[smacktoward]

This approach is called "cap and trade" (see https://en.wikipedia.org/wiki/Emissions_trading), and the main political problem with it is that most of the people arguing for it turned out to be doing so in bad faith, at least here in the United States.

When there were lots of options for dealing with emissions on the table, including more intrusive ones like carbon taxes and outright emissions restrictions, cap and trade was the favored alternative of conservatives because it was "market-based." When President Obama settled on cap and trade in 2009 in order to get conservatives on board with doing something about climate, though, those same conservatives immediately turned on their heel and started denouncing it as an example of Obama's "socialism."

(Yes, they went from praising a policy as market-based to condemning the same policy as socialist. Such is the sorry state of American political discourse.)

So, the political problem is: if the appeal of cap and trade is that it should theoretically get the support of conservatives who would usually oppose action on climate, but those conservatives will stop supporting it the moment all the other options they like less are taken off the table, is there any point in offering them a cap and trade olive branch in the first place? How do you negotiate with a faction whose only goal for the negotiation is that you have to lose?