A couple of economists argue here why they still favour a cap and trade scheme to make international reductions in CO2 work. But they do show a certain optimism, to put it mildly, about enforcement mechanisms. Here are the concluding paragraphs:
There is no bulletproof solution to the problem of enforcement, but
at least two instruments should be used against countries which break
climate agreements. First, the WTO should treat non-compliance as a form
of dumping, leading to sanctions. Second, non-compliance should commit
future administrations and should be treated like sovereign debt. In a
cap-and-trade system, a shortfall of permits at the end of the year
would add to the public debt of offending country. The conversion rate
would be the current market price. Non-participating countries should be
punished with border taxes administered by the WTO.
There is no perfect solution to climate change that wraps economic efficiency in a
politically convenient package. But the current pledge-and-review strategy is unacceptable, and will just prolong the waiting game. A carbon tax, which is efficient and reasonable, is clearly superior. But the cap-and-trade approach combines the efficiency of the carbon tax with easier enforcement. For that reason we believe it should sit at the heart of any successful global climate agreement.