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Mitigation of Climate Change

SUMMARY FOR POLICYMAKERS

May 4, 2007

Intergovernmental Panel on Climate Change, 4th Report, Working Group III

Four main criteria are used to evaluate policies and instruments: environmental effectiveness, cost effectiveness, distributional effects, including equity, and institutional feasibility.

• Integrating climate policies in broader development policies makes implementation and overcoming barriers easier.
• Regulations and standards generally provide some certainty about emission levels. They may be preferable to other instruments when information or other barriers prevent producers and consumers from responding to price signals. However, they may not induce innovations and more advanced technologies.
• Taxes and charges can set a price for carbon, but cannot guarantee a particular level of emissions. Literature identifies taxes as an efficient way of internalizing costs of GHG emissions.
• Tradable permits will establish a carbon price. The volume of allowed emissions determines their environmental effectiveness, while the allocation of permits has distributional consequences. Fluctuation in the price of carbon makes it difficult to estimate the total cost of complying with emission permits.
• Financial incentives (subsidies and tax credits) are frequently used by governments to stimulate the development and diffusion of new technologies. While economic costs are generally higher than for the instruments listed above, they are often critical to overcome barriers.
• Voluntary agreements between industry and governments are politically attractive, raise awareness among stakeholders, and have played a role in the evolution of many national policies. The majority of agreements has not achieved significant emissions reductions beyond business as usual. However, some recent agreements, in a few countries, have accelerated the application of best available technology and led to measurable emission reductions.
• Information instruments (e.g. awareness campaigns) may positively affect environmental quality by promoting informed choices and possibly contributing to behavioural change, however, their impact on emissions has not been measured yet.
• RD&D can stimulate technological advances, reduce costs, and enable progress toward stabilization.

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Read More: Development, Economy, Energy, Environment, Governance, Global

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