In a recent op-ed for the New York Times entitled Going Green but Getting Nowhere, Gernot Wagner reminds us that individual actions alone can’t solve the climate problem. To solve climate change and other planetary ills, we need real economic incentives. We can green the planet faster by “mastering some basic economics” and supporting smart carbon policy than recycling plastic bags.
Helping others understand climate economics and the economic imperative for firm limits on carbon emissions is part of what Real Climate Economics is all about. But Gernot makes some strong assertions in his op-ed that have created quite a stir. For one, he likens a market system that fails to price the full social cost of carbon to socialism. Yet, at the same time, Gernot argues that the social cost of carbon is only $20 per ton, or a mere 20 cents per gallon of gasoline .
In a recent letter to the New York Times in response to Gernot’s op-ed, Frank Ackerman argues that our market system is grossly inefficient (not socialist) because it ignores the social cost of carbon, which may – according to some recent studies – be as high as $900 per ton under the worst plausible climate change scenarios.
If the rule of thumb can be extrapolated, RCE suggests an increase in the price of gasoline of $9/gallon. The best estimates the optimal gas tax/price seem to be in the $1/gallon range.
