The Swedish Carbon Tax Experience

So, Sweden's had a carbon tax in place since 1991, at a rate of about $150 US/tonne of CO2. Interestingly, they share some similarities with Canada: large forestry industry, large hydroelectricity capacity, export-driven economy, northern climate with significant heating costs, relatively significant transportation distances for the north. They do have much lower GHG emissions per capita (around 8 tonnes compared to 24 or so for Canada)
Apparently the tax has had little or no negative impact on their economy and significantly reduced GHG emissions - 25% from BAU levels in 2000 according to a 2000 Swedish Environmental Protection Agency (SEPA) report, 20% below BAU levels projected in 2010 according to their 2005 report on Kyoto protocol progress (along with other economic instruments).
Given that the big barrier to carbon taxes is apparently political resistance, particularly from vested interests in industry, how did they do it? Two factors are mentioned by SEPA in an OECD report from 2000. A) Energy taxes, already quite high (got to love those European taxation levels) were simultaneously reduced, so that the overall cost of some fossil fuels actually went down initially. B) Exporting and/or energy-intensive industries like pulp and paper, as well as electricity generation, were either exempted or taxed at 50% of the level of the rest of society.
Of course, both of these factors must have reduced the effectiveness of the tax as well in changing behaviour. What have been the biggest effects of the tax? Again according to SEPA , fairly modest changes, but a big increase in the use of forestry products for heat generation, and a major expansion of the industry for biomass heat generation technology.

Link to SEPA 2000 case study for the OECD
Link to Sweden's 2005 report on its climate change policy

My comments
Two points. Firstly, this supports an argument put forward by the Director of GEMCO on CBC's Cross-Country Checkup (February 4th 2007), that carbon taxes have generally failed to perform strongly because politicians inevitably weaken the taxes on interest groups. At the same time, let your imagination run wild - what could be done with a 150$/tonne carbon tax in Canada, with tax shifting for export-driven industries and low-income families? As pointed out this week here, even an 85$/tonne carbon tax would produce about 65 billion dollars/year. Assume the rest of our 150$ carbon tax goes to the aforementioned tax shifting, that's a whole lot of money for renewables production subsidies, climate change adaptation, R&D programs, etc....