* Some in business prefer tax
* Emissions trading can be more closely linked to targets
* World Bank figures find $14 bln of carbon pricing is tax
By Barbara Lewis and Susanna Twidale
BARCELONA, May 27 (Reuters) - Tax versus trade is an issuethat has stalked the EU Emissions Trading System (ETS) over its10 years of existence, but is fading in importance as the worldmoves towards increased use of both methods of cuttinggreenhouse gas pollution.
The European Union set up the ETS in 2005 as a way ofgetting round policy-making rules that require the unanimity ofmember states to decide on a tax.
Following years of legislative fine-tuning to overcomeproblems such as a glut of carbon allowances, they say it is ontrack and has advantages over a tax because it can be linked toa political target to cut emissions.
China, the world's biggest carbon emitter, is convinced.
It aims to launch a national ETS next year, following onfrom pilot regional schemes.
World Bank figures this week showed trading systems weredominant, but for the first time the Bank included a fiscalnumber, saying about $14 billion of the estimated $50 billionvalue of carbon pricing came from tax.
"The debate over the choice between an ETS and a carbon taxhas dissipated. The choice depends on the circumstances andcontext of the country," it said.
Big business, however, is still divided. Some say a tax issimpler and more predictable.
"A tax is easier to administer, but the European Union hasmade the choice," ExxonMobil's vice president ofstrategic planning, Bill Colton, said in Brussels this month.
David Hone, chief climate change adviser at Royal DutchShell, said at an industry event in Barcelona thatachieving a global carbon price would be harder with taxes.
"Taxation is an effective route at a national level but is avery slow way of achieving price harmony," he said.
As it strives for a global price, the EU is connecting itsmarket, the world's biggest, with other schemes. A link to theSwiss market is possible this year, officials say.
The EU ETS is struggling with emission allowances at around7 euros ($7.63) a tonne, too cheap to drive a shift from highlypolluting coal to greener energy.
Prices have recovered, however, from a low of less than 2.50euros in April 2013 and the European Commission, the EUexecutive, is promising deeper reforms following a series ofsmall fixes to tackle oversupply of carbon allowances.
Meanwhile, some EU nations have complementary taxes.
In Portugal, a tax of five euros per tonne came into forceon Jan. 1 to cover sectors not dealt with by the EU ETS.
Sweden, which even before the ETS had a carbon tax, has theworld's highest carbon price of $130 per tonne, according tothis week's World Bank report.
The tax has been criticised as too high, although theSwedish Bioenergy Association says the levy has been highlyeffective in lowering oil imports.
Beyond Europe, Canada, viewed as an obstacle to cuttinggreenhouse gas emissions as its economy relies on tar sands oil,is turning into a land of both tax and trade.
Canada's Conservative government has ruled out a federalcarbon tax, but that has not stopped the province of BritishColumbia from introducing one. Quebec has a cap-and-tradescheme, which has linked up to California's, and now Ontario hassaid it will join in.
($1 = 0.9179 euros) (Additional reporting by Anna Ringstrom in Stockholm; Editingby Dale Hudson)
