Early action climate change policy for all countries

Abstract

[Conclusion]: The key objective for those interested in promoting responsible climate change policy is to allow each country runs its program – without depending on other countries – but within an overall framework that provides constructive incentives for private actors to control emissions in an efficient manner. The proposal outlined here would accomplish this objective, ensuring sufficient flexibility for private actors, providing incentives for developing countries to commit to the system, and creating constituencies within all countries to sustain the agreement – all without the need for cross border intervention. Finally, raising the price of carbon by a known amount in the short run would establish the insurance premium to be paid for climate change prevention over coming year, while reducing the short run uncertainty for investment planning and creating a market that accurately prices carbon emissions for long run planning purposes. Credible price signals can guarantee that emissions of carbon will be lower than otherwise would have been the case. Perhaps emissions won’t be low enough as time proceeds and we get better information and improved climate science, but a flexible system of emissions reduction can deal with this over time. Starting with small, but significant action now is far better than continuing to argue over the Kyoto Protocol and failing to implement policies that could make a meaningful start toward emissions reduction. The current situation generates enormous uncertainty for investment decisions and compounds the cost of climate change.