The problem with your argument is that tax regimes in developing countries, where emission abatement opportunities are relatively less expensive, are often not as transparent as in industrialized countries. The administrative dexterity required to ensure a carbon tax is revenue neutral is generally not there. Because of this, a global carbon tax may not deliver on it’s acclaimed benefits and could actually hurt the poor more. So a harmonized tax would largely be confined to the industrialized world resulting in a loss of cost reductions possible through engagement in the developing world. While some may disagree, in my view higher costs would mean that industrialized countries will not go as far with their emission reductions. Furthermore, economists tend to idealize a carbon tax’s administration even though the tax system is complicated by loopholes and exceptions. There’s a real risk of “instrument hopping”.

So perhaps the CDM is not perfect, but their is potential for reform. And there are maybe even ways of building some of the advantages of price-mechanisms such as a carbon tax into the CDM. But one should be cautious in dismissing the international offset system because, I believe, there is a real risk to do very little if we decide to wait for an ideal (global) tax regime before trying to get a handle on emissions. Note that the EU tried for 10 years to implement a carbon tax and abandoned it for cap-and-trade. So keep the CDM but continue exploring other avenues for mitigation and engagement with the developing world on climate change.