The bond program also seems to misunderstand the nature of the carbon pollution problem. The bonds are supposed to be sold and redeemed based on estimates of the social cost of a given unit of carbon pollution. But carbon pollution is not the sort of thing that imparts social costs per unit. The way climate experts describe it, it is not that each unit of pollution is a problem, but that a certain aggregate level of it is a problem. So a certain amount of carbon emissions has little to no social cost, then beyond that amount, there is an accelerating social cost of each unit, and eventually there is a tipping point that creates enormous social costs. So for instance, the marginal unit of carbon pollution that puts us over the point where the permafrost thaws and releases its bottled-up carbon — that marginal unit of carbon pollution is massive costly. Because the social cost of carbon pollution is not even remotely consistent across marginal units of pollution, a bond program premised on that notion will be both a conceptual and practical failure.
Read the rest at Policy Shop.