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Fiddling while carbon burns: why climate policy needs pervasive emission pricing as well as technology promotion

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  • Pezzey, John C.V.
  • Jotzo, Frank
  • Quiggin, John C.

Abstract

Effective climate policy requires global emissions of greenhouse gases to be cut substantially, which can be achieved by energy supply technologies with lower emissions, greater energy use efficiency, and substitution in demand. For policy to be efficient requires fairly uniform, fairly pervasive emission pricing from taxes, permit trading, or combinations of the two, as well as significant government support for low-emission technologies. We compare the technology-focused climate policies adopted by Australia and the 'Asia-Pacific Partnership on Clean Development and Climate' (AP6), against this ideal policy yardstick. We find that such policies omit the need for emission pricing to achieve abatement effectively and efficiently; they over-prescribe which abatement actions should be used most; they make unrealistic assumptions about how much progress can be achieved by voluntarism and cooperation, in the absence of either adequate funding or mandatory policies; and they unjustifiably contrast technology-focused policy and the Kyoto Protocol approach as the only two policies worth considering, and thus ignore important combined policy options.

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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 52 (2008)
Issue (Month): 1 (March)
Pages:

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Handle: RePEc:ags:aareaj:117740

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Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
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Related research

Keywords: Asia–Pacific Partnership; climate policy; pricing; technology; Resource /Energy Economics and Policy;

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References

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  1. Stavins, Robert & Jaffe, Adam & Newell, Richard, 2004. "A Tale of Two Market Failures: Technology and Environmental Policy," Discussion Papers dp-04-38, Resources For the Future.
  2. Goulder, Lawrence & Bovenberg, A. Lans, 2000. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does It Cost?," Discussion Papers dp-00-27, Resources For the Future.
  3. Warwick J. McKibbin & Peter J. Wilcoxen, 2002. "The Role of Economics in Climate Change Policy," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 107-129, Spring.
  4. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
  5. John C. V. Pezzey, 2002. "EmissionTaxes and Tradable Permits: A Comparison of views on Long Run Efficiency," Economics and Environment Network Working Papers 0210, Australian National University, Economics and Environment Network.
  6. Jacoby, Henry D. & Ellerman, A. Denny, 2004. "The safety valve and climate policy," Energy Policy, Elsevier, vol. 32(4), pages 481-491, March.
  7. Ford, Melanie & Matysek, Anna & Jakeman, Guy & Gurney, Andrew & Fisher, Brian S., 2006. "Perspectives on international climate policy," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 137963, Australian Agricultural and Resource Economics Society.
  8. Joseph E. Aldy & Scott Barrett & Robert N. Stavins, 2003. "Thirteen Plus One: A Comparison of Global Climate Policy Architectures," Working Papers 2003.64, Fondazione Eni Enrico Mattei.
  9. Lawrence H. Goulder & Ian W. H. Parry & Roberton C. Williams III & Dallas Burtraw, 1998. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," NBER Working Papers 6464, National Bureau of Economic Research, Inc.
  10. Jakeman, Guy & Hanslow, Kevin & Hinchy, Mike & Fisher, Brian S. & Woffenden, Kate, 2004. "Induced innovations and climate change policy," Energy Economics, Elsevier, vol. 26(6), pages 937-960, November.
  11. Popp, David, 2006. "Innovation in climate policy models: Implementing lessons from the economics of R&D," Energy Economics, Elsevier, vol. 28(5-6), pages 596-609, November.
  12. Sijm, J. & Neuhoff, K. & Chen, Y., 2006. "CO2 cost pass through and windfall profits in the power sector," Cambridge Working Papers in Economics 0639, Faculty of Economics, University of Cambridge.
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Citations

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Cited by:
  1. Warwick J McKibbin, 2007. "The 2006 Sir Leslie Melville Lecture: From National to International climate Change Policy," CAMA Working Papers 2007-30, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  2. Pezzey, John C.V. & Mazouz, Salim & Jotzo, Frank, 2010. "The logic of collective action and Australia’s climate policy," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), June.
  3. Armbruster, Walter J., 2009. "Challenges and Issues in the Next Decade: A Proactive Role for Agricultural and Resource Economists," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 38(1), April.
  4. Harro Asselt & Norichika Kanie & Masahiko Iguchi, 2009. "Japan’s position in international climate policy: navigating between Kyoto and the APP," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(3), pages 319-336, August.
  5. repec:reg:wpaper:601 is not listed on IDEAS
  6. Pablo del Río, 2009. "Assessing the dynamic efficiency of internal mitigation projects. An evolutionary perspective," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 14(3), pages 203-213, March.
  7. Sarah Hards, 2011. "Social Practice and the Evolution of Personal Environmental Values," Environmental Values, White Horse Press, vol. 20(1), pages 23-42, February.
  8. King, Helen, 2008. "The challenges of finding efficient policy measures to reduce Australia’s agricultural Greenhouse gas emissions," Research Reports 94809, Australian National University, Environmental Economics Research Hub.
  9. Mathews, John, 2007. "Seven steps to curb global warming," Energy Policy, Elsevier, vol. 35(8), pages 4247-4259, August.
  10. Sylvia Karlsson-Vinkhuyzen & Harro Asselt, 2009. "Introduction: exploring and explaining the Asia-Pacific Partnership on Clean Development and Climate," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(3), pages 195-211, August.
  11. Frank Jotzo, 2007. "Climate policy in Australia and globally: where to and how?," Economics and Environment Network Working Papers 0703, Australian National University, Economics and Environment Network.
  12. Helen King, 2008. "The challenges of finding efficient policy measures to reduce Australia'’s agricultural greenhouse gas emissions," Environmental Economics Research Hub Research Reports 0809, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.

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