The need for a price on carbon

[vc_empty_space height=”10px”]

This session looked at the expected sustainability policies in 2021 and the important role of a price on carbon as part of that. The winner of the Nobel Prize for his work on “integrating climate change into long-run macroeconomic analysis” outlined the best approach, as well as the idea of an international climate compact to bring countries and policies together. View Professor Nordhaus’ presentation slides here[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Professor%20William%20Nordhaus%22%2C%22job_role%22%3A%22Sterling%20Professor%20of%20Economics%2C%20Yale%20University%3B%202018%20Nobel%20Prize%20winner%20in%20Economics%20(United%20States)%22%2C%22content%22%3A%22William%20Nordhaus%20was%20born%20in%20Albuquerque%2C%20New%20Mexico%20and%20completed%20his%20undergraduate%20work%20at%20Yale%20University%20in%201963%20and%20received%20his%20Ph.D.%20in%20Economics%20in%201967%20from%20the%20Massachusetts%20Institute%20of%20Technology%2C%20Cambridge%2C%20USA.%20He%20has%20been%20on%20the%20faculty%20of%20Yale%20University%20since%201967%20and%20has%20been%20Full%20Professor%20of%20Economics%20since%201973%20and%20also%20is%20Professor%20in%20Yale%E2%80%99s%20School%20of%20Forestry%20and%20Environmental%20Studies.%20Professor%20Nordhaus%20lives%20in%20downtown%20New%20Haven%20with%20his%20wife%20Barbara%2C%20who%20works%20at%20the%20Yale%20Child%20Study%20Center.%20He%20won%20the%20Sveriges%20Riksbank%20Prize%20in%20Economic%20Sciences%20in%20Memory%20of%20Alfred%20Nobel%202018%20for%20integrating%20climate%20change%20into%20long-run%20macroeconomic%20analysis.%5CnHe%20is%20a%20member%20of%20the%20National%20Academy%20of%20Sciences%20and%20a%20Fellow%20of%20the%20American%20Academy%20of%20Arts%20and%20Sciences.%20He%20is%20on%20the%20research%20staff%20of%20the%20National%20Bureau%20of%20Economic%20Research%20and%20has%20been%20a%20member%20and%20senior%20advisor%20of%20the%20Brookings%20Panel%20on%20Economic%20Activity%2C%20Washington%2C%20D.C.%20since%201972.%20Professor%20Nordhaus%20is%20current%20or%20past%20editor%20of%20several%20scientific%20journals%20and%20has%20served%20on%20the%20executive%20committees%20of%20the%20American%20Economic%20Association%20and%20the%20Eastern%20Economic%20Association.%20He%20serves%20on%20the%20Congressional%20Budget%20Office%20Panel%20of%20Economic%20Experts%20and%20was%20the%20first%20chair%20of%20the%20advisory%20committee%20for%20the%20Bureau%20of%20Economic%20Analysis.%20He%20was%20the%20first%20chair%20of%20the%20newly%20formed%20American%20Economic%20Association%20Committee%20on%20Federal%20Statistics.%20In%202004%2C%20he%20was%20awarded%20the%20prize%20of%20%E2%80%9CDistinguished%20Fellow%E2%80%9D%20by%20the%20American%20Economic%20Association.%5CnFrom%201977%20to%201979%2C%20he%20was%20a%20Member%20of%20the%20President%E2%80%99s%20Council%20of%20Economic%20Advisers.%20From%201986%20to%201988%2C%20he%20served%20as%20the%20Provost%20of%20Yale%20University.%20He%20has%20served%20on%20several%20committees%20of%20the%20National%20Academy%20of%20Sciences%20including%20the%20committee%20on%20Nuclear%20and%20Alternative%20Energy%20Systems%2C%20the%20panel%20on%20Policy%20Implications%20of%20Greenhouse%20Warming%2C%20the%20committee%20on%20National%20Statistics%2C%20the%20committee%20on%20Data%20and%20Research%20on%20Illegal%20Drugs%2C%20and%20the%20committee%20on%20the%20Implications%20for%20Science%20and%20Society%20of%20Abrupt%20Climate%20Change.%20He%20recently%20chaired%20a%20panel%20of%20the%20National%20Academy%20of%20Sciences%20which%20produced%20a%20report%2C%20Nature%E2%80%99s%20Numbers%2C%20that%20recommended%20approaches%20to%20integrate%20environmental%20and%20other%20non-market%20activity%20into%20the%20national%20economic%20accounts.%20More%20recently%2C%20he%20has%20directed%20the%20Yale%20Project%20on%20Non-Market%20Accounting%2C%20supported%20by%20the%20Glaser%20Foundation.%5CnHe%20is%20the%20author%20of%20many%20books%2C%20among%20them%20Invention%2C%20Growth%20and%20Welfare%2C%20Is%20Growth%20Obsolete%3F%2C%20The%20Efficient%20Use%20of%20Energy%20Resources%2C%20Reforming%20Federal%20Regulation%2C%20Managing%20the%20Global%20Commons%2C%20Warming%20the%20World%2C%20and%20(joint%20with%20Paul%20Samuelson)%20the%20classic%20textbook%2C%20Economics%2C%20whose%20nineteenth%20edition%20was%20published%20in%202009.%20His%20research%20has%20focused%20on%20economic%20growth%20and%20natural%20resources%2C%20the%20economics%20of%20climate%20change%2C%20as%20well%20as%20the%20resource%20constraints%20on%20economic%20growth.%20Since%20the%201970s%2C%20he%20has%20developed%20economic%20approaches%20to%20global%20warming%2C%20including%20the%20construction%20of%20integrated%20economic%20and%20scientific%20models%20(the%20DICE%20and%20RICE%20models)%20to%20determine%20the%20efficient%20path%20for%20coping%20with%20climate%20change%2C%20with%20the%20latest%20vintage%2C%20DICE-2007%2C%20published%20in%20A%20Question%20of%20Balance%20(Yale%20University%20Press%2C%202008).%20Professor%20Nordhaus%20has%20also%20studied%20wage%20and%20price%20behaviour%2C%20health%20economics%2C%20augmented%20national%20accounting%2C%20the%20political%20business%20cycle%2C%20productivity%2C%20and%20the%20%E2%80%9Cnew%20economy.%E2%80%9D%20His%201996%20study%20of%20the%20economic%20history%20of%20lighting%20back%20to%20Babylonian%20times%20found%20that%20the%20measurement%20of%20long-term%20economic%20growth%20has%20been%20significantly%20underestimated.%20He%20returned%20to%20Mesopotamian%20economics%20with%20a%20study%2C%20published%20in%202002%20before%20the%20war%2C%20of%20the%20costs%20of%20the%20U.S.%20war%20in%20Iraq%2C%20projecting%20a%20cost%20as%20high%20as%20%242%20trillion.%20Recently%2C%20he%20has%20undertaken%20the%20%E2%80%9CG-Econ%20project%2C%E2%80%9D%20which%20provides%20the%20first%20comprehensive%20measures%20of%20economic%20activity%20at%20a%20geophysical%20scale.%5Cn%22%2C%22image%22%3A%2233552%22%2C%22linkedin%22%3A%22%22%7D%5D” title=”Speaker” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Amanda%20White%22%2C%22job_role%22%3A%22Director%2C%20institutional%20content%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22White%20is%20responsible%20for%20the%20content%20across%20all%20Conexus%20Financial%E2%80%99s%20institutional%20media%20and%20events.%20She%20is%20responsible%20for%20directing%20the%20bi-annual%20Fiduciary%20Investors%20Symposium%20which%20challenges%20global%20investors%20on%20investment%20best%20practice%20and%20aims%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20She%20is%20the%20editor%20of%20conexust1f.flywheelstaging.com%2C%20the%20online%20news%20and%20analysis%20site%20for%20the%20world%E2%80%99s%20largest%20institutional%20investors.%20White%20has%20been%20an%20investment%20journalist%20for%20more%20than%2020%20years%20and%20has%20edited%20industry%20journals%20including%20Investment%20%26%20Technology%2C%20Investor%20Weekly%20and%20MasterFunds%20Quarterly.%20She%20was%20previously%20editorial%20director%20of%20InvestorInfo%20and%20has%20worked%20as%20a%20freelance%20journalist%20for%20the%20Australian%20Financial%20Review%2C%20CFO%2C%20Asset%20and%20Asia%20Asset%20Management.%20She%20has%20a%20Bachelor%20of%20Economics%20from%20Sydney%20University%20and%20a%20Master%20of%20Arts%20in%20Journalism%20from%20the%20University%20of%20Technology%2C%20Sydney.%20She%20was%20previously%20a%20columnist%20for%20the%20Canadian%20publication%2C%20Corporate%20Knights%2C%20which%20is%20distributed%20by%20the%20Globe%20and%20Mail%20and%20The%20Washington%20Post.%20White%20is%20currently%20a%20fellow%20in%20the%20Finance%20Leaders%20Fellowship%20at%20the%20Aspen%20Institute.%20The%20two-year%20program%20consists%20of%2022%20fellows%20and%20seeks%20to%20develop%20the%20next%20generation%20of%20responsible%2C%20community-spirited%20leaders%20in%20the%20global%20finance%20industry.%22%2C%22image%22%3A%2233531%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Famanda-white-101a7515%2F%3ForiginalSubdomain%3Dau%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]

