Your points are valid, you can't truly hypothecate.

The problem is at the moment the difference between what people are forced to pay 'cos its environmental and what actually gets spent on carbon reduction stuff is so large that nobody believes taxes are implemented to try and modify behaviour and are therefore much more likely to protest them and, as governments of the west need to be regularly elected, this reduces their ability to modify behaviour by this means. Eventually, people also simply start to sidestep the tax because they think it is unjust. Again, look at smoking and the smuggling of cigarettes.