In this lesson, we looked at what is likely to be the largest issue facing the energy business over the next quarter-century - the issue of climate change and carbon reduction. We looked at the basic physics of the greenhouse effect, and why carbon emissions from fossil-fuel combustion may be causing undesirable changes in the earth's atmosphere. We looked at the public goods/market failure aspects of carbon emissions, and looked at some of the policy options available to address this issue. We examined several controversies and contentious issues surrounding carbon reduction policy, and then we examined some of the strategies for reducing carbon output.
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