On his mock-"conservative news" show, Stephen Colbert once earnestly implored an environmentalist guest who warned about the impact of unrestrained carbon emissions, "Please, tell me, what can I do to cut carbon emissions ... without inconveniencing myself in any way?"

Many businesses feel that way. Their first choice would be for no system, but by now most businesses realize that some sort of regulation is inevitable. Their biggest wish is for a clear signal from regulators about what's required of their companies. Given this reality, their clear second choice among methods to cut greenhouse gases is "cap-and-trade," also known as emissions trading.

Precedent has a lot to do with this. Emissions trading began in the 1990s for sulfur dioxide and nitrous oxide, and the system worked better than even its advocates hoped. Even though the carbon dioxide trading will be much larger and more complicated than the last decade's markets, the historical experience with emissions trading has played a large part in winning its wide acceptance. Many U.S. utilities like it, or can at least live with it. The flexibility of cap-and-trade is a huge plus for businesses -- participants choose their specific method for cutting or offsetting their emissions.

Under a cap-and-trade program, the Kyoto Protocol sets an overall emissions cap for each country. Participating governments then issue or auction allowances that grant businesses the right to emit a set amount, and these allowances can be traded. Green companies and projects with low emissions can sell their surplus allowances to others whose emissions exceed their allotment. Relying on the market, a cap-and-trade system lets a nation reach its cap at the lowest cost.

In political terms, the opacity of cap and trade does have a few cynical benefits. Governments can placate politically powerful polluters with permits, or pay developing countries to cut their emissions without any cash changing hands between governments.

Europe's cap-and-trade system, the ETS, is actually making progress. The system covers more than 10,000 sources and has spawned a dynamic emissions trading market with millions of transactions per month. Kyoto calls for more types of emissions to be brought into the system in the coming years.

Cap-and-trade readily links with other emissions trading systems around the world. In today's global economy, where companies operate in multiple countries, this kind of system reduces the incentives for companies to flee to more lax jurisdictions. Cap-and-trade could also allow the ''banking'' of emission allowances -- reducing emissions early and using the saved emission allowances later.

Not every business sector is fond of cap-and-trade. Oil companies would be obliged to buy a great many allowances, as would the most coal-intensive utilities. A number of regional carbon trading initiatives are coming in the US, including the Regional Greenhouse Gas Initiative, or RGGI, in the Northeast, usually pronounced "Reggie." Its less-evolved counterpart in the western states is struggling to come up with a name that doesn't get pronounced "Wedgie."

To Tax or Not to Tax

The most prominent alternative to emissions trading is a carbon tax, in which emitters are required to pay a tax for every ton of pollution they emit. Most economists agree that carbon taxes are a better way to reduce greenhouse gases than cap-and-trade schemes. And yet a carbon tax has virtually no political support. Taxes are poison in America, where years of propaganda have undermined their legitimacy and make them almost impossible to get through congress. Many conservatives instinctively recoil from any tax, no matter how important the goal. Businesses often dislike the one-size-fits-all nature of a tax.