Total energy costs from PoW mining won’t rise to exceed PoW mining revenues unless miners are willing to mine at a loss. In an efficient market, one where PoW mining profits have been driven down to zero, total energy use should remain constant if market price is held constant. PoW mining energy efficiency may increase, though.
The rest of your post could be read as a criticism against incomplete application of hypothetical carbon taxation regimes. It seems weird to single out PoW cryptocurrency as the one and only benefactor to a patchwork carbon taxation regime globally.
How can efficiency increase in a way that decreases energy use?
Let's say a new ASIC comes out that mines twice as efficiently, i.e. 2x less energy per calculation. Because miners can now afford to run twice the amount of ASICs on the same energy budget, this means that eventually miners are mining twice as fast.
The network however needs to keep the block rate constant (6 blocks per hour in Bitcoin), so it counteracts by adjusting the difficulty. In this case, mining a block becomes twice as difficult. In summary, everyone has now twice the amount of ASICs consuming the same amount of energy, still mining at 6 blocks per hour.
The misconception is that the "work" in "proof-of-work" is meaningful by itself. It is actually not, it is a lottery whose probability to win is adjusted exactly so that statistically, all miners in the world together will mine 6 blocks per hour on average.
As for "mining at a loss": I am not convinced there is a general principle that only allows for absolutely clean energy to make mining profitable, across the whole world and in any situation. We have already seen a coal plant being ramped up for the purpose of mining in New York, and hash rate going down when coal plants in China got flooded.
It can spike up when new miners join the game, possibly in remote locations of the world with defunct governments that decide that mining Bitcoin for a select few is a more "important" use of their non-clean energy source. The network will react, miners in other parts of the world where regulations do not allow the same may scale their operation down, but there was a spike, and much more importantly you now incentivized burning resources by whatever means available where regulations do not stand in the way.
The rest of your post could be read as a criticism against incomplete application of hypothetical carbon taxation regimes. It seems weird to single out PoW cryptocurrency as the one and only benefactor to a patchwork carbon taxation regime globally.