The wealth transfer mechanism can be designed to account for that. For example, a negative income tax would work.
Another thing to consider, the tax is on the producers of the fossil fuels, not the consumers. And those producers are increasingly competing in markets with non-carbon alternatives. So it is unlikely that they can pass the full cost onto consumers, more likely the tax will be eating into their profits. And what does show up on the consumer side will likely show up as mild inflation. In an economy with an effective UBI, wages are more likely to track inflation as the labor market will have more negotiating power.
FWIW, I have no idea if a carbon tax alone is enough to fund UBI (or negative income tax). But it is certainly one source of revenue that I would fully support tapping into.
Another thing to consider, the tax is on the producers of the fossil fuels, not the consumers. And those producers are increasingly competing in markets with non-carbon alternatives. So it is unlikely that they can pass the full cost onto consumers, more likely the tax will be eating into their profits. And what does show up on the consumer side will likely show up as mild inflation. In an economy with an effective UBI, wages are more likely to track inflation as the labor market will have more negotiating power.
FWIW, I have no idea if a carbon tax alone is enough to fund UBI (or negative income tax). But it is certainly one source of revenue that I would fully support tapping into.