Zhen Li wrote: There's nowhere along the line any sensible person can hang their coat. However, if one is looking for credible pricing, only the market can provide credible pricing - if the cost doesn't come up in the market place, it doesn't really exist.
This is because the market externalizes the costs of cleaning up after itself onto the consumer. As the cost of cleaning up after the market becomes higher and more costly, eventually the consumer have no choice but to enact legislations which limit the markets power to sell highly polluting commodities, and to impose fees on those who use them.
It is similar to drugs — the human cost of cleaning up after drugs such as cocaine, meth and heroin are too high -- therefore, these commodities are strictly controlled markets in which a class of professionals is licensed to dispense them. Governments exist because markets exist. Markets exist because governments exist. Markets must be controlled and regulated (rather than planned), and carbon taxation is one way for governments to control the market in petrochemicals.