Global Warming – How Much a Ton of Carbon Dioxide will Cost?

One of the most discussed methods to counter global warming is carbon capping and charging carbon dioxide emitters a fee to invest in carbon-absorbing technologies. Planting more trees with the monies collected is a frequently mentioned solution, the efficacy of which still remains to be proven.

But how much such an approach would cost per ton of carbon dioxide (CO2) emission? What would be its impact on the global economy? The numbers are slowly emerging.

A United Nations report released in May 2007 suggests that the global effort to reduce the emission of greenhouse gasses like carbon diode could cost the world economy 3% of of its total output by 2030. That is, by 2030 the world economic output could be 3% lower than what it would otherwise have been due to the cost of the programs to fight carbon pollution.

According to the numbers of the World Resources Institute, an environmental think tank in Washington DC, to bring the carbon levels down to those suggested by the UN report would cost $20 to $100 per ton of carbon dioxide.

McKinsey & Co., an energy consulting firm, estimates that it would cost $40 per ton of CO2 to reach the 2030 greenhouse gas levels recommended by the UN study.

In Europe, where “carbon trading” has become a brisk new “derivatives trading” specialty, the price of a ton of CO2 is going for $25, as of May 2007. That’s how much it would cost you today to have the right to release a ton of CO2 next year.

Duke Energy Corp. of Charlotte, North Carolina is using the figure of “$7.50 to $30 per ton of CO2” in its future investment plans.

Another learned estimation is provided by Prof. Robert Socolow of Princeton University who is quoted by the Wall Street Journal as having said that a carbon cap that would result in a $30 fee per ton of CO2 emitted would also cost the U.S. consumers an additional 30 cents a gallon at the gas pump.

So estimates still range anywhere between $20 and $100 per ton of CO2 released, leaving plenty room for policy makers and economists to come up with ever-changing alternate plans while providing plenty reasons for the perplexed consumers to scratch their heads.

The way it looks right now, not only the science and politics, but the economics of global warming also looks equally complex.