A global CO2 price – Necessary and sufficient

Abstract

During the last 10 years, I have spent most of my research time on the economics of climate change. Basically all of it has been done together with my colleagues Per Krusell at IIES and Conny Olovsson at Sveriges Riksbank. Being a truly cross-disciplinary field, the close interaction with many natural scientists, in particular Jonas Nycander at the department of meteorology at Stockholm University has been an absolute necessity. In this article, based on a talk at the Finnish Economic Association annual conference in February 2020, I summarize what we have learned over the years. Hopefully it can be of value to other researchers and policy makers. In any case, I am convinced that economics is key for understanding what to do about global warming. The key conclusion is that a global agreement on a (minimum) price on fossil carbon emission is necessary, sufficient and efficient solution to limiting climate change.