Over the coming decades, the whole world needs to move from fossil fuel energy to energy sources that do not affect the climate. The intelligent and efficient way to encourage that is to put a price on releasing greenhouse gas pollution into the atmosphere. Right now, people and firms have no financial reason to care how much pollution they are generating. Even a small incentive, in the form of a carbon price, would encourage people throughout the economy to make low-cost reductions in their pollution output.

In addition to establishing a price on carbon, which would initially be low, it makes sense to establish a mechanism through which emissions limits will be tightened and the price per tonne of pollution will rise over time. This will allow people to make sensible investments, and avoid the situation where large amounts of money are invested in facilities that turn out to be deeply inappropriate for the kind of economy we need to create – facilities like coal-fired power plants, coal-to-liquids production facilities, and unconventional oil and gas projects. Ignoring climate change now is like ignoring a worsening toothache – it may save the immediate cost of going to the dentist, but the pain and expense of dealing with the problem later will be much greater.

At a time when governments are struggling to keep their finances in order, the income from a carbon price would be welcome. It could be implemented through a carbon tax, which has the virtue of simplicity, or through a cap-and-trade system with a hard cap on the total allowable amount of pollution per year, and in which the permits that allow a firm to emit greenhouse gas pollution are auctioned.

The ongoing economic weakness in the world economy is not a reason to delay action on climate change. When we ignore the harm produced by our greenhouse gas pollution, we defer an ever-more-serious problem to the future. Not only that, but we are continuing to increase how costly that problem will be to deal with, with every passing month. That is because we are not making the investments we need to make, in the development and deployment of low- and zero-carbon technologies, and because we are encouraging the economy as a whole to continue to invest in the inappropriate, fossil-powered technologies of the past, which are going to need to be scrapped along the road to a safe and renewable global energy system.