Why should you believe that cutting emissions is affordable? First, because financial incentives work.
Action on climate, if it happens, will take the form of cap and trade: businesses wont be told what to produce or how, but they will have to buy permits to cover their emissions of carbon dioxide and other greenhouse gases. So theyll be able to increase their profits if they can burn less carbon and theres every reason to believe that theyll be clever and creative about finding ways to do just that.
I love it when Krugman schools free-marketers on basic free market principals. A while back I stated using the term
Carbon-Socialism to describe the objection to the creation of markets for carbon emissions. I still think the term holds.