In an ideal world, a unified global carbon tax would be the first-best solution, as it would make companies internalize the externalities of emissions. While economists have advocated such a carbon tax, in the real world where we live in, this is being challenged by issues in measuring emissions and by the realpolitik.
Taxation can be used to create the right incentives even without a unified global carbon tax. Sitra has recently published a report detailing how an environmental tax reform could reduce emissions, while creating many benefits for the economy. The new government programme of Finland, released today, is based on these principles.