In today’s column, An Affordable Salvation, Nobel economist Paul Krugman addresses the scare tactics of climate change denialists by arguing we can afford a CO2 cap and trade program. Moreover, it will provide an economic investment incentive just when we need it.

And with denialists and most Republicans attacking any significant effort to deal with global greenhouse gases, Krugman’s framing is just what has been needed in this debate:

But the opponents of action claim that limiting emissions would have devastating effects on the U.S. economy. So it’s important to understand that just as denials that climate change is happening are junk science, predictions of economic disaster if we try to do anything about climate change are junk economics.

Yes, limiting emissions would have its costs. . . .

But the best available estimates suggest that the costs of an emissions-limitation program would be modest, as long as it’s implemented gradually. And committing ourselves now might actually help the economy recover from its current slump.

(emphasis mine)

In recent weeks, as denialists continue their efforts to keep America’s head in the sand, Republicans like Newt Gingrich have misued an M.I.T. study on CO2 action costs, claiming there would be major increases in electricity prices. But Krugman dismisses these claims and reminds that "[i]f emission permits were auctioned off — as they should be — the revenue thus raised could be used to give consumers rebates or reduce other taxes, partially offsetting the higher prices." He then puts the actual costs in perspective:

Even with stringent limits, says the M.I.T. group, Americans would consume only 2 percent less in 2050 than they would have in the absence of emission limits. That would still leave room for a large rise in the standard of living, shaving only one-twentieth of a percentage point off the average annual growth rate.

Krugman then explains how a CO2 emission reduction policy would help the economy:

Right now, the biggest problem facing our economy is plunging business investment. Businesses see no reason to invest, since they’re awash in excess capacity, thanks to the housing bust and weak consumer demand.

But suppose that Congress were to mandate gradually tightening emission limits, starting two or three years from now. This would have no immediate effect on prices. It would, however, create major incentives for new investment — investment in low-emission power plants, in energy-efficient factories and more.

To put it another way, a commitment to greenhouse gas reduction would, in the short-to-medium run, have the same economic effects as a major technological innovation: It would give businesses a reason to invest in new equipment and facilities even in the face of excess capacity. And given the current state of the economy, that’s just what the doctor ordered.

Note that Krugman does not address the likely costs and consequences of failing to act. So his arguments are, if anything, understated.

Related: More from Senator Markey’s Select Committee On Energy Independence and Global Warming. For an explanation of one version of a cap and trade program, see the Blueprint of the US Climate Action Partnership. A critique of economic studies, from Laurie Johnson, NRDC and another from Brad Johnson at the Wonk Room.