the goal of a bill introduced last month by Waxman and Markey, “Moratorium on Uncontrolled Power Plants Act” (see here).
[Yes, regular readers will note that this does represent a bit of a shift in my thinking -- I once thought the most urgent climate policy was getting a price for carbon dioxide -- but the recent news from Europe about the possible resurgence of coal power should change everyone's thinking.]