I'm personally inclined to think that cap and trade, with an initial auction, and then either "decaying" permits (so the cap declines over time at a set percentage rate) or a government fund devoted to gradually buying permits out of the market, is the way to go. The scientists can give us a pretty good idea of how much carbon we can allow to be emitted, and then we can let a market set the appropriate price for that volume of emissions. If we have to try to set a price in order to achieve the right level of emissions, that's a lot trickier, and far more subject to lobbying -- without debating the "right" level of emissions, you can suggest that a lower level of tax will achieve that level.
I suspect that Exxon has exactly this factor in mind. They should expect to ultimately pay more if we have a cap-and-trade system where they have to engage in a debate over what the correct level of emissions is, than if they're dealing with a fixed per-ton carbon tax which they can lobby to keep too low to achieve the real necessary reductions.
Exxon Mobil CEO favors carbon tax over cap-and-trade
From staff and wire reports
Jan. 8, 2009, 11:20PM
Exxon Mobil Corp. Chief Executive Rex Tillerson says he favors a tax on carbon dioxide over a cap-and-trade system because it would be “a more direct and transparent approach.”
In a speech at the Woodrow Wilson International Center for Scholars in Washington, D.C., on Thursday, Tillerson said the cap-and-trade approach would pose new challenges, such as the establishment of new markets for trading emissions permits and new regulators to monitor them.
Democrats in Congress and President-elect Barack Obama have been leaning toward cap-and-trade legislation, which would set a limit on the amount of carbon dioxide large operations like power plants could emit each year and reduce the limit over time, forcing companies to buy more permits or clean up emissions.
Tillerson said a carbon tax “is the most efficient means of reflecting the cost of carbon in all economic decisions”—from company investments to consumer’s choices about fuel and other products.
He said the tax should be “revenue neutral” — meaning the government would reduce revenues from other sources if it added a carbon tax.
According to Bloomberg News, Tillerson said in December that he preferred a carbon tax but that he hadn’t completely made up his mind.