Carbon Pricing & Integral Ecology

I’ve heard it mentioned that carbon pricing (or an equivalent cap-and-trade system) doesn’t work. I believe that if implemented, it would be the single biggest lever to integrate the concept of integral ecology into our economic system and prevent climate catastrophe.

Consider these two points.
First, from the CFTC, a US market regulator.

“This report begins with a fundamental finding—financial markets will only be able to channel resources efficiently to activities that reduce greenhouse gas emissions if an economy-wide price on carbon is in place at a level that reflects the true social cost of those emissions. Addressing climate change will require policy frameworks that incentivize the fair and effective reduction of greenhouse gas emissions. In the absence of such a price, financial markets will operate suboptimally, and capital will continue to flow in the wrong direction, rather than toward accelerating the transition to a net-zero emissions economy. At the same time, policymakers must be sensitive to the distributional impacts of carbon pricing and other policies and ensure that the burden does not fall on low-to-moderate income households and on historically marginalized communities. This report recognizes that pricing carbon is beyond the remit of financial regulators; it is the job of Congress.”

Commodity Futures Trading Commission’s Report: Managing Climate Risk in the U.S. Financial System

Second, consider that we have a great example of where carbon price/cap-and-trade programs work: acid rain. Remember when that was a problem?

Quick overview from the Environmental Defense Fund:

More details if you’re interested:

In addition to everything we have talked about in the last two modules, I assert we also need to support and implement a carbon price/cap-and-trade/cap-and-dividend policy in the US and around the world to align trillions of dollars of assets with integral ecology.

Agree? Disagree? Thoughts?

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