This report provides an overview of the fundamental choices involved between a cost (tax) and a quantity (cap) control instrument, including a discussion of policy tools that could be employed to bridge the gap between a carbon tax and a cap-and-trade program. It also analyzes the potential advantages and disadvantages of a carbon tax, discusses implementation issues for a carbon tax -- including where to apply the tax, at what level to set the tax, and options for distributing the tax revenues-- and provides conclusions.