TAIPEI, Taiwan - A Nobel Prize-winning economist told an audience yesterday in Taipei that the price for carbon emissions must be accounted for equally around the world.
Jean Tirole, the 2014 winner of the Nobel Memorial Prize in Economic Sciences, said that trading prices for carbon emissions must be the same everywhere and proposed innovative rather than regulatory measures to combat environmental pollution.
Tirole attended the 2015 Master Forum, where he proposed talks on combating climate change through the unifying of carbon emission prices, as one ton of carbon emissions exacts the same damage on Earth, "be it in France or in Taiwan," according to local newspaper United Daily News.
Each country's carbon emissions must be incorporated into their national debt, Tirole stated. Only then, will countries begin to take carbon emissions more seriously.
The incentives brought on by proposing carbon taxes are less binding, Tirole said. Effective measures to lower a country's carbon emissions would include setting up a unified standard for carbon emission prices and setting up mandatory regulations to turn carbon emissions into part of a country's national debt, according to each country's emission rate.
Regulations are not effective in lowering carbon emissions, Tirole suggested during his speech. Rather than implementing strict regulations, Tirole stated that innovation would be a better way to combat pollution through technology and effectively lowering the risks brought on by climate change.
Tirole cited innovation as an important tool in the 21st century - to decrease carbon emissions, technological innovation must be relied on due to the current stagnation of talks and delay in progress, he said.
Discussions on a system regulating carbon prices have also been delayed for years, Tirole stated. He proposed that the problem could be helped through the use of intellectual property rights. On the other hand, Tirole also said that lack of investment is an obstacle as well.
He pointed out how investments will produce "spillover effects," and competitors will attempt to play catch up, thus each government institution must inject money into research and development and set up measures to protect intellectual property and royalties.
In the Next 5 Years?
On questions regarding how countries should react in the next five years, Tirole suggested that countries could consider implementing a version of the World Trade Organisation's "anti-dumping agreement."
Countries should then follow a regulated total amount of emissions - should they fail to comply, carbon emission trade would be restricted for that country, Tirole stated. Climate change debt would then be calculated and added to that country's national debt. The final result would be released to compare carbon emission progress between countries.
This is why the Kyoto Protocol was ineffective in its results, as each country did not follow regulations, and there was a lack of punishment for failing to abide, Tirole stated.
Compensatory measures must be considered in policies aimed at reducing carbon emission as well. Tirole cited the IMF's Green Fund injection of a yearly US$100 billion (S$135 billion) to assist developing countries in tackling climate change.
Ethical and political factors should be considered as well, as reducing carbon means producing costs. Each country would have its own considerations, which would lead to different degree of pollution, Tirole stated. He believed that well-off countries should shoulder most of the costs to assist developing countries in addressing their carbon emission problems.