I agree in principle, but given the huge proportion of energy which comes from fossil fuels, a carbon tax would have to be huge (and hence unpopular) if it were to match the market competitiveness of subsidies.

That is, to subsidize solar 33% (our current subsidy in the US), you would have to make a carbon tax equivalent to 50% of the current price of fossil fuels, or about $1.50/gal. This is obviously politically untenable in the United States.

The happy medium is probably to do a bit of both, and work toward the middle. Smart, targeted subsidies for carbon-neutral sources, and small, gradually increasing carbon taxes.