Virtually every passing week the evidence grows concerning the serious dangers of manmade climate change. The Earth is warming, glaciers are melting, new pest infestations are multiplying, species are being threatened with extinction, and much more is to come. Politicians run from the problem, and brave souls who put forward serious policy options get lambasted. Yet with sound policies, the long-term costs of solutions are likely to be much lower than is currently believed.

The challenge is easy to state, if difficult to accomplish. We have a fossil-fuel-based world economy, built upon oil, gas and coal. Without plentiful and low-cost energy, the standard of living and future economic growth would plummet. Yet the same fossil fuels that undergird our economy are the source of carbon dioxide emissions when the fuels are burned, and rising concentrations of carbon dioxide in the atmosphere are the most important cause of manmade climate change.

The great complications of this issue come down to the following basic facts. First, fossil fuels remain cheaper than the alternatives. Given the plentiful reserves of tar sands, coal and other non-conventional fossil fuels, this is likely to remain true even if traditional oil and gas reserves reach a peak of production in the near future.

Second, fossil fuels are used everywhere in the world, so even if Canada or a selected group of countries slows its use of fossil fuels, others are likely to pick up the slack. Solutions require global co-operation.

And third, the lead time for decisively changing the energy infrastructure is measured in decades and generations, not years. Needed changes will include new technologies, not yet developed, as well as a shift among existing technologies.

Given these daunting obstacles, politicians have ducked the issue rather than go for real solutions that will require foresight, long-term investments and lots of global negotiations. Yet homemade solutions will mean nothing unless they are part of international agreements, and agreements with teeth. The United States' absence from the Kyoto protocol, for example, is an act of extreme irresponsibility. Kyoto is imperfect, but it's a start. Canada and other signatories need to stick to international commitments while expanding and improving upon them by bringing India, China, the U.S. and others to the table.

Ironically, the costs of addressing climate change are likely to be much less than is widely feared, and vastly less than continued neglect.

Extremists who say that we need to abandon our way of life and cut our living standards sharply in order to preserve the environment are wrong and unhelpful. They paralyze real actions rather than promote them.

And they misunderstand our real choices.

The key is to make a transition in the coming decades to an energy system that no longer emits billions of tons of carbon dioxide into the atmosphere. Part of the answer, clearly, will be improved efficiency in power generation and use. Hybrid vehicles and lighter materials in vehicles can substantially increase kilometres per litre. Cogeneration of electric power and heating can raise power-plant efficiency. Non-carbon energy sources -- nuclear, wind, solar -- will all play a significant role, albeit one with a gradual increase in their share of energy supply.

But another part of the answer is likely to be the capture and sequestration of carbon at fossil-fuel power plants. Technologies already exist to capture carbon dioxide from the exhaust gases of coal- and gas-fired plants, and then ship the carbon dioxide in pipelines to sites where it will be injected under the ground for geological sequestration. This technology is still unproved at any significant scale, but the costs of carbon capture and sequestration, when widely applied, could be as low as one to three cents per kilowatt hour.

In short, the growing evidence suggests that a comprehensive control program, entered into step by step by all countries over the coming decades, would cost less than 1 per cent of world income, and probably much less.

With the health of the world and its species in mortal peril, this would truly be the bargain of our era, a must-buy. Yet, how can we get there? The single most important step, by far, is to put a market price on carbon emissions. Companies that figure out how to produce energy without carbon emissions (for example, through successful capture and sequestration) should get a boost compared to the emitters. Households that economize on types of energy use that emit carbon should get a break compared with those who don't.

The market price can be a tax on carbon emissions or a subsidy for avoided emissions. Either way, the vast multitude of individual decisions that are taken around the world, on which fuels, automobiles, home energy systems, power plant designs or research agendas to adopt, will all be guided toward the right long-term solutions -- and without intrusive bureaucratic processes that are easy to corrupt and politicize.

A reasonable starting price for carbon emissions might be around $20 per ton of carbon dioxide, which would translate roughly into about four cents a litre of gasoline, or roughly 1.5 cents per kilowatt hour.

To head off a long-term doubling of atmospheric carbon dioxide, the price of emissions would likely have to rise gradually to perhaps $30 to $50 per ton of carbon dioxide within a decade or two, depending on how new technologies develop. The European Union already has put on such a price on carbon through its "cap and trade" system of carbon-emission permits.

A tax on carbon emissions, as proposed last week by the province of Quebec and mused about by Michael Ignatieff, would be another effective approach.

A combination of methods is likely to prevail, one that includes carbon taxes, carbon emissions permits, and subsidies for non-carbon-emitting technologies, including subsidies for research and development in new technologies.

Supporters of putting a price on carbon often get attacked by populist politicians whose time horizon is the next election. Yet the sooner we put a price on carbon emissions, the sooner we will see that practical and large-scale technological solutions will jump to the fore, and at a cost much lower than widely feared. Today's business leaders who want to do the right thing -- for example, to construct new power plants that capture and sequester carbon -- are blocked by the lack of a bottom-line motivation that they can sell to their corporate boards and regulators.

It's time we provided them with the economic inducement; it's time we aligned market forces and global survival.

Jeffrey D. Sachs is director of the Earth Institute at Columbia University in New York.