Geoscience Reference
In-Depth Information
Investments to slow global warming should compete with other
investments, and the discount rate is the measuring rod for comparing
competing investments.
SUMMARY ON APPROACHES TO SLOWING CLIMATE CHANGE
Here are the important points to emphasize on the costs of slowing
climate change that I have reviewed in Part III.
First, economic and engineering analyses indicate that it is feasible
to keep climate change within safe limits. If the world takes strenuous
and effi cient efforts with full participation, it can stay with the Copen-
hagen target of limiting change to 2°C. Even if efforts are delayed and
some countries do not participate, the world can remain within a limit
of 3°C change. Economic studies suggest that the cost of limiting climate
change to 2
1
⁄
2
or 3°C would be 1 percent or less of discounted world
income if policies are reasonably effi cient.
Second, this optimistic outlook must be qualifi ed by the strong
warning that it requires cooperative and effi cient measures. Coopera-
tion requires that most countries participate in the efforts relatively
quickly—say, w ith i n a couple of decades. If the poor and middle-income
countries decline to join the effort, and particularly if the United States
continues to stay on the sidelines, then the costs of meeting an ambitious
temperature target will rise very sharply, and the Copenhagen targets
become infeasible.
Third, effi ciency requires not only near-universal participation but
cost effectiveness. It requires that all sectors and countries have roughly
equal marginal costs of emissions reductions. An effi cient program can-
not have wildly different marginal abatement costs in different sectors
and countries.
This summary leaves many open questions. What targets should gov-
ernments set for climate change? How do all these relate to the targets
that were established at Copenhagen? What mechanisms should be used
to induce people and businesses to make the decisions that are necessary to
bend down the curve of CO
2
emissions? These are the questions we turn
to in Part IV.
