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The debate over whether greenhouse gas (GHG) emissions contribute to global warming is over. Although large uncertainties continue to cloud the science related to the relationship between particular GHGs and the pronounced elevation in global temperatures during the last century and the extent to which cumulative emissions contribute to climate change, the range of the uncertainties has narrowed considerably. All but the most committed skeptics and a few demagogues in Congress now accept that human activities have contributed to global warming and both that something must be done to reduce GHG emissions in the near term and that even greater efforts will have to be undertaken in the intermediate term between 2010 and 2020 to stabilize GHG emissions. The history of past great debates over environmental policy suggests that the debate over global warming will now shift from the realm of science to the realm of economics, as activists and defenders of the status quo argue over how much it will cost to achieve particular levels of GHG reduction and whether we are willing to pay those costs. Following the historical pattern, the headlines of major stories about climate change began to shift from the science to the economics of global warming in mid-2007. A front page article in the July 15, 2007, issue of the Washington Post headlined “Climate Change Debate Hinges on Economics” quoted the head of a conservative think tank to say that the question now is: “Will Congress get in place a larger architecture that sends a signal to the economy that accelerates change?”1 Congressman John Dingell , no fan of GHG controls (especially as they relate to the automobile industry that dominates his district), introduced a bill providing for a carbon tax because he “sincerely doubt[ed] that the American people will be willing to pay what this is really going to cost them.”2 And the editorial board of the Wall Street Journal chortled its agreement with the longtime congressman in an editorial entitled “Truth in Global Warming.”3 10 The Cost of Greenhouse Gas Reductions Thomas O. McGarity 214 T. O. McGarity Many former global warming skeptics have now become GHG reduction pessimists, arguing that the technologies needed to reduce GHGs to 1990 levels are simply not available at what they regard to be a reasonable cost. The CEO of American Electric Power Company, a company that plans to take no serious steps to reduce its very large GHG emissions inventory until the government actually mandates action, predicted that the company simply could not deliver significant GHG reductions until at least 2020 and, even then, only by raising energy prices 50 percent.4 The industry-funded Electric Power Research Institute has concluded that it will take until 2025 or 2030 to reduce emissions to 1990 levels, even in the unlikely event that the industry increases nuclear power production by 60 percent, doubles wind and solar energy production, and develops cost-effective carbon capture technologies.5 Citing studies indicating that reducing GHG emissions in 10 years would cost more than 4 percent of the gross domestic product (GDP), the Cato Institute advocates delaying any action for up to 20 to 30 years.6 Reasoning that “wealthier is healthier,” some extreme pessimists even claim that spending resources on reducing GHG emissions will result in hundreds of “statistical deaths” from reduced incomes of low-income workers.7 The truth of the matter is that the actions that Americans must take to reduce GHG emissions to the levels required to slow down the alarming trends in global warming might well be expensive and inconvenient. Moreover, it may well be that a carbon tax of the sort proposed by Congressman Dingell is the most efficient vehicle for inducing the necessary changes. The good news is that technologies already in existence or that will be available in the very near future are capable of meeting reasonable GHG reduction goals if we have the political will to do the job and the wisdom to create the right incentives to take action in both the near and intermediate terms. Although uncertainties comparable in magnitude to those that once plagued climate change science now befuddle the economics of GHG controls, there are good reasons to believe that gloomy predictions that implementing these technologies will result in huge costs that may disrupt the U.S. economy are overblown. At the same time, rosy predictions that the change can be accomplished in a way that is essentially cost-free may be unduly optimistic...

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