The Complex International and Domestic Economics of Climate Change
Australian-German Climate and Energy College
Level 1, 187 Grattan St
T: (03) 8344 4124
Professor Garnaut Lecture Series
Climate change represents an unusually complex economic policy challenge, as there is a range of distributional effects of the costs of climate change and its mitigation across countries and generations. How do we value the living standards of people living now against those living in future? How do we value the costs of climate change and its mitigation in rich countries against those in poor countries? Further, a range of policy instruments can be applied to mitigation, and numerous factors inform under which circumstances carbon pricing and regulatory measures are more effective.
This lecture begins with a discussion on measuring the costs and benefits of action to reduce damage from climate change and acknowledges some of the questions raised concerning the economic value of mitigation – in particular, what level of temperature rise compared with pre-industrial levels is economically justified? The discussion considers the case for international trade in emissions entitlements and examines the economics of technological innovation and its relevance to the transition to a low-carbon economy. It also discusses the role of public institutions such as ARENA and the Clean Energy Finance Corporation. Finally, the lecture discusses how the historic 21st century fall in the cost of capital favours renewable energy sources over fossil fuels, which in turn supports the transformation of land use and more generally favours action to secure the interests of future generations.