THE MORALITY AND ETHICS OF CARBON PRICING

In 2009, US president Barack Obama appointed Harvard Law School Professor Cass Sunstein to be the administrator of the White House Office of Information and Regulatory Affairs (OIRA).

- Peter Singer

Prof Sunstein was the co-author, with the Nobel laureate economist Richard Thaler, of Nudge, a widely acclaimed bestseller showing that small changes in how choices are put to people increase the likelihood that they will make healthy, prudent or socially beneficial choices.

Under Prof Sunstein’s leadership, OIRA sought to change government regulations in ways that would acknowledge the reality of global warming and seek to minimise the harm it would cause. To make these changes consistent across the government, it was essential to assess policies affecting greenhouse-gas (GHG) emissions — for example, closing coal-fired power stations or subsidising electric cars — on the basis of an agreed price for a tonne of carbon. Only then could the social cost of GHG emissions be reflected in assessments of the costs and benefits of regulations.

Once a price is put on carbon, other emissions that contribute to climate change, like methane, can be priced in terms of their equivalent impact. That is why Prof Sunstein has called the price of carbon “the most important number you have never heard of”.