· 2 min read
illuminem summarizes for you the essential news of the day. Read the full piece on Forbes or enjoy below:
🗞️ Driving the news: A recent NBER working paper by Adrien Bilal of Harvard and Diego Känzig of Northwestern University suggests the "social cost of carbon" (SCC) is much higher than previous estimates
• They argue that each ton of CO2 emitted carries a real cost to civilization of $1,056, compared to the significantly lower estimates from previous studies, including a Nobel Prize-winning economist's assessment
🔭 The context: The SCC represents the estimated future damage to society from emitting one additional ton of CO2 today, expressed in present-day dollars
• Previous estimates, like William Nordhaus's $47 per ton, are criticized for underestimating the economic impacts of climate change
• Bilal and Känzig’s analysis, covering 173 countries over 120 years, suggests that the economic costs are far greater than previously thought
🌍 Why it matters for the planet: Properly pricing carbon is critical for crafting effective climate policies • Undervaluing the SCC can lead to insufficient action against climate change, potentially resulting in catastrophic environmental and economic consequences, such as large-scale extinctions and disruptions to global food systems
⏭️ What's next: As the debate over the true cost of carbon emissions continues, policymakers and economists must consider these new findings
• Accurately reflecting the SCC in carbon pricing could drive more aggressive climate action and investment in sustainable technologies, helping to avert the worst effects of climate change
💬 One quote: “The SCC is economists’ best guess at the future damage to society created by releasing another ton of CO2 equivalent into the atmosphere today, with the dollar value of future damage discounted to the present.” – Erik Kobayashi-Solomon, climate change adaptation and mitigation investor
📈 One stat: Carbon credits traded on Europe’s ETS market are undervalued by an eye-popping 1347% if Bilal and Känzig’s SCC estimate is accurate
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