Stephane Dion on carbon taxes and emissions trading

Just looked over Stephane Dion's energy and climate change plan from last fall's Liberal leadership race. He rejects a carbon tax in favour of emissions trading, arguing that a carbon tax a) won't work since fossil fuel prices are already high b) is a flat tax and therefore 'will not inflate with a bull market or recede in times of difficulty' and c) misses out on a key advantage of emissions trading - that of allowing emissions reductions to happen where they are cheapest to implement.
He seems to commit to keeping the emissions trading system for large final emitters (LFEs) that was being developed under his government, although this isn't entirely clear. He spends a lot of time talking about creating a Climate Fund which will buy offset credits from municipalities, farmers and home industry businesses, etc.

Link to Dion's energy and climate change plan (see pages 29-32)
Link to a my 2004 website describing the emissions trading program for large final emitters

My comments
I found Dion's dismissal of a carbon tax too brief - it could be used as a tool alongside an emissions trading scheme, for example, if need be. His first argument (high energy prices have no effect) doesn't make sense - regardless of currently high oil prices, a long term tax will still provide a useful price signal. His flat tax argument is easily countered - the GST for example, is also a flat tax - and the disproportionate burden of a carbon tax on low-income Canadians could be compensated for with proportional income tax cuts. I don't understand his point about bull markets vs times of difficulty - neither will emissons permits under cap and trade. Only the last argument is fair, in my mind - emissions trading does allow polluters facing high costs for reducing their own emissions to buy credits from others who have cheaper reduction costs.

Re his emissions trading position: I'd be happy to see the LFE system implemented since it at least imposes some limits on big industrial emitters. That being said, it is a fairly weak system as it stands - it uses sectorial intensity targets instead of an absolute cap on emissions (i.e., total emissions could still grow with the economy), the government guaranteed a maximum cost of $15.00/tonne, and the overall targets didn't reflect industry's responsibility for Canadian emissions.
Dion's talk about buying offsets with a Climate Fund also rang a few alarm bells for me. (A) Offsets should be bought by the emitters, not by the government, that is the point of the offset system. (B) Some of the emissions reductions he uses as examples of offsets are activities that were funded by other parts of the Liberal's climate change plan, such as home renovations- this could mean paying twice for the same reductions.
See the Pembina Institute's many critiques and contributions on the LFE system for more details: Link