Axel Michaelowa’s paper addresses how the world should proceed in a post Kyoto Protocol period, which begins in 2013 but must be agreed before then. It is informative, ingenious, and constructive. But its proposal for extending emissions targets and enlarging the number of countries to which they apply is deeply flawed, partly by carrying forward the flaws inherent in the Kyoto Protocol (KP hereafter). This comment will address the intellectual framework of the proposal, identify three fatal flaws (all inherent in the Kyoto Protocol), and suggest an alternative approach.
Michaelowa explicitly rejects a cost-benefit approach to public policy in dealing with global climate change in favor of an absolute (indicative) ceiling to atmospheric concentrations of greenhouse gases, mainly but not exclusively carbon dioxide. This approach implies an extreme degree of risk aversion with respect to climate change – any cost to avoiding it is worth the price—about which every economist should be skeptical.