Carbon taxes represent another financial mechanism for addressing climate change , 2019b). For example, the implementation of a carbon tax and a value-added tax on transport fuel in Sweden resulted in a reduction of CO2 emissions from transport of about 11%, of which the carbon tax had the largest share . In the USA, for example, a carbon tax could increase fiscal flexibility by collecting new revenues that can be redeployed to finance reforms and help stimulate economic growth. However, US tax-inclusive energy prices would have to be 273% higher than laissez-faire levels in 2055 in order to meet international agreements . Similarly, limiting global warming to 2℃ or less would likely require a carbon tax rate in the Asia/Pacific region to be significantly higher than USD 25 per ton . Therefore, using tax revenues to issue payments back to taxpayers that are disproportionately impacted, or to redistribute capital among regions, may be one of the most important features of carbon tax policies. Although the average effect of carbon tax on welfare would be positive, some regions  will gain and some regions  lose . Therefore, large transfer payments are needed to compensate those losing from carbon tax . The International Monetary Fund  argues that, of the various mitigation strategies to reduce fossil fuel CO2 emissions, carbon taxes are the most powerful and efficient, because they allow firms and households to find the lowest-cost ways of reducing energy use and shifting towards cleaner alternatives.
IPCC
Climate Change 2022: Impacts, Adaptation and Vulnerability
IPCC Report