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

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Author Info

  • John C. V. Pezzey

    ()
    (Australian National University,Centre for Resource and Environmental Studies)

  • Frank Jotzo

    ()
    (Australian National University, Research School of Pacific and Asian Studies)

  • John Quiggen

    ()
    (University of Queensland, School of Economics and Political Science)

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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File URL: http://een.anu.edu.au/download_files/een0611.pdf
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Bibliographic Info

Paper provided by Australian National University, Economics and Environment Network in its series Economics and Environment Network Working Papers with number 0611.

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Length: 14 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:anu:eenwps:0611

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Web page: http://een.anu.edu.au/

Related research

Keywords: climate policy; greenhouse gas emissions; abatement; emission taxes; emissions trading; technology policy; innovation; Asia-Pacific Partnership; AP6;

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References

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  1. Pezzey, John C.V., 2003. "Emission Taxes and Tradable Permits: A Comparison of Views on Long Run Efficiency," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 58198, Australian Agricultural and Resource Economics Society.
  2. 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.
  3. Goulder, Lawrence H. & Parry, Ian W. H. & Williams III, Roberton C. & Burtraw, Dallas, 1999. "The cost-effectiveness of alternative instruments for environmental protection in a second-best setting," Journal of Public Economics, Elsevier, vol. 72(3), pages 329-360, June.
  4. A. Lans Bovenