We are asked how the size of the carbon tax levied on a given fuel will vary. Well, in the very first paragraph we are told that "the great virtue of such a tax is that it would provide incentives for industry to achieve emission reductions," (7-10).
So, this tax will provide incentives to the industry to reduce the emission of pollution, e.g. "oil emits more carbon dioxide per unit of energy generated than does natural gas, and coal more than oil," (10-12). Therefore, such a carbon tax would vary based on the type of fuel, since each type of fuel emits a different amount of pollution (12-16).
This is exactly what answer choice (B) is saying: "amount of pollution caused by the fuel being taxed."
Answer choice (A): "amount of that fuel used by a particular industry," is never discussed in the passage. The passage never pinpoints how much of each type of fuel is used by a particular industry. Thus, this cannot be our answer according to the passage.
Hope that clears things up! Please let us know if you have any other questions.
