Climate protection has become a central part of national as well as international environmental policy, triggered off above all by the reports of the "International Panel on Climate Change" and by the UN Framework Convention on Climate Change. Its scientific modelling is carried out in four steps: - Economic activity and emission of greenhouse gases, - Atmospheric concentration of greenhouse gases and climate change, - Costs and benefits of climate protection, - Environmental policy instruments and strategies of climate protection. A peculiarity of climate change is its element of uncertainty on every stage of its scientific and economic analysis. The focus of interest in discovering costs and benefits of climate protection is the extent of the estimated damage and abatement costs and the level of the discount rate. The latter is a value judgement concerning the role of future generations when making economic policy decisions. Market economy orientated instruments of climate protection are environmental taxes (price solution) and tradeable permits (quantity solution). The form of environmental taxation is analyzed in view of an ecological tax reform in Germany. Additional to a reduction of carbon dioxide emissions ("first dividend") a welfare improving correction of the tax system and an increase in employment ("second dividend") is hoped for. A stepwise (EC- or world wide) introduction of a system of tradeable permits is supposed to lighten an international harmonized reduction of carbon dioxide emissions instead of a national or international carbon dioxide or energy tax. It also can be combined with a national environmental tax. The major problem is the fair allocation of permits to advanced industrial and to less developed countries (grandfathering, public auction) and the organization of the permit market.
