Geoscience Reference
In-Depth Information
19
THE CENTRAL ROLE OF
CARBON PRICES
Climate-change policy is a tale of two sciences. The natural sciences
have done an admirable job of describing the geophysical aspects of
climate change. The science behind global warming is well established.
While the timing and regional effects of the changes are not known
with certainty, natural scientists have persuasively shown that un-
checked CO
2
emissions will have dangerous consequences.
But understanding the natural science of climate change is only the
fi rst step. Designing an effective strategy to control climate change will
require the social sciences—the disciplines that study how nations can
harness their economic and political systems to achieve their climate
goals effectively. These questions are distinct from those addressed by
the natural sciences. They involve not only estimating the economic
impacts of climate change along with the costs of slowing climate
change, as we have seen, but also designing policy tools that society can
deploy to attain the desired emissions reductions.
I discuss these questions in the chapters that follow. The present
chapter discusses the central role of pricing the CO
2
externality, or the
design of “carbon prices.” Chapter 20 discusses how governments actu-
ally go about setting carbon prices. And Chapter 21 examines how the
goals of climate policy can be effectively and effi ciently implemented
among the community of nations. We confront here the politically
charged issues of institutional design for a low-carbon world.
