This is where regulation meets the marketplace, and how proper regulations and policies can work together with market forces to drive sustainability. But, it does require forces outside the market (such as government regulation) to internalize those costs so that they get accounted for up front.
I agreed with you until you used the word "require". A free-market does not require a strictly-outside force to enforce internalization of externality costs, at least in theory.
Example: An externality of oil-discovery are accidents in the Gulf Coast, which result in billions of dollars in damages. If there is sufficient demand-side desire not to have such accidents occur, then suppliers will go to sufficient lengths to prevent them from happening, however desirable they may be for the purpose of profitability.
Now, of course, in practice you have vast information asymmetries (who outside of the supplier's management and engineering staff are aware of the firm's operational effectiveness & safety?), which such firms are happy to exploit (as BP did). And you have vast dry-gulches of long-term thinking; relatively-few people truly care enough about where their oil comes-from to care enough to check on firms' operational effectiveness, *even if* the transparency existed to do so. (I may be overly-pessimistic on this point though -- after all, how many people waste countless hours following each other's dinner plans on Twitter??)
In practice, you're right, and I fully agree with you; careful regulations can force externality internalization. The real trouble, then, is getting politicians to craft such legislation. The reality, unfortunately, is that their heads are up their asses and are corrupt beyond any possibility of usefulness. There are (many) days when I think we would be better-off with less regulation, and in its place, a vastly-expanded set of demand-side reporting/watchdog services (like Consumer Reports), as well as a cultural rejigger in which people return to voicing demand-side power, in the form of strikes, boycotts, and the like. (Of course, the problem with this libertarian idea is the cultural shift. That can't seriously happen until failures arise even more-catastrophic than the financial near-collapse of 2008, and even then, we're more-likely to go in the opposite direction anyway, towards more regulation...)
A fuel tax (Pigouvian tax) seems to me one of the most-sensible taxes, *assuming* (and with politicians, this is an enormous assumption) the taxed money is spent 100% on things that accelerates our adoption of renewable energy sources (wind, solar, tidal electricity, electric cars, etc.). Cap-and-trade never ought to have died in U.S. Congress. But, the trouble with real-world politics is that all of these sensible ideas that moderate economists create is that government cannot implement them unless:
1) voters become sensible (and regarding that likelihood, read Bryan Caplan's "The Myth of the Rational Voter")
2) you institute a non-democratic government, in which supposedly-wise technocrats make decisions without a care for what the rest of the public wants. For an historical example, see Soviet Russia, or for a less-extreme example, modern-day Singapore.
In the end, nobody and nothing works. Those of us under the age of 60 are pretty much all fucked -- by the threat of economic collapse, by global warming, by the threat of nuclear terrorism (or mere human error in the presence of nuclear weapons), by resource misuse and/or misallocation, and, so long as we are alive in the developed world, by the growth and modernization of the 1/3 of the world's populace that has heretofore lived in squalor (India and China) that feeds those population's acceptance of worsening work environments arising out of increased competition due to increased populations in the markets served -- regardless of whether we have a free-market or socialist or thoroughly-mixed economy, and regardless of whether we have a democratically-elected government.