Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgements
- Introduction
- Summary of Conclusions
- Part I Climate Change – Our Approach
- Part II Impacts of Climate Change on Growth and Development
- Part III The Economics of Stabilisation
- Part IV Policy Responses for Mitigation
- 14 Harnessing Markets for Mitigation – The Role of Taxation and Trading
- 15 Carbon Pricing and Emissions Markets in Practice
- 16 Accelerating Technological Innovation
- 17 Beyond Carbon Markets and Technology
- Part V Policy Responses for Adaptation
- Part VI International Collective Action
- Abbreviations and Acronyms
- Postscript
- Technical Annex to Postscript
- Index
14 - Harnessing Markets for Mitigation – The Role of Taxation and Trading
Published online by Cambridge University Press: 05 March 2014
- Frontmatter
- Contents
- Preface
- Acknowledgements
- Introduction
- Summary of Conclusions
- Part I Climate Change – Our Approach
- Part II Impacts of Climate Change on Growth and Development
- Part III The Economics of Stabilisation
- Part IV Policy Responses for Mitigation
- 14 Harnessing Markets for Mitigation – The Role of Taxation and Trading
- 15 Carbon Pricing and Emissions Markets in Practice
- 16 Accelerating Technological Innovation
- 17 Beyond Carbon Markets and Technology
- Part V Policy Responses for Adaptation
- Part VI International Collective Action
- Abbreviations and Acronyms
- Postscript
- Technical Annex to Postscript
- Index
Summary
KEY MESSAGES
Agreeing a quantitative global stabilisation target range for the stock of greenhouse gases (GHGs) in the atmosphere is an important and useful foundation for overall policy. It is an efficient way to control the risk of catastrophic climate change in the long term. Short term policies to achieve emissions reductions will need to be consistent with this long-term stabilisation goal.
In the short term, using price-driven instruments (through tax or trading) will allow flexibility in how, where and when emission reductions are made, providing opportunities and incentives to keep down the cost of mitigation. The price signal should reflect the marginal damage caused by emissions, and rise over time to reflect the increasing damages as the stock of GHGs grows. For efficiency, it should be common across sectors and countries.
In theory, taxes or tradable quotas could establish this common price signal across countries and sectors. There can also be a role for regulation in setting an implicit price where market-based mechanisms alone prove ineffective. In practice, tradable quota systems – such as the EU's emissions-trading scheme – may be the most straightforward way of establishing a common price signal across countries. To promote cost-effectiveness, they also need flexibility in the timing of emissions reductions.
[…]
- Type
- Chapter
- Information
- The Economics of Climate ChangeThe Stern Review, pp. 351 - 367Publisher: Cambridge University PressPrint publication year: 2007