There are reasonably good ways of spending that money though.
- Reducing taxes elsewhere: a carbon tax is likely to be somewhat regressive, since the poor are the least able to quickly go out and buy a Prius.
- Basic research such as alternate energy.
As far as internalization goes, it does have that effect if you are able to calculate what the costs of the externalities are and thus up the price to that level. That, of course, is the tricky part, but cap and trade also involves determining a level to cap at.
- Reducing taxes elsewhere: a carbon tax is likely to be somewhat regressive, since the poor are the least able to quickly go out and buy a Prius.
- Basic research such as alternate energy.
As far as internalization goes, it does have that effect if you are able to calculate what the costs of the externalities are and thus up the price to that level. That, of course, is the tricky part, but cap and trade also involves determining a level to cap at.