The Economics of the Global Energy Challenge

This lecture argues that, rather than facing an isolated climate change challenge, the world must confront the Global Energy Challenge (GEC) that requires all countries to make trade-offs between three often competing and interrelated goals: inexpensive and reliable energy, clean air, and limiting damages from climate change. I present seven facts that help illuminate the contours of the GEC and the interactions between the three goals. Finally, it concludes by outlining potential solutions: pricing energy at its full social cost, investing in technical and policy innovation, improving information on pollution and climate damages, and treating energy as a private good.