Krugman on the Green Economy

In a lengthy piece in the New York Times Magazine, Paul Krugman gets right down to it:

But is it possible to make drastic cuts in greenhouse-gas emissions without destroying our economy?

Krugman walks us through the basics of environmental economics, starting with negative externalities. He compares the classic regulatory approach to limiting pollution with market based systems, which leads us to cap and trade. Krugman describes how using market forces drove industry to find the most cost efficient methods to reduce sulfur dioxide.
Krugman compares the costs of acting (one CBO estimate: 0.09 percent of GDP) with the cost of inaction. The entire piece is too long and too comprehensive for me to sum it up. Just go read it.