This law isn't about reducing CO2 emissions. It's more specifically about reducing the forms of pollution that are disproportionately produced by small engines,

This law isn't about reducing CO2 emissions. It's more specifically about reducing the forms of pollution that are disproportionately produced by small engines, which are often two-stroke and (AFAIK) never have catalytic converters. Taxing gasoline would be a failed attempt at a one size fits all solution, when there are very different categories of engines burning that fuel with drastically different emissions profiles.