Tools and policies to promote decarbonization of the electricity sector

This chaptersummarisesboth marketand non-market-basedpolicies andtoolsavailable forencouragingdecarbonisationof the electricity sector.Market-based policiesinclude carbon pricing, through a carbon tax on electricity generation or a cap-and-trade program on emissions, and second-best tradable standards, which include emissions intensity standards, clean energy standards, and renewable portfolio standards.Popular non-market, technology-specific policymechanismsdiscussed include targeting specific technologies through subsidies, or discouraging the use of dirtier resources, such as coal, through a mandated phase-out. Policy options for encouraging energy efficiency in the power sector to reduce emissions are also explored.Policies that price carbon are more economically efficient than other, particularly non-market policies but can be politically challenging.Since multiple policies are often used simultaneously,interactions between these various market and non-marketpoliciesare discussed. Examples are drawn from experiences in several countries, including parts of Europe, the US, Asia, and South America.