World Carbon Tax Can ‘Free-Riders’ In Climate Fight

Opinion: Why is humanity so reluctant to save itself from climate change? The biggest challenge in keeping Earth from overheating isn’t technical, it’s political

Willem E, Buiter, February 23, 2020 (MarketWatch)

“…[The world’s current environmental prospects include] three obstacles: climate-change denial; the economics of reducing greenhouse-gas (GHGs) emissions; and the politics of mitigation policies, which tend to be highly regressive…There is a massive free-rider problem…Even if the current Nationally Determined Contributions (NDCs) under the 2015 Paris accord were met, emissions in 2030 would 38% above where they need to be…The NDC targets would need to be roughly tripled just to limit warming to 2°C, and would have to increase fivefold to achieve the 1.5°C goal…[D]enialism is the least serious of the three main obstacles…

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As the real-world costs of climate-driven disasters mount over time, denialism will become less of an issue…The second major challenge is that greenhouse-gas emissions are the quintessential global economic externality…But given the current state of multilateralism, expecting a truly global effort in pursuit of the common good is a tall order…The third obstacle is that effective policies to reduce emissions disproportionately hurt the poor (both globally and within countries)…[A] global carbon-emissions tax is likely to be the best solution to the climate challenge…

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But with such a tax in place, average household electricity prices over the next decade would increase cumulatively by 45%, and gasoline prices by 15%...The only way to square the circle is to extend financial aid to developing and emerging economies undergoing unavoidably energy-intensive development, so that they can afford to internalize the externality through an appropriately steep tax on emissions. Unfortunately, sustained large-scale international aid programs are deeply unpopular…Unless and until that changes, an existential crisis of our own making will only worsen…” click here for more

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