Key takeaways

• Since 1900, CO2 emissions have increased 2.8 per cent per year. If this path continues, we will get nowhere near our global targets.
• Unregulated markets have failed because CO2 is priced at zero which is wrong. To increase the price of carbon, we could introduce carbon taxes. Carbon taxes would be a better goal that carbon emissions.
• History is littered with failings in international negotiation, so we must be patient and not fall victim to short-term thinking.Nonetheless, the path we have been going down for international negotiations is a dead end. We are on square zero. We need to change the goal and change the vision. Current agreements have no sticks and few carrots. We need more of both. We need a set of climate treaties that provide benefits for participation and costs for non-participation. Roosevelt said speak softly and carry a large stick. In contrast, we are speaking loudly and carrying no stick at all.
• Research from McKinsey shows that CO2 emissions can be reduced by between 10 and 30 per cent for nearly no cost. There are many similar ‘no regrets’ actions that we could all take to improve the status quo.
• We need to reconceptualise how we deal with climate change on a global level. This is a collective action problem. We need to convince our governments and commercial partners to do more.

[vc_empty_space height=”10px”]

Poll results

[vc_line_chart x_values=”” values=”%5B%7B%22title%22%3A%22Yes%22%2C%22y_values%22%3A%2270%22%2C%22color%22%3A%22blue%22%7D%2C%7B%22title%22%3A%22No%22%2C%22y_values%22%3A%227%22%2C%22color%22%3A%22pink%22%7D%2C%7B%22title%22%3A%22Maybe%22%2C%22y_values%22%3A%2222%22%2C%22color%22%3A%22chino%22%2C%22custom_color%22%3A%22%23ff675b%22%7D%5D”]