The economic case for limiting warming to 1.5°C is unclear, due to manifold uncertainties. However, it cannot be ruled out that the 1.5°C target passes a cost-benefit test. Costs are almost certainly high: the median global carbon price in 1.5°C scenarios implemented by various energy models is more than US$100 per metric ton of CO2 in 2020, for example. Benefits estimates range from much lower than this to much higher. Some of these uncertainties may reduce in the future, raising the question of how to hedge in the near term.
Maintaining an option on limiting warming to 1.5°C means targeting it now. Setting off with higher emissions will make 1.5°C unattainable quickly without recourse to expensive large-scale carbon dioxide removal (CDR), or solar radiation management (SRM), which can be cheap but poses ambiguous risks society seems unwilling to take. Carbon pricing could reduce mitigation costs substantially compared with ramping up the current patchwork of regulatory instruments. Nonetheless, a mix of policies is justified and technology-specific approaches may be required. It is particularly important to step up mitigation finance to developing countries, where emissions abatement is relatively cheap.
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Simon Dietz is an environmental economist with particular interests in climate change and sustainable development. He has published dozens of research articles on a wide range of issues, and he also works with governments, businesses and NGOs on topics of shared interest, such as carbon pricing, insurance and institutional investment.
Simon is based at the London School of Economics and Political Science (LSE), where he is Professor of Environmental Policy in the Grantham Research Institute on Climate Change and the Environment, and the Department of Geography and Environment. He is also an Oxford Martin Visiting Fellow and Research Associate of the Smith School of Enterprise and the Environment at Oxford University, a Principal consultant at Vivid Economics, and is co-editor of the Journal of the Association of Environmental and Resource Economists.