On the other hand, I cannot accept without heavy qualification Carole James's statement that "the market has already taken care of giving people incentives to change their behaviour" because gas has risen 30 cents a litre. The market is also giving the signal to Saudi Arabia, OPEC, and the Oil Companies to increase fossil fuel supplies, including those from Alberta's dirty tar sands. Market analysts are already predicting that gas prices may come back down somewhat as a result. Carbon taxes should be in place to ensure that $1.50 per litre is a floor, and not a ceiling. Carbon taxes should be in place to ensure that energy sources substituted for gasoline and oil are not simply other types of fossil fuel or their derivatives.
The best policy may be one which offers some degree of exemption above $1.50 per litre, but which makes it clear that there will be no return to cheap gas, even if world market conditions allow it. With transportation accounting for 38% of provincial greenhouse gas emissions, it would be irresponsible to simply "axe the gas tax".
The best policy would still have a role for cap-and-trade as a flexible tool for regulating industrial emissions, such as those in in the gas, aluminum, concrete, commercial and manufacturing sectors; this would form part of the growing North American system of emissions trading. (As far as I know, the Liberals are in favour of this. )
Academics and journalists who have been rightly applauding Gordon Campbell for showing some initiative need to get beyond the rectitude of the carbon tax as a concept and attend to these very important details. If they don't, the result may only serve to discredit an otherwise intellectually sound policy.