>Option 2 is never going to work and is equivalent to just giving up on fighting climate change.
And option 1 is no better. You tax the crap out of fossil fuels forcing billions of people's standard of living to go substantially backwards, they start revolting, maybe have you lined up and shot, people like me say "told ya so" and we're left with shattered economies, refugee crisis and basically all the bad things climate change is going to bring anyway.
We're long past the point of solving this easily. Whatever option we pick is going to hurt given the choice between suffering at the hand of other people and suffering at the hand of nature I think the latter is going to result in a lot less overall suffering because the correlation between land becoming uninhabitable or non-productive and revolt is much weaker (or at the very least it takes longer) than the correlation between oppressive taxation/regulation and revolt. The climate change bill is gonna come due regardless. Having governments try and collect proactively is just gonna give is broken governments to go with our broken planet.