Economically Efficient Strategies for Reducing Carbon Emissions

Abstract

In a world dominated by economics, cost-efficient carbon reduction inherently becomes a central dynamic of necessary climate action to prevent catastrophic global warming. Considering big business (as well as our reliance on them) is perpetuating climate change through massive carbon emissions, utilizing economics as a primary tool for directing 'balanced proportional costs' (and benefits) is appropriate. In other words, the same industrial and consumer sectors perpetuating climate change through fossil fuels could be utilized to remedy it. Knowing the general components driving climate change is one thing, but how to actually go about achieving cost-efficient climate policy from an economic, environmental and social perspective is another. On a direct level, any solution to carbon-driven climate change must be equipped to take on vast emissions sources, the international community, and the people perpetuating it. This means being capable of accounting for the underlying principles regarding financial incentives (supply and demand), administrative (public policy) constraints, not to mention social psychology. The results of this study show that carbon pricing (taxes) on energy production is the best option regarding incentivized cost-efficient climate policy. Cost efficiency is the goal regarding carbon reduction, cost being a general term not restricted to a single component (wealth), but includes the environment, economy, or people in this context. Every public and private policy has a cost and benefit. Cost efficiency comes down to reducing cost, including environmental damage, through maximizing resources. Possible policies include carbon offsets, carbon taxes (pricing), emissions standard laws, and subsidies. The goal is to reduce carbon emissions, ultimately eliminating fossil fuels. The world needs time to implement green energy. Fossil fuel companies will adopt policies that protect their profits. To incentivize reduction of energy use, you can tax producers or consumers. Research shows that carbon-taxing energy consumption passes costs on to consumers directly, causing them to use less but generating fewer profits for energy companies, while carbon-taxing fossil fuel producers causes them to produce less, thus raising the price of energy and protecting their profits even as consumers use less when possible. The goal is to incentivize fossil fuel companies to produce less by allowing them to keep their profits.