IT DOES not matter whether you are a global warming sceptic, it is still difficult to deny that unsustainable economic pressure on natural resources and the environment is the most substantial market failure in the history of the market economy. Therefore, regulation is inevitable.

Surprisingly, most economists, most politicians and even the public don't seem to be particularly concerned with the type of regulation.

Direct regulation or financial inducement are both appropriate measures to promote a sustainable economy and, particularly, sustainable energy generation and use.

Nevertheless, the debate seems to be evolving about the shape and form of the financial inducement - carbon tax versus carbon emissions trading - and the directions and magnitude of compensation required.

In the international context, observers are mostly concerned with the timing of Australia's action, but that in turn depends on when and what this country's big competitors and trading partners do to curb their carbon emissions.