David Montgomery expressed concern that, since they are not taking full account of the institutional impediments and inefficiencies that may drive up costs, the models are all projecting costs on the low end of what may in fact occur. Skip Laitner agreed that the results are likely the lower bound of costs, but he also argued that there are benefits in terms of productivity gains, efficiency gains, spillover innovation, and other aspects that are also not fully accounted for. Thus, he commented, more work needs to be done on characterizing full costs and full benefits. Richard Newell offered the caution that there needs to be a distinction between hypothetical opportunities and those that can be captured given existing conditions (including institutional impediments and regulations).

John Weyant described the current situation in California, where analysts are trying to reframe the notion of “cost-effective” from zero or negative cost options to least-cost options to achieve whatever objectives policymakers think they need to achieve. In other words, there is recognition that addressing climate change entails additional costs, and while there is uncertainty about those costs, this should not be a deterrent to taking early action. One additional challenge he described is the cost shock that could pose a political risk—policies could cost much more than anticipated, and rate shock for consumers could undermine further progress.

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