by Dana Nuccitelli
“Based on everything we think we know about technology, climate damages, etc. it would indeed be ‘optimal’ to cut emissions massively now,” said the paper’s co-author Gernot Wagner. Achieving such rapid decarbonization would require climate policies commensurate with a global carbon price of about $250 per ton of carbon dioxide today but declining to below $40 per ton in 2100 as the prices for clean technology come down.
Wagner has compared climate economics to financial investments. Many investors put money in bonds despite their lower returns than stocks because bonds are less risky. This is analogous to investing in decarbonization today to reduce long-term risks, rather than trying to accumulate wealth in the hopes that it can pay for the costs of potentially catastrophic future climate damages.
Quoted in: “Drastic climate action is the best course for economic growth, new study finds” by Dana Nuccitelli, Yale Climate Connections (16 April 2023)
Paper: “Carbon dioxide as a Risky Asset” with Adam M. Bauer and Cristian Proistosescu