In either case, the consumer pays for it, but a carbon tax can go to things like government programs (Or, if you are of that ilk, per person rebates that favor the less well off), while carbon trading enriches polluters, the Vampire Squids of the world, and people who game the system for personal profit:

The European Commission suspended trading in greenhouse gas emissions permits on Wednesday for at least a week after the theft of permits worth millions of euros via online attacks.

The Emissions Trading System was a target of “recurring security breaches” over the last two months, the commission, the executive agency of the European Union, announced on its Web site Wednesday.

The commission said it needed to shut the system down until at least Jan. 26 because “incidents over the last weeks have underlined the urgent need” for enhanced security measures.

The attacks raised new questions about the viability of Europe’s main tool to combat a rise in greenhouse gases in the atmosphere.

The stolen permits are part of Europe’s effort to cap the amount of carbon dioxide, the main greenhouse gas, that companies may emit each year. Europe’s system is the world’s largest market for greenhouse gas emissions credits.

The only advantage to carbon trading is that it gives politicians the ability to give another revenue stream to their classmates from Ivy League/Oxbridge/Sorbonne/Etc. who work in investment banks.

It’s a giveaway to the investment banker, and an invitation to fraud, the case of hydroelectric plants in China without transmission lines to accumulate credits being just one such example.