A tax may offer a lower administrative burden given the additional complexities associated with regulating a trading scheme, a not insignificant advantage in China given the difficulties faced hitherto. Irrespective of the approach taken to pricing carbon, given the important contribution from the electricity generation sector it is critical to allow increases in electricity prices in line with changes in generation costs (IEA, 2012e). In addition to moving ahead with carbon pricing, the system of pollution levies needs to be transformed into a system of pollution taxes with revenues collected by tax authorities and allocated to government coffers rather than earmarked to environmental projects.