Carbon pricing is the most powerful tool we have to reduce climate change causing emissions. The momentum for carbon pricing is building as we surpass 400 ppm of atmospheric carbon. The need to find workable carbon reduction mechanisms is great as we head towards a hoped for climate agreement at COP 21 in Paris at the end of this year.
Although there was a bit of a slowdown in the rise of carbon emissions after the recession of 2008, they continue to grow at unacceptable levels. We know that fossil fuels are the primary sources of carbon and their use must be priced to drive down consumption. Integrating financial incentives and disincentives associated with carbon is a quick and efficient way to curtail emissions.
Simply put, given the current configuration of the global economy carbon pricing is the best mechanism we have to reduce emissions and stave off the worst impacts of global warming. A New Climate Economy report shows that carbon pricing can reduce emissions without harming the economy.
Global warming is also linked to extreme weather which is both costly and deadly. According to the Center for American Progress, there were 25 extreme weather events in the US with damages of more than $1 billion during the time period of 2011-2012. These events left more than 1,100 people dead and the economic costs reached nearly $188 billion. Much of the extreme weather in 2013 was attributed to climate change.
Carbon pricing will also improve public health by cutting pollutants, it can also create jobs by encouraging the development of cleaner, safer technologies.
In addition to health and employment benefits, a carbon scheme could also produce revenues known as climate dividends. According to a book by Peter Barnes’ titled “With Liberty and Dividends for All.” such revenues could “could rise to about $5,000 per person per year, or $20,000 per year for a household of four.” These climate dividends could help to make the issue attractive to the American public.
A 2013 CDP paper outlines how carbon pricing benefits both companies and the US economy. Whether to reduce regulatory risk or deal with the potential of stranded assets, there is a powerful logic driving carbon pricing.