We need to put a price on carbon emissions, expert argues

Feb 12, 2014 09:33 GMT  ·  By
William Nordhaus has been studying the economic aspects of global warming since 1974
   William Nordhaus has been studying the economic aspects of global warming since 1974

The scientist who basically invented the field of climate economics, Yale University professor William Nordhaus, argues in a new book called The Climate Casino that humans need to put a price on carbon emissions, so as to make it unfeasible from an economic standpoint for people and business to release the dangerous greenhouse gas into the atmosphere.

While the scientific consensus on the man-made origins of global warming is overwhelming and unambiguous, the fact remains that politics and finances ultimately decide what will happen next, and how we will respond to the challenges that lie ahead.

In 1974, when Nordhaus first became interested in the economic underpinnings of global warming, this field of science did not exist, and neither did any interest in understanding these connections, he says.

CO2 is now piling up in the atmosphere faster than it did back then, and thousands of studies have since been produced to show just how serious the situation really is. The issue is fairly simple for an economist – the world uses fossil fuels because they are very cheap, and keeps production costs down.

However, carbon and other GHG are increasing the risk of climate change, sea level rise, ocean acidification, increased tornado frequency and so on. What we need to do, Nordhaus argues, is balance the prospective costs of addressing global warming with the costs of handling the damages this phenomenon will inevitably produce.

“Actually from an economic point of view, it's a pretty simple problem,” he says, arguing that people and business should pay for permission to release carbon into the atmosphere, which would increase production costs. This would make it unfeasible even for big business to release a lot of CO2.

“We need to put a price on carbon, so that when anyone, anywhere, anytime does something that puts carbon dioxide in the atmosphere, there's a price tag on that,” the economist says. This price tag could come in the form of a carbon tax, or a cap-and-trade system where carbon emissions rights are traded like in the stock market.

“The real point of the pricing is not to gouge people, not to extract resources from people. It's to tilt the playing field in such a way that people, firms, government – everybody moves toward carbon-free or low-carbon activities,” argues Nordhaus, quoted by NPR.