Yale professor William Nordhaus says if there is a single lesson to be learnt from economics it is that “economic participants – thousands of governments, millions of firms, billions of people, all taking trillions of decisions each year – face a market price of carbon that reflects the social costs of their consumption, investment, and innovation”.
The idea of trying to establish a global carbon price appears to be gaining currency beyond the realms of economic academia. The Intergovernmental Panel on Climate Change, the UN’s own body for assessing the science related to climate change, recommends a “single global carbon price” high enough to create the necessary incentives to limit global warming to about 2°C.
