Editorials & Articles

The Social Cost of Carbon

Pricing carbon can reduce emissions and enable smarter planning
Directions: A passage has been given in which [A] has a highlighted phrase,
[B] has one blank and a highlighted phrase [C] has an error and [D] is a
jumbled sentence. Read the passage carefully and answer the following
questions.
[A] The cost of carbon-intensive goods like fossil fuels should reflect the damage they
cause. Even a small charge on carbon emissions can help insure against climate risk
and incentivize the use of green energy. [B] Economists have ______ two forms of
carbon pricing: emissions trading schemes (or “carbon markets”), and carbon fees or
taxes. According to the World Bank, more than 57 carbon pricing initiatives are in
place globally. And, more than 95 countries representing 55% of greenhouse gas
emissions are considering carbon pricing to help meet their pledged reductions.
Barriers to taxing carbon persist, however. In 2018, France suspended a planned tax
hike on gasoline and diesel fuel following violent demonstrations. At about the same
time, voters in the state of Washington rejected a ballot proposal to tax carbon
dioxide emissions (the proposal had been aggressively targeted with an ad campaign
funded by the fossil-fuel industry). Clearly, new approaches are needed to gain public
support, possibly by refunding proceeds to low-carbon consumers or through
simultaneous reductions in non-carbon-related taxes.
The High-Level Commission on Carbon Prices, launched in 2016 with support from the
World Bank, engages economists and energy experts in designing effective carbon
pricing. [C] A private-sector initiative led by CDP (formerly the Carbon Disclosure
Project) (1)/ and the We Mean Business Coalition complement this effort, (2)/ which
in turn goes hand-in-hand with a G20 initiative (3)/ to reform fossil-fuel subsidies that
lead to wasteful energy consumption. (4)/ [D] by pushing companies to set an internal
price on carbon, (1)/ and allocate capital to a low-carbon economy (2)/ Institutional
investors are paying more attention to carbon risk management (3)/ to assess their
exposure to climate-based risks (4)/. BlackRock, the world’s largest asset manager,
signalled a significant shift in December 2020 by announcing that climate risk would
be incorporated “across our platforms as a critical investment risk.” In the past forty
years, our understanding of the economic forces underlying climate change has
advanced considerably. In recognition of this, the 2018 Nobel Memorial Prize in

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Economic Sciences was awarded to Yale economist William Nordhaus, for his work on
integrating climate change and carbon pricing into macroeconomic analysis.

Practice Questions
Q1. In the following question, a sentence is given with the phrase or idiom
highlighted in bold. Select the option that cannot replace the phrase in bold and
mark that as your answer. Ignore the errors of punctuation, if any.
The cost of carbon-intensive goods like fossil fuels should reflect the damage they
cause. Even a small charge on carbon emissions can help insure against climate risk
and incentivize the use of green energy.
A. Galvanise the use of
B. Forestall the use of
C. Propel the use of
D. Spur the use of
E. Actuate the use of

Q2. In the following question, two sentences are given. The first sentence contains
a blank while the second one contains a phrase highlighted in bold. The blank has
to be filled and the highlighted phrase has to be replaced with given options to make
the second sentence grammatically and contextually correct. Choose the option that
represents the correct combination of words/phrases.
I. Economists have ______ two forms of carbon pricing: emissions trading
schemes (or “carbon markets”), and carbon fees or taxes.
II. According to the World Bank, more than 57 carbon pricing initiatives are in
place globally. And, more than 95 country representing 55% of greenhouse gas
emissions are considering carbon pricing to help meet their pledged reductions.
Barriers to taxing carbon persist, however.

