IF you believe that human emissions of carbon dioxide create a significant risk of negative climate change, the solution seems obvious: reduce emissions. But this conventional wisdom is exactly wrong.
The United Nations Intergovernmental Panel on Climate Change (IPCC) – which recently, together with Al Gore, won the Nobel Peace Prize – projects that, under fairly reasonable assumptions for world population and economic growth, global temperatures will rise by 2.8°C by the year 2100, and that this will begin to create costs equal to 1 to 5 percent of global GDP sometime in the 22nd century. So, it is argued, we should begin, right now, to reduce emissions of carbon dioxide in order to prevent some or all of these costs. The most frequently discussed methods for doing this are 1) a straightforward tax on carbon and 2) an inefficient, back-door (and therefore politically more palatable) tax on carbon called a cap-and-trade system.
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