Earlier quoted context omitted.
That type of taxation of externalities is really a no-brainer in the West too, but there’s just not democratic majority for implementing it. A tragedy. Tragedy of the commons, really, on a spectacular scale. A general CO2 tax wouldn’t be hard to implement if we were a dictatorship.
Taxes are hard to implement in many countries, including the USA, because people have seen that the tax money is not spent on what proponents say it will be spent on. You'd have a hard time getting a CO2 tax passed because it would just end up going into the general fund and get spent on pet projects, not on anything that really addressed CO2 emissions, or helped with the cost of alternative fuels or vehicles.
A carbon tax would work if you burned the money. Bonus points if you captured the CO2 from the fire :)
A carbon tax serves to connect our intuition to our logic. We logically know that, somehow, the sum of all our disparate little actions is responsible for global warming. But the feedback loop is notoriously long, and complex. And humans are no-to-ri-ous-ly bad at properly valuing that. We couldn't do it to save our lives, or that of our species.
Furthermore, it helps break free from the tragedy of the commons, where every independent agent makes a game theoretically optimal move, to the detriment of the global system. No amount of proselytising or appealing to humane sensibilities, no amount of ecological lucidity or sudden flashes of intuitive insight into that awful feedback loop, would ever solve that problem.
No weapon works better against overfishing than quotas. Not necessarily a tax, but leveraging the market similarly.
No weapon works better against carbon emissions than a carbon tax.
Pigovian taxes are powerful weapons in a market oriented society. Very, very powerful. This is why vested interests will do absolutely anything to prevent them.
Doing something useful with the money is just a tiny cherry on top of large cake of success.