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1. zeroed in on, more than 95 countries representing 55% of greenhouse gas
emissions are considering
2. Emphasized on, more than 95 countries representing 55% of greenhouse gas
emissions are considering
3. Focused on, more than 95 countries representing 55% of greenhouse gas
emissions are considered
4. Put a lot of emphasis on, more then 95 countries representing 55% of
greenhouse gas emissions are considering

A. Only 2
B. Both 1 & 2
C. Only 3
D. Both 2 & 4
E. Only 1

Q3. In the following question, one part of the sentence may have an error. Find out
which part of the sentence has an error and select the appropriate option. If the
sentence is free from error, select 'No Error’.
A private-sector initiative led by CDP (formerly the Carbon Disclosure Project) (1)/ and
the We Mean Business Coalition complement this effort, (2)/ which in turn goes hand-
in-hand with a G20 initiative (3)/ to reform fossil-fuel subsidies that lead to wasteful
energy consumption. (4)/

A. 2
B. 3
C. 1
D. 4
E. No error

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Q4. In the given question, a sentence has been broken into four parts and the parts
are jumbled. Choose the option which provides the correct way to re-arrange the
parts to form a grammatically and contextually meaningful sentence. The
rearranged sequence of the parts will be your answer.
by pushing companies to set an internal price on carbon, (1)/ and allocate capital to a
low-carbon economy (2)/ Institutional investors are paying more attention to carbon
risk management (3)/ to assess their exposure to climate-based risks (4)/
A. 1243
B. 3124
C. 3142
D. 1324
E. No Improvement

Q5. In the question below, there is a word given in bold which is followed by five
options. In each of the options, a pair of words is given which is either the pair of
synonyms or antonyms or synonym & antonym of the word given in bold. Choose
that pair as your answer.
Allocation
A. Dispensation, Allotment
B. Abnegation, Distribution
C. Vandalism, Conundrum
D. Deprivation, Reminiscences
E. None of these

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Answers:
Q1. B Q2. E Q3. A Q4. C Q5. A

Passage Vocabulary
1. Social cost – Social cost is the total cost to society. It includes private costs
plus any external costs. Example of driving to work. Costs of paying for petrol
(personal cost) Costs of increased congestion (external cost)
(Congestion – भीड़-भाड़ - crowded, full of traffic)

2. Intensive (adj) - थोड़े समय में बहुत अधिक प्रयास या गततविधि शाममल करना -
involving a lot of effort or activity in a short period of time
Example - an intensive course in English

3. Fossil fuel (n) - a natural fuel such as coal or oil, that was formed millions of
years ago from dead animals or plants in the ground

4. Incentivize (v) – प्रोत्साहहत - motivate or encourage (someone) to do

something; provide with an incentive
Example - We need to incentivize our sales managers to achieve these targets.

5. Green energy – Green energy is any energy type that is generated from
natural resources, such as sunlight, wind or water.

6. Zeroed on (phrasal v) - to direct all of one’s attention to (someone or

something).
Example - We must decide on our target market, then zero in on it.

7. Emission trading scheme - Emissions trading is a market-based approach to

controlling pollution by providing economic incentives for reducing the
emissions of pollutants.

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8. Gasoline (n) - Gasoline or petrol is a derivative product of crude

oil/petroleum.

9. Simultaneous (adj) - एक ही समय में होऩेिाला - happening or done at exactly

the same time as something else.
Example - There were several simultaneous explosions in different cities.

10.G20 – The G20 or Group of Twenty is an intergovernmental forum

comprising 19 countries and the European Union (EU). It works to address
major issues related to the global economy, such as international financial
stability, climate change mitigation, and sustainable development.

11.Subsidies (n) - आधथिक सहायता - money that the government, etc. pays to
help an organization or to keep the cost of a service low
Example - The government is planning to abolish subsidies to farmers.

12.Allocate (v) – बाांटना - to give something to someone as their share of a total

amount, to use in a particular way:
Example - The government is allocating £10 million for health education.

13.Low carbon economy – A low carbon economy is a system that aims to

minimize its output of greenhouse gasses while functioning as a typical
economic program

14.Macroeconomic (adj) - relating to the financial and economic systems of a

country or an industry.

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