Rules for Carbon Trading

Via Greg, here's an interesting article in the National Post on carbon trading.

Basically, the argument tracks the evolution of the thinking of Aldyen Donnelly, a Canadian who has been advising corporations on emissions reductions for years. Where once Donnelly believed that governments should set up carbon trading markets or exchanges, now Donnelly believes that it would be more effective for government simply to impose emission standards and let the companies set up the exchange themselves if they feel it would help them meet the targets.

Seems like a perfectly reasonable plan to me. Government processes tend to move slowly, so it might be quicker for government to just set the basic ground rules and stay as hands off as possible. It certainly fits with Jane Jacobs ideas in her book Systems of Survival that, as much as possible, government should simply set objectives and allow industry to figure out how best to meet those objectives. But I haven't really thought it through and the article doesn't offer any dissenting opinion. Any objections out there in the audience?