A Clunker of a Climate Policy, by Jeffrey D. Sachs, Commentary, Scientific American: The Cash for Clunkers program offers a cautionary tale for the future of climate change control. … The broad principle of climate change mitigation is to reduce greenhouse gas emissions … to target levels at the minimum net cost to society. There are many ways to reduce emissions: drive more efficient or electrically powered vehicles; produce electricity with renewable energy sources; capture CO₂ from power plants and store it geologically; restart the nuclear power sector; weatherproof homes… The list is long, with different time horizons, costs and uncertainties.

Clearly, not every method of reducing emissions makes equal sense. …McKinsey & Company has recently published estimates of the abatement costs of various technologies. Highly efficient lighting, appliances and vehicles, along with better insulation and other technologies, can save more in energy costs during their lifetime than the upfront capital for installing them: they are better than free to society. Other options—notably, renewable energy sources, forest conservation programs and carbon capture and storage—tend to come in below $60 per ton of avoided CO₂emissions.

Some carbon-reduction ideas are so expensive they should play no part in the policy mix. Yet because lobbyists overrun our legislative processes,… lots of terrible ideas will no doubt be advocated.

Let’s make a rough calculation of how much mitigation per dollar the Cash for Clunkers program really achieved. …[calculations]… The net annual cost of the CO₂ reduction is therefore … $141 per ton of CO₂. … This crude calculation is subject to many refinements but shows that Cash for Clunkers represented a very high cost per ton of CO₂ avoided. Countless ways to reduce CO₂emissions are less expensive than smashing up autos five years before their natural demise.

We will blunder badly and repeatedly in climate change control unless we put some transparent control systems in place. We should rely heavily on price signals rather than one-by-one subsidized programs, except for the subsidies needed to bring new technologies such as electric vehicles to the commercial phase. An economy-wide tax on each ton of CO₂ emissions, programmed to rise gradually over time at an appropriate social discount rate, would induce the marketplace to take actions that are less expensive per ton than the tax and to leave behind measures such as Cash for Clunkers or corn to ethanol. A carbon tax would be far more effective in this regard than the cumbersome cap-and-trade system proposed by the House of Representatives.

We’ll need to spend trillions of dollars over time to save the planet from climate change. All the more reason not to let lobbyists make a financial game out of this deadly serious effort.