TAXING CARBON CREATES THE MARKET:

In building their case for an artificial market for carbon removal, Athey, Glennerster, Ransohoff, and Snyder point to the recent success in building a market for pneumococcal vaccines in low-income countries. In the early 2000s, pneumococcal disease -- which causes illnesses like pneumonia and meningitis -- killed around 1.1 million people every year, most of them kids under age five.

While pharmaceutical companies possessed the know-how to develop a vaccine to save these lives, they were reluctant to sink millions of dollars into R&D for it because the financial rewards were too small and uncertain. As it is now with carbon removal, there was basically no market for a pneumococcal vaccine in the developing world.

In 2007, five countries -- Canada, Italy, Norway, Russia, and the United Kingdom -- and the Bill & Melinda Gates Foundation agreed to try and change this. They donated $1.5 billion to create an "Advance Market Commitment," which pledged to buy vaccines from pharmaceutical companies at a set price. In doing so, they created a market where there wasn't one.

It worked. Not only did the Advance Market Commitment convince one pharmaceutical company to create such a vaccine; it convinced three of them to do it (GSK, Pfizer, and the Serum Institute of India). In the years since, more than 150 million kids have been immunized against pneumococcal disease, saving an estimated 700,000 lives.

Athey, Glennerster, Ransohoff, and Snyder now want governments and NGOs to create an Advance Market Commitment for carbon removal. "If you look at the numbers, you'll realize we've got to figure this out," says Athey, a technology-focused economist at Stanford University. "We've just got to do it. Most models show that just reducing emissions won't work."

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