Controversy erupted earlier this month when the European Union proposed carbon tariffs that would slap taxes on imports from countries that fail to take adequate action to address climate change.

China decried the measure as illegal, OECD Secretary General Mathias Cormann called it a "last resort," and a group of Senate Democrats introduced a carbon tariff plan of their own.

In a new interview, Pavan Sukhdev — the president of WWF International, one of the world's leading environmental advocacy groups — said he backs such proposals, praising taxation as a key policy tool that can push industry toward environmentally friendly practices.

"I think it's not a bad thing," says Sukhdev, a former managing director at Deutsche Bank (DB).

"We know that there is a huge economic cost to greenhouse gas emissions, which comes home at some point in time, not immediately; but it could come later, a year later, a decade later, but these are the externalities," he says.

"So I think we need to recognize that climate change is a result of unmanaged externalities," he adds.

The EU carbon tariff proposal, detailed in a 291-page document, would not go into effect until 2026. The measure seeks in part to protect most European companies that must currently pay a charge for the carbon they emit. Without a tax imposed on foreign producers, they could undercut European competitors that face such carbon penalties, proponents argue.

"Carbon markets and carbon taxes are two sides of the same coin in the sense that these are alternative ways of ensuring that polluters pay and carbon is a form of pollution," Sukhdev says.

China assailed the proposed carbon tariffs as a violation of trade principles adopted by the World Trade Organization, and warned that the measure would hurt economic growth across the globe, Reuters reported.

The EU proposal comes as Democrats in Washington D.C. move to pass a $3.5 trillion infrastructure package that includes a slew of provisions aimed at tackling climate change, including tax incentives for electric cars and a clean energy standard.

A similar carbon tariff plan proposed by Senate Democrats, which they say will raise $16 billion in annual revenue, is expected to be included in the infrastructure package, The New York Times reported.

Speaking to Yahoo Finance, Sukhdev said the policy goal of addressing climate change can be attained with carbon markets that put a price on emissions and carbon taxes that put a levy on them. But the latter is more efficient, he added.