As usual you should begin by explaining key terms, which in this case forms a central part of the essay answer. You will need to define market based and regulatory, giving examples. In fact even market-based instruments are designed through regulations (a point worth making) but the question assumes a commonly held political distinction between regulations which prescribe particular outcomes in terms of performance or technology used and market-based instruments that leave it to individual companies to make decisions on the basis of the financial pull of the market trading.
You will need to go through the arguments on both sides of this debate, using some examples. Then you can have a discussion about the merits and reach a conclusion that answers the question.
Blumstein C, Green R, 2008, Electricity and Energy Policy in Britain, France and the United States since 1945, JOURNAL OF ECONOMIC LITERATURE, Vol: 46, Pages: 1024-1026
Sugandha D. Tuladhar*, Sebastian Mankowski*, and Paul Bernstein* (2014) Interaction Effects of Market-Based and Command-and-Control Policies, The Energy Journal, Vol. 35, pp 61-88, https://www.rggi.org/docs/ProgramReview/2016/11-17-15/Comments/Sierra_Club_Combined_Comments.pdf#page=77
Goulder, L., (2013) Markets for Pollution Allowances: What Are the (New) Lessons?, Journal of Economics Perspectives, Vol 27 no 1, pp87-102
Clean Air Strategic Alliance, (2011) Policy Instruments, Canadian Province of Alberta, https://dwb.unl.edu/teacher/nsf/c09/c09links/www.casahome.org/policy.htm
Green R, Yatchew A, 2012, Support Schemes for Renewable Energy: An Economic Analysis, ECONOMICS OF ENERGY & ENVIRONMENTAL POLICY, Vol: 1, Pages: 83-98
Jacobs, D., (2014) Policy invention as evolutionary tinkering and codification: the emergence of feed-in tariffs for renewable electricity, Environmental Politics, Vol 23 No5 pp 755-773
Jordan, A., Wurzel, R., Zito, A., (2003) \’New\’ Instruments of Environmental Governance: Patterns and Pathways of Change, Environmental Politics, Volume 12, Issue 1,, p201-224
Sorrell, Steven and Boemare; P. Quiron, C (2003) Tensions between national trading schemes in Europe and the proposed EU Directive ? a comparison between the UK and France. Climate Policy, 3 (S2)
Also in Scrase and Mackerron Energy Future, Houndmills: Palgrave Macmillan see chapter on Carbon Trading by Steven Sorrell
Toke, D., (2008) The EU Renewables Directive – what is the fuss about trading? Energy Policy, Vol 36, 2991 2998
Toke, D., (2008) \”Trading Schemes, Risks and Costs: The Cases of the EU-ETS and the Renewables Obligation\”, Environment and Planning C , volume 26, pages 938 953
Toke, D., Lauber, V., (2007) Anglo Saxon and German approaches to neo-liberalism and environmental policy: the case of financing renewable energy Geoforum, 38 (4) 677687