How Real Is a Price on Carbon?

Richard Houghton

Acting President & Senior Scientist
Richard A. Houghton

There are lots of reasons given for the impasse on an international agreement that recognizes and implements the UN program, Reducing Emissions from Deforestation and Forest Degradation (REDD). Are the tools good enough to measure changes in emissions (MRV)? Where will the money come from for rewarding reductions? Where will the money go (to those responsible for reducing emissions or to corrupt politicians)?

These are all tough questions, but the ultimate reason for the stalemate is the awareness of the proximity and severity of the climate threat. There won’t be an international agreement on REDD or, indeed, on any international agreement limiting emissions until it is understood that climate change poses an immediate and substantial enough threat to put a price on carbon. Only when the concern is great enough will there be a price for carbon, whether it’s an asset (in growing forests) or a liability (in emissions). Forests will not be worth more than agricultural lands that produce food until crops stop growing because of climate change. Oil will not be left in the ground until using it costs more in penalties than the costs of alternative, renewable fuels.

Many conservatives seem to think that climate agreements, reductions in emissions, and getting beyond fossil fuels are all unrealistic fantasies. In contrast, theirs is the real world. But their reality is based on a world that continues to work as it has over the past 10,000 years—with a stable and benign enough climate for the development of agriculture and the advancement of civilization. But that is the old reality.

We now know that human activity has altered the Earth’s climate and, if we do not stabilize the concentrations of heat-trapping gases in the atmosphere, the world as we know it will be gone. Attempting to live in the old world and continue business as usual will be the unrealistic fantasy.

Recently, 29 major corporations, including five big oil companies, hardly the most progressive of institutions, included a price on carbon in their long-term financial projections. They have come to believe that governmental regulations are inevitable. They recognize that reality is changing… and that it’s better to be ahead of the curve. That’s not a conservative decision. As noted in one of the first symposia on the global carbon cycle (Woodwell and Pecan, 1973), “…to do nothing when the situation is changing rapidly is not a conservative thing to do.”