Climate change

Posted on
July 9, 2008

CBO has been doing a significant amount of analytical work on climate change, and I wrote an oped for today's Washington Post on the topic.

The piece notes that the economic cost of emission reductions will depend on the degree to which flexibility is provided on when emission reductions can occur and what policymakers do with the valuable emission allowances created under a cap-and-trade program.

The first point -- that timing flexibility matters -- is based on the observation that, as the oped points out, changes in climate reflect the accumulation of greenhouse gases in the atmosphere over long periods. The environmental impact depends little on year-to-year fluctuations in emissions. By contrast, the economic cost of reducing emissions can vary a lot from year to year -- because of factors such as weather, economic activity or the state of technology. Flexibility regarding the timing of emissions reductions matters because of this disconnect between the environmental dynamic, which depends on total emissions reductions over an extended period, and the economic dynamic.

The second point has been discussed at length in numerous CBO documents. For more on CBO's climate work, see here.