Upstream is much easier to manage and collect, down stream tends to be difficult (read as expensive with lots of failure points) to administer. Likewise, it would be very difficult to insure that such a downstream tax was made revenue neutral.
I feel we're talking completely different notions. What you say is more a practical system to within-the-rules counterbalance tariffs on national emissions.
Personally, I find offensive the lack of a strong tax on vehicle fuels in the United States like most of the rest of the world has (please, other people, don't reply to this with lame examples of equally lame taxes on gasoline; read thoroughly). For instance, an
extra tax of 100$ per ton or CO2 emissions on gasoline and air gasoline, means fuel 1$ more expensive per gallon, and an overall collection of 350 G$ -taking a 7% drop in consumption-.
If that is to be distributed by cheques addressed to citizen in a robinhoodesque way, I doubt it. I also oppose to additional taxes. Much of those 350 G$ should be distributed as tax relief, or social contribution relief.
But anyway, what I'm saying is that it is my problem that the United States pollute so much, and it's not my problem who does it or who pays what so they do it a bit less. My flat contains an average of 4 buckets more of CO2 of what it contained in 1940 when it was built. From that, more than a bucket comes from the USA and a couple of cups from Argentina herself.
I have to prevent that from going further, so my country, as any country, including the USA, has to apply a tariff on foreign goods and services imported. For instance, a tax of 50$ per ton of CO2 emitted by the US would mean some 320 G$ to be paid at custom points over some 2.3 T$ of exports, then some 14% environmental additional tariff must be charged worldwide on goods and services of the USA.
The USA could create a tax on fuel of 0.90$ per gallon in order to pre-pay those tariffs worldwide, according to this system, so the country's trade is not affected (or otherwise let it shrink; unemployment and depression would make the emissions cut). What the USA has to play is what they collect applying similarly set tariffs to the rest of the world, but they can't funnel it into subsidies for their own exportations.
This is a wildly oversimplified explanation of the system, but I think you'll get the core of it and how it works. It requires new international institutions, like environmental WorldBank and IMF, and new international treaties. That's why is much resisted to the point of violence as it simply prevents every country from going scot-free regarding to their own AGW emissions.
(With the same parameters, on Argentine goods and services it results in a 14% tariff as well, not because we are big polluters but because the government have shrunk international trade)
