Here’s How Good Climate Policy Could Go Bad
A high and rising carbon price is our best shot against global warming. Unfortunately, we’re doing other stuff to prevent it from working.
Let’s make this expensive.
Photographer: George Frey/Getty Images
There’s good news and bad news in humanity’s struggle against climate change. What’s good is that we have an excellent instrument against global warming that we can extend and improve: a market-friendly carbon price. What’s bad is that we seem bent on gumming it up with other policies that are faddish but misguided, and amount to a new form of central planning.
Let’s start with the good news. The price of carbon allowances being traded in the European Union’s emissions trading system (ETS), which is by far the world’s largest, has been soaring and now hovers around 50 euros ($61) per metric tonne of carbon-dioxide equivalent. The reason is high demand from industrial polluters as well as hedge funds and banks that speculate in these permits.