A political "air war" has been launched over a policy proposal that hasn't yet been released.

The Conservative Government is attacking the Opposition Liberals' looming carbon tax proposal with a series of ads, including a now-foiled plan to play them at gas pumps. The Tories are portraying the Grits' move as a giant tax grab.

Opposition to a carbon tax also comes from the left side of the spectrum. The NDP has come out against it, putting that party at odds with both the Liberals and the Green Party.

If you haven't been following this issue, here are some of the main concepts and questions:

What's a carbon tax?

Carbon taxes put a price on carbon, usually expressed on a per-tonne basis.

Fuels such as coal, natural gas, heating oil, gasoline and diesel fuel are all carbon-based. They have differing levels of carbon. For example, coal is considered a "dirtier" fuel source than natural gas, Simon Fraser University resource economist Marc Jaccard told CTV.ca.

The burning of "fossil fuels" -- which began in earnest in 1850, the start of the Industrial Revolution's second phase -- has resulted in the global warming that is leading to potentially dangerous climate change.

Currently, there's no direct "cost" associated with the harmful effects of carbon emissions to those who are burning it. That cost that will be largely borne by future generations.

"It's a way to tax the 'bads', rather than the 'goods'," John Bennett of climateforchange.ca, a climate change advocacy group, told CTV.ca about a carbon tax.

"We want to put signals in the economy that encourage us to be less wasteful and less polluting. And if it's done properly, it doesn't actually increase taxes, it just shifts them."

In addition, if one uses less carbon, one pays less tax, he said.

Environmental groups are behind the idea of a carbon tax, but the Canadian Council of Chief Executives has also voiced support for the general concept of pricing carbon.

Is a carbon tax the only way to put a price on carbon?

No.

Another major approach is "cap and trade." Governments put a limit on carbon emissions from a group of industrial emitters. Those companies can then trade allowances within that cap, which has the effect of putting a price on carbon.

Large industrial emitters account for about 50 per cent of Canada's greenhouse gas emissions.

The Conservative government has tried to address the issue by requiring companies to steadily ramp up their "energy intensity" -- using progressively less energy for each unit of production.

However, that approach doesn't impose an overall cap. Critics say if production rises sufficiently, overall emissions could still rise.

Environment Minister John Baird has said "dirty coal" and the oilsands sector in Alberta are the only industrial sectors where output will likely outpace his government's reduction targets over the next two years.

From a GHG emissions perspective, the oilsands are a dirty fuel. As it is, Alberta accounts for 40 per cent of Canada's GHG emissions, but has 10.5 per cent of Canada's population.

What are the advantages and disadvantages?

According to a background paper put out by the Pembina Institute and David Suzuki Foundation, here are the pros and cons:

• Cap-and-trade provides more certainty on the amount of reductions. A carbon tax provides more certainty on price.
• A carbon tax can be implemented quickly. Cap-and-trade systems take longer and are more complex.
• Governments are better set up to implement taxes than deal with emissions regulation.
• Carbon taxes require adjustment. In other words, a government might have to increase such a tax, and that would be "politically difficult," the groups admit.

Is a carbon tax "enough" on its own to rein in carbon emissions?

Depends. Green party Leader Elizabeth May, say a full range of policy tools is necessary.

Jaccard said a carbon tax alone could work if it steadily went up over time. "But that doesn't mean I'm an advocate of a carbon tax," he said, admitting that it's politically difficult to put the tax on a "rising trajectory."

Incentives might also be required for things like alternative energy sources or carbon capture and storage, he said.

For most people, a carbon tax at its early stages will be more about "moral suasion," Bennett said.

It can co-exist with cap-and-trade, and there should be other policies that encourage people to become more energy-efficient and reduce their carbon emissions.

But the fastest gains can come from the large emitters, he said.

Which provincial government is doing what?

• Quebec implemented a limited carbon tax on fuel in 2007. Jaccard said the funds are to be spent on climate programs.
• B.C. brought in a full carbon tax in its latest provincial budget. The tax begins on July 1.
• B.C. is also part of the Western Climate Initiative, a carbon-trading initiative with some of the western U.S. states, as are Manitoba and Quebec. Saskatchewan and Ontario are "observers." Alberta isn't participating at all.
• New Brunswick is an observer to the Regional Greenhouse Gas Initiative in the northeastern U.S.
• Quebec and Ontario have announced plans for a carbon-trading system between the two provinces. B.C. and Manitoba have expressed interest in joining.
• Ontario Premier Dalton McGuinty, a Liberal, has said he will not impose a carbon tax in his province. Manitoba has indicated it won't bring in a carbon tax, but Jaccard said it is putting a tax on coal.

South of the border, both Sens. Barack Obama and John McCain, the presumptive nominees for the U.S. Democratic and Republican parties respectively, are proposing cap-and-trade systems.

Gasoline is very expensive these days. Would the Liberal tax make things worse?

The Liberal carbon tax would reportedly not apply at the pump.

Bennett said this could be justified because special taxes already apply to gasoline and diesel that don't apply to coal or natural, as one example.

Environmentalists say a carbon tax of $50 per tonne, if applied to gasoline, would work out to about 12 cents per litre.

Who would be most affected by a carbon tax?

Bennett said small and medium-sized businesses, which are the toughest to reach from a regulatory perspective, would be most influenced.

In other words, consumers and mom-and-pop businesses wouldn't be that affected, but larger businesses, with chains of stores or fleets of vehicles, would be motivated to reduce their carbon costs -- and have the economies of scale to gain a return on the investment.

Most individuals could recoup the cost of a carbon tax on home heating fuels by boosting the energy efficiency of their homes, he said.

The Pembina Institute and David Suzuki Foundation said there is merit in "putting a price on greenhouse gas pollution from smaller businesses or from individuals, as long as there are provisions to protect people on low incomes."

Some on the left oppose a carbon tax because they fear it will disproportionately hurt the poor.

Will a carbon tax work?

Norway and Sweden have had carbon taxes since the early 1990s.

Jaccard said their per-capita emissions have fallen while Canada's has risen.

Although those countries also made some regulatory changes, "carbon taxes were a significant part of their policies," he said.

Neither country uses coal to generate electricity.

According to an April 29, 2008 Guardian article, Sweden cut its overall carbon emissions by nine per cent between 1990 and 2006. Its economy grew by 44 per cent in that period.

Norway, an oil exporter, has been seen as less successful than Sweden in cutting carbon emissions. But it is still more successful than Canada.

Jaccard has written that in the 1990 to 2005 period, per-capita greenhouse gas emissions increased 7.5 per cent in Canada but fell 0.4 per cent in Norway. Over that period, Norway's economy grew by 47 per cent compared to 30 per cent for Canada.

Other countries that have carbon taxes include Britain, Finland and Denmark.

However, an article published by the MIT Energy Initiative noted that the European Union introduced a cap-and-trade system after attempts to impose a carbon tax failed.

Is a carbon tax a 'tax on everything,' as the Conservative claim?

"In a sense, yes, but only in the basest of terms," Bennett said.

The under-priced nature of carbon energy, and the fact that its environmental costs are passed on to future generations, has led to things like Chilean strawberries showing up in Canadian supermarkets in the dead of winter, he said.

If the cost of carbon were attached to those strawberries -- they are shipped by air, which creates substantial carbon emissions -- it would only make economic sense to bring them here if it could be done in a low-carbon way, he said.

Most economic models overestimate the costs of climate change because they assume energy is being used efficiently. But it's not, he said.

Jaccard said it's not that simple. He thinks most environmentalists underestimate the cost of energy efficiency and that sometimes businesses are making rational decisions when that decision appears to be less energy-efficient.

However, both were opposed to the Conservative attack strategy aimed at the still-unreleased Liberal policy.

Jaccard said his reaction was "disgust" and that the ads were dishonest.

The Conservative attacks on a carbon tax are an attempt to cover up "their own inept efforts on climate change and to frighten the public," Bennett said. "I think that fortunately for us, they went overboard, and the public will see through what they're trying to do."