Carbon taxes, or cap and trade, seems to be one of the only solutions being discussed to reduce CO2 in the atmosphere. Bjorn Lomborg and economists at the Copenhagen Consensus are examining whether this is a smart choice. Their conclusion: a carbon tax can’t save the planet.
In the documentary “Cool It,” Bjørn Lomborg asserts that cap and trade is setting up conditions for cheating and exploitation. Indeed, it will become another a way for companies to make money, not always ethically. Could it become the next “derivatives” investment scam?
Lomborg points out that much of the present-day focus is on cutting a ton of carbon emissions here or there from national carbon emissions.
From the Copenhagen Consensus website:
“The main climate economic models show that to achieve the much discussed goal of keeping temperature increases under 2C, we would need a global tax on carbon emissions that would start at nearly $100 per ton and increase to more than $3700 per ton by the end of the century.
This would cost the world $40 trillion a year by 2100, according to calculations by noted climate economist Richard Tol. But all in all, this spending would be 50 times more expensive than the climate damage it seeks to prevent, according to mainstream calculations of expected damage.”
Lomborg continues: “Taken as a whole, the nations of the world now spend a paltry $2 billion a year on green energy research and development. We can and should do a lot better.
A significant increase in R & D investment is needed. Spending 0.2 per cent of global gross domestic product – roughly $100bn a year – on green energy R & D would produce the kind of game-changing breakthroughs needed to fuel a carbon-free future.
Economists Chris Green and Isabel Galiana of McGill University in Canada calculated the benefits – from reduced warming and greater prosperity – of this investment. They concluded that with this policy, avoiding a dollar of climate damage would cost just 9c. This compares starkly with other analyses showing that with strong carbon cuts we’d spend as much as $50 to avoid the same amount of damage.”
Lomborg argues that public funds will need to stimulate the research because there is currently no strong incentive for private investment today.