Shelia Olmstead and Robert Stavins are in favor of carbon cap-and-trade with a safety value. Check out their The Economist's Voice article "A Meaningful Second Commitment Period for the Kyoto Protocol":
Robert Stavins and Sheila Olmstead propose ways to modify the Kyoto Protocol for its second commitment period (2012-2016) so that it will provide a way forward that is scientifically sound, economically rational, and politically pragmatic.
In addition to C&T-SV they suggest:
- "Broad participation by major industrialized nations and key developing countries ..."
- "emissions targets ... ought to begin at [business as usual] levels, then depart gradually ..."
In sum, include the U.S., China and India, start slow and use incentive-based economic policy. I like it.