Krugman: Building a Green Economy

Essay on dealing with the externalities of a carbon economy.

Published: 25-Apr-2010

If you listen to climate scientists — and despite the relentless campaign to discredit their work, you should — it is long past time to do something about emissions of carbon dioxide and other greenhouse gases. If we continue with business as usual, they say, we are facing a rise in global temperatures that will be little short of apocalyptic. And to avoid that apocalypse, we have to wean our economy from the use of fossil fuels, coal above all.

But is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy?

Like the debate over climate change itself, the debate over climate economics looks very different from the inside than it often does in popular media. The casual reader might have the impression that there are real doubts about whether emissions can be reduced without inflicting severe damage on the economy. In fact, once you filter out the noise generated by special-interest groups, you discover that there is widespread agreement among environmental economists that a market-based program to deal with the threat of climate change — one that limits carbon emissions by putting a price on them — can achieve large results at modest, though not trivial, cost. There is, however, much less agreement on how fast we should move, whether major conservation efforts should start almost immediately or be gradually increased over the course of many decades.


Nissan COO Toshiyuki Shiga

Ruling currently favors more fuel-efficient Japanese models.

Toyota Yaris with diesel engine achieves 70 mpg, but is only available in Europe.

In Europe, over 100 models can be purchased that meet the 2016 standards, writes John Addison.

Former CIBC Chief Economist Jeff Rubin.

Todd Hirsch reviews Jeff Rubin's new book, Why Your World is About to Get a Whole Lot Smaller: Oil and the End of Globalization.


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