Nobel prize-winning US economists urge Obama to support carbon pricing in global negotiations on aviation emissions

Nobel prize-winning US economists urge Obama to support carbon pricing in global negotiations on aviation emissions | ICAO HGCC,S. 1956,Obama

Fri 15 March 2013 – A group of 32 leading US economists, including eight Nobel Prize winners, have written an open letter to President Obama urging him to advance proposals at ICAO for a global market-based measure that would effectively and efficiently reduce greenhouse gas aviation emissions. They say that good economic policy forces those who pollute to pay for the damage they do and pricing carbon in the aviation sector would incentivise investment and operational changes. In the long run it will be in aviation’s interest as well as that of all society, they conclude, to use the price mechanism to efficiently allocate over time at least cost to the industry the uncertain remaining capacity of the atmosphere to safely absorb emissions. The next meeting of the high-level group (HGCC) negotiating the issue at ICAO will start in just over a week’s time (March 25-27) and strong progress will be required if an ambitious agreement is to be reached by the ICAO Assembly in October.

“If climate change is to be slowed appreciably at tolerable cost, it is wise to use the market to provide incentives for individuals and firms to reduce greenhouse gas pollution,” argue the economists. “In economic terms, the emission of these pollutants meets the classic definition of an externality – the price that individuals and firms face for emitting these pollutants is substantially lower than the social cost imposed by the pollution.

“Because emissions are not priced, the world is wastefully using up a scarce resource, the earth’s ability to safely absorb greenhouse gas emissions. Our selfish inaction pushes increased costs onto future generations, and dangerously increases the probability of extreme events with major impacts on their welfare.”

In a similar open letter a year ago, the group asked the President to support, or at least not oppose, the EU’s own market-based mechanism (MBM) to reduce aviation emissions, the EU ETS. The plea fell on deaf ears and the EU ETS prohibition bill that authorises the Secretary of Transportation to forbid US aircraft operators to comply with the European scheme was signed into law, known as Public Law 112-200, by the President late last year.

The economists remind the President that the law also directs US government officials to use their authority “to conduct international negotiations to pursue a worldwide approach to address aircraft emissions, including the environmental impact of aircraft emissions.”

By proposing a global MBM, the US Administration “will be implementing Public Law 112-200, resolving tensions with some of our closest allies and appropriately using market forces to efficiently address the threat of climate change,” they say, pointing out the opportunity for action by US officials at the upcoming HGCC meeting. “We urge you to immediately advance a US proposal for a global MBM for aviation.”

Full text of the letter



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