A proposed carbon tax is being touted to provide more price certainty for businesses

New research has found it could work well alongside the Emissions Trading Scheme, to both cut emissions and support a stable economy.

It's also suggested to make the price of a carbon tax flexible with the economic climate, to help counteract emission spikes from agriculture.

Auckland University economics associate professor Stephen Poletti, says prices on carbon permits from the ETS, can fluctuate quite dramatically.

He says uncertain prices make it difficult to invest, and that means the investments costs more compared to a carbon tax.