EconPort - Advantages of Green Taxes

Encourages, but doesn't mandate, the use of pollution control technology, making its utilization widespread. Therefore, costs decrease and innovation increases in the pollution abatement technology field due to the increased viability of the industrial niche for producers of such technology.
Gives more control to regulators and businesses over future costs of an anti-pollution program. This is due to flexibility afforded in changing the tax rates and in not meeting the target pollution level if costs become prohibitively high. This feature isn't present in Cap and Trade Markets.
Represents the most cost-effective method if the tax is set where all covered firms' MACs are equalized.
The double dividends effect:Green taxes generate revenues for the instituting government. Proponents of this system also claim these revenues help offset other, more economically distorting taxes like an income and other payroll taxes. With this money in its coffers, the treasury can be less reliant on these taxes that meddle with individual's and firms economic decisions (Hanley, 27).
This source of revenue can also be utilized to address the environmental problem by designating those monies to subsidizing behavior that alleviates the negative externality. This concept is called feebating by Amory Lovins of the Rocky Mountain Institute. A pertinent example would be the revenues collected from a gas guzzler tax being used to subsidize or offset tax exemptions for hybrid vehicles and other fuel misers.

First 3 (Hanley); Fourth RMI