How much will it cost to cap CO2 emissions?

At the International Press Institute* World Congress in Helsinki in early June, Charles Kolstad, Professor of Environmental Economics and Policy, Donald Bren School of Environmental Science and Management, UC Santa Barbara responded to a question about the cost of cap and trade.

Hindu Newspaper Editor: If you were to put a figure on costs, in terms of GDP how much will it cost to put a cap on emissions? How is the burden to be shared globally?

Charles Kolstad: The cost estimate is one percent of GDP -- around that. The Stern Review has figures as high as 7 or 8 percent in extreme case of costs being higher than expected. Look at the Ozone Treaty on CFCs: any extra costs were to be paid for by developed world. Such an approach seems more than reasonable. CFCs have become more targeted; carbon pervasive, of course. I suspect that the developed world, in any agreement, will agree to absorb much if not all of costs.

At the end of June 2009, Paul Krugman pointed to an estimate that the cost of cap and trade could be far lower than $1.00 a day. See Can we afford cap and trade?

The IPI panel discussion on climate change also included Jorma Ollila, Chairman of Nokia; Chairman of Royal Dutch Shell, Ali Sayigh of the World Renewable Energy Network (WREN), and Curtis Brainard of the Columbia Journalism Review. Jotman live-blogged the entire panel discussion. See "Technology and innovation: Climate change Rx?"
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* "The International Press Institute is a global network of editors, media executives and leading journalists . . . dedicated to the furtherance and safeguarding of press freedom, the protection of freedom of opinion and expression, the promotion of the free flow of news and information, and the improvement of the practices of journalism."