The IEA endorses carbon pricing

by Milan on November 9, 2011

in Climate change, Economics, Ethics

The International Energy Association is now saying what many environmental economists have been saying for years:

The world will lock itself into an “insecure, inefficient and high-carbon energy system” if it does not adopt a “bold change of policy directions,” the International Energy Agency has warned…

“There is a need for an international legally binding agreement to put a price on carbon, to put in place some new regulations,” said Fatih Birol, the IEA’s chief economist.

Companies are making bad investment decisions because the price of the harm done by greenhouse gas pollution is not recognized by the market. By putting a price on carbon – through a carbon tax or a cap-and-trade system – firms can be encouraged to invest more efficiently.

Some firms stand to lose out substantially from carbon pricing, but that is only because the current regulatory regime allows them to impose unlimited suffering from climate pollution on other people, with no financial penalty to be paid. Allowing them to continue to profit by harming others is both inefficient and unethical.

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. November 9, 2011 at 8:53 pm
. November 9, 2011 at 8:57 pm

IEA’s Birol Says Major Policy Changes Needed on Climate

Nov. 9 (Bloomberg) — Fatih Birol, chief economist at the International Energy Agency, discusses global energy demand, climate change and the outlook for production by the Organization of Petroleum Exporting Countries. He speaks in London with Bloomberg’s Lananh Nguyen.

Milan November 9, 2011 at 9:32 pm

This is less encouraging:

Environmentalists who believe a massive global investment in renewable energy is the answer to future demands are “smoking dope,” says the deputy executive director of the International Energy Agency.

Richard Jones was responding to Greenpeace Canada accusations that the IEA was taking an “intellectually and morally inconsistent” stand by supporting pipelines and the oilsands sector while scolding world leaders about climate change inaction.”

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