For more than 20years i have been singing the same song...

For more than 20years i have been singing the same song...

So has many other economists, because it lies at the heart of economic theory.

Pricing carbon-emission via a hefty tax as proposed will VERY fast change our entire production and consumption pattern. Todays massive emission is very much rooted in non-pricing of externalities, i.e. we fly because we dont pay for the emission, if a short-haul cost usd1000,- and not usd100,- you would overnight see 25-50% reduction in flying. Likewise if cement/concrete, due to carbon-pricing, suddenly cost far more then you would switch to build in tree to some extend. This is whats called substitution effect and it would be massive. Coal would be dead within 12month 2) Supply-side you would see immense R&D in low carbon tech, and to survive everything from aviation, shipping to building over over other sectors such as farming would change. I would bet that alone a carbontax of say usd1000 with no income effect overall, given the payback mechanism, would reduce emission in the area of 20-40% over 5y and likely 75% over 10years. Emission is huge today because its free. We have build our world on it, but as soon as its prices we would change faster than any regulation could do the job. That said i agree we should consume less, BUT pricing of externalities, i.e. emission will have huge impact. Free markets does not work as long as nobody pays for externalities. its Econ 101, but something the fossil fuel lobby does not seem to understand. But a price on carbon that equals the marginal cost to society and mankind and one can start to talk about free market, market economy and efficiency - but right not the fossil fuel industry is benefactor of the biggest subsidy in history...whether the price for carbon should be usd200 per tonnes of usd1000 i dont know, but its likely in that zipcode....and with that price we would automatically be free of coal, free of destruction of forestland, have better farming and building practices, cleaner air, lower healthcare cost etc. The list goes on...but we need to start now

To view or add a comment, sign in

Insights from the community

Others also viewed

Explore topics