Book contents
- Frontmatter
- Contents
- Introduction
- Publication History
- Part I Perspectives on Climate and Equity
- Chapter 1 Climate Economics in Four Easy Pieces
- Chapter 2 Carbon Markets Are Not Enough
- Chapter 3 Modeling Pessimism: Does Climate Stabilization Require a Failure of Development?
- Chapter 4 The Tragedy of Maldistribution: Climate, Sustainability and Equity
- Part II Analyses of Climate Damages
- Part III Theory and Methods of Integrated Assessment
- Part IV Applications of Integrated Assessment Models
- Appendix Supplementary Data for Chapter 3
- Notes
- References
Chapter 2 - Carbon Markets Are Not Enough
from Part I - Perspectives on Climate and Equity
Published online by Cambridge University Press: 03 November 2017
- Frontmatter
- Contents
- Introduction
- Publication History
- Part I Perspectives on Climate and Equity
- Chapter 1 Climate Economics in Four Easy Pieces
- Chapter 2 Carbon Markets Are Not Enough
- Chapter 3 Modeling Pessimism: Does Climate Stabilization Require a Failure of Development?
- Chapter 4 The Tragedy of Maldistribution: Climate, Sustainability and Equity
- Part II Analyses of Climate Damages
- Part III Theory and Methods of Integrated Assessment
- Part IV Applications of Integrated Assessment Models
- Appendix Supplementary Data for Chapter 3
- Notes
- References
Summary
The good news is that all major voices in the climate policy debate are now taking the problem seriously. Skepticism about the science is no longer an option: the world's scientists have never been so unanimous, and so ominous, in their projections of future perils. The bad news is that too many participants in the debate consider climate policy to primarily consist of manipulating markets and prices. If the only tool available were market liberalization, then the solution to every problem would seem to be a matter of getting the prices right. But setting a price for carbon emissions is only the beginning of climate policy – not the end. To address the threat of climate change, it is not only necessary to charge a price for carbon emissions; governments have to do much more, through actions to support innovation and diffusion of new, low-carbon technologies.
Introduction: The State of the Debate
For market-oriented institutions, the path is clear. The International Monetary Fund (IMF) simply assumes that climate policy consists of adjusting the price of carbon, when it states: “An effective mitigation policy must be based on setting a price path for the greenhouse gas (GHG) emissions that drive climate change” (IMF 2008). Although it gives an occasional nod to the importance of developments such as hybrid vehicles, energy efficiency and new infrastructure spending, the IMF's approach to climate policy focuses almost entirely on market instruments. Moreover, it apparently does not consider the problem to be so serious. In the IMF's view, the world can afford to move at a comfortably slow pace: “Carbon-pricing policies […] must establish a time horizon for steadily rising carbon prices that people and businesses consider believable. Increases in world carbon prices need not be large – say a $0.01 initial increase in the price of a gallon of gasoline that rises by $0.02 every three years” (IMF 2008).
However, changes in carbon prices of this magnitude have been dwarfed by recent swings in the price of oil. While it may be possible to achieve climate stabilization at a moderate total cost, considerable ingenuity and new policy directions will be required; by themselves, price changes of a few cents per gallon of gasoline are not enough to achieve anything of importance.
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- Chapter
- Information
- Climate Change and Global Equity , pp. 13 - 20Publisher: Anthem PressPrint publication year: 2014