I was one of the 50 economists who signed a letter urging the retention of carbon pricing. Keeping limits on carbon emissions is the most severe environmental problem the world has ever faced. Not controlling greenhouse gas emissions possibly threatens the survival of human and non-human life on our planet but, at the minimum, will change our lifestyles in drastically costly ways – these costs will increase the longer action to address climate change is delayed. Australia is one of the world’s wealthiest countries and cannot ignore its obligations to address this issue.
Every basic economics text – even those written by those on the right-wing of politics, such as Gregory Mankiw – endorse carbon pricing as the cheapest way to address climate change. Over the last week Ross Garnaut has proposed a compromise which, while not ideal, would keep the architecture for pricing in place by setting a very low price (40 cents per ton CO2) and by enabling international purchases of emissions permits. This was promptly rejected by the Coalition but it should not be. The price of 40 cents is very low but would rise as other countries practice carbon emissions control. This is one way of meeting a key (though misleading) objection to carbon pricing that Australia is “going it alone”. Pricing would only become significant when other countries act.
Of course I would prefer a much higher price than this and a firm commitment on the part of Australian policy makers to enforce a switch away eventually from the use of all carbon-based fuels but at a minimum the Garnaut proposal should be considered.