Giving a Cost to CO2 Emissions

I highly recommend this article from today's New York Times. It is about the need to put a cost to CO2 emissions in order to cut them.

Traditionally, economists have said that the free market will most efficiently allocate resources to its best uses; however, this thinking doesn't put a cost to depleting resources, so depleting resources are not accounted for. This is a major reason that industry has grown as it has and why it is so difficult to have companies cut CO2 emissions.

Putting a cost on CO2 emissions, while not something that can be precise, may be the only way to make industry more efficient. If companies have to actually consider this 'added' cost of environmental degradation, they will work to reduce these costs.

The NY Times article speaks of a couple of different ideas to include this cost - one is a tax on CO2 emissions; the other is a cap-and-trade system, where companies are given permits to pollute a certain amount. Those who pollute less can sell these permits to the those who pollute more. This does add a cost to the biggest polluters who, theoretically, will work to reduce these costs.

The article also gets into the need to for us to produce energy more efficiently with technology that is already here, such as using compact fluorescent lightbulbs and improving insulation in homes, buildings and factories.

Overall, the article talks about the fact that taking major steps now serves as an insurance policy for our future. The example the article says its most like is how we reacted in the Cold War - we taxed ourselves to protect ourselves from an outcome that could have been devastating, but not guaranteed to be so. In other words, the potential outcomes of what global warming can do to our world are varied in their severity. We need to act now to insure our future against potentially devasting outcomes.

Something else the article mentions is the need to for India and China to get on board as well. Interestingly and fortunately, another article today speaks of how a top energy official in China discusses how China wants to slow its growth in carbon emissions.