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I told you that a sound economic policy to mitigate climate change required sett

by | Oct 10, 2021 | Micro Economics | 0 comments

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I
told you that a sound economic policy to mitigate climate change
required setting an (implicit) price for carbon. The following article
explains some of the technical challenges to figuring out how high this
price should be.Biden administration puts a price on carbon (Links to an external site.).The next article explains how the EU carbon-trading market has reduced carbon emissions slightly in Europe.EU carbon-trading market has reduced emissions despite low carbon prices (Links to an external site.).This is a much slower pace than the vigorous effort to reduce
carbon emissions that will be necessary to stabilize carbon
concentrations at 550 ppm, but still much better than what the U.S. has
achieved during the same period. The next article gives an example of
what has been going on in the U.S. Read it and weep.US vehicle fuel efficiency effectively stalled over the last 10 years (Links to an external site.).For the first part of this assignment, I ask you to read all
three articles and try to explain the theory of carbon pricing as best
as you can to one or more of your acquaintances. Report on your success
or failure to make it understandable. Refer to the lecture notes or to
other material gleaned online for additional assistance. Do you feel
that the current U.S. administration is on the right track to mitigate
climate change? Should it do even more, or should it do a little as the
Trump administration? Use what you have learned so far about costs and
benefit calculations to make a persuasive argument either way.For the second part of this assignment, please watch the
following 10-min. video which I did not have time to show during today’s
lecture. (Invite an acquaintance to watch it with you if you can.)The Story of Cap & Trade (Links to an external site.)It is by the same people who produced The Story of Stuff which
you saw at the beginning of the semester. It explains why cap-and-trade
is unlikely to work as well as a Pigouvian tax or outright regulation
to reduce carbon emissions.The pros and cons of cap & trade are complex. One important
consideration is that the powerful fossil energy industry lobby could
easily mount an all-out disinformation blitz to derail any attempt at a
Green New Deal unless the government awards it property rights over the
environment (a “pollutees pay” regime). Despite its flaws, should the
government make this “pact with the devil” and embrace cap & trade?
Or should it press ahead with a policy that is more likely to achieve
better results, but that also has a greater chance of being blocked by
industry lobbyists and their Republican allies? Make a persuasive
argument either way.

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