Monday, July 16, 2007

The Low Cost of Fighting Global Warming

In an article titled "Climate Change Debate Hinges on Economics," the Washington Post's Steven Mufson reports on the costs of reducing carbon emissions:
Here's the good news about climate change: Energy and climate experts say the world already possesses the technological know-how for trimming greenhouse gas emissions enough to slow the perilous rise in the Earth's temperatures.
Here's the bad news: Because of the enormous cost of addressing global warming, the energy legislation considered by Congress so far will make barely a dent in the problem, while farther-reaching climate proposals stand a remote chance of passage.
Enormous cost?
The potential economic impact of meaningful climate legislation -- enough to reduce U.S. emissions by at least 60 percent -- is vast. Automobiles would have to get double their current miles to the gallon. Building codes would have to be tougher, requiring use of more energy-efficient materials. To stimulate and pay for new technologies, U.S. electricity bills could rise by 25 to 33 percent, some experts estimate; others say the increase could be greater.... Measures taken by the world's governments to reduce greenhouse gases could cost 1 percent of world economic output, according to a report commissioned by the British government and written last year by former World Bank chief economist Nicholas Stern. But Stern said the cost of not taking those steps would be at least five times as much, hitting the developing world hardest...
Considering what's at stake for the future of the human race (and cute polar bears, too), a 25%-33% increase in electricity bills seems a small price to pay. Sign me up! But some folks in Washington seem to think their constituents have a very narrow view of their self-interest:
"I sincerely doubt that the American people are willing to pay what this is really going to cost them," John D. Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, said in a recent C-SPAN interview, adding that he intended to introduce legislation that would impose a carbon tax "just to sort of see how people really feel about this." He said his proposal would boost the gasoline tax by 50 cents a gallon and establish a "double-digit" tax on each ton of all carbon-dioxide emissions.
Carbon-tax supporter Greg Mankiw commented on Dingell's proposal. Here's the transcript of Mufson's chat with readers. If this seems a bit familiar, an article in The Economist which reached a similar conclusion was blogged here in May.


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