Taxes, Bans, and Incentives: promoting change

Recently, Nick, a JustMeans member, raised the point of the power of using market incentives instead of bans to promote positive behavioral changes. His point raised an important and old question - when is it appropriate to ban something (or a process) versus when should one tax or use incentives to promote change?

The question was plastic bags. Plastic bags are bad for human and environmental health on many levels. I argued that they are pollutants that cause irreversible damage and suggested a global ban. Nick and others reminded me that taxing can and has made a substantial difference - even requiring customers to pay small amounts for their bags reduces the use of plastic bags. But people still use them. And for so long as people use them, they clog drains, kill shrimp, turtles, birds, and other animals, and thus cause damage to the valuable eco-system on which we depend. Is reducing consumption of them enough? Many governments in Africa - and China - didn't think so.

When do you use a ban? When it causes particularly bad damages. (I know, that's a really technical term.) For example, DDT has a global ban on it because it was considered so damaging to the global environment and human well being that any use at all is undesirable. But it's not just the damage caused - its the politics of it. Indoor cigarette smoking is banned in some countries but not others, though the health effects are the same for everyone. And then there is gasoline. Arguably, fossil fuels are the most dangerous pollutants around (well, nuclear waste isn't that good either...) - its destroying the planet. You don't get much worse than that. But even I am not going to recommend an immediate global ban on gasoline and other fossil fuels - I don't see it as feasible or, at the moment, practical. Am I inviting planetary suicide by being practical? I would like to see a tax on gasoline and other fossil fuels in the United States, regardless of the economic downturn, though that is hardly a popular measure at the moment. Incentives (free electric cars if you buy the electricity is one idea coming out of Silicon Valley right now) is much more popular.
What are your thoughts?