Free Markets Save the Planet

A startling new report from the International Energy Agency (IEA) reveals a free-market way to thwart climate change: Create a free market in energy. Fatih Birol, chief economist at the IEA, estimates that 37 nations spent $409 billion on fossil fuelsubsidies in 2010. (By comparison, renewables received $66 billion in that same year.) Impressively, if fossil fuel subsidies were eliminated, this would avoid 750 million tons of CO₂ by 2015, and could potentially save over 2.5 gigatons of carbon by 2035. The latter is 70 percent of what the European Union currently emits. In total, by ending these distortions in the energy market, the world could reduce half of the carbon emissions necessary to stop a 2°C (3.6°F) rise in global temperatures.

Writing in Slate, Matthew Yglesias expands on what this means for climate policy:

If roughly half of what needs to be done can be achieved simply by eliminating economic distortions—economic distortions that would be unwise even if there were no concern about pollution—then the whole framework of a trade-off between prosperity and sustainability is largely misguided.