In my simple world, a carbon tax should have one purpose only: encourage us to transition to non-carbon energy sources.
Implementing it seems simple enough – tax the carbon-based products. If people don’t like the added costs, they should look for ways to improve efficiency or transition to a different energy source.
How should the tax money be spent? In my opinion, in ways that directly support energy transitions for those who are actually paying the tax. So perhaps rebates on heat pumps and electric vehicles. Financial support of EV charging infrastructure. Support of solar and wind installations.
The person who doesn’t want to pay more for gasoline will get his carbon tax money back through the rebate on the EV he buys. The homeowner who doesn’t like the additional cost for natural gas will get his tax money back via an incentive to install a heat pump. Simple stuff.
The plan fails absolutely if the tax money goes to carbon sink projects that are of dubious benefit… and provide financial gain to the very few.
What is crystal clear, however, is that virtually none of us will make much of an effort to change our ways without a tax. That’s reality. It won’t be painless and there’s very little we can do about that. However, the concept of short term pain for long term gain is entirely relevant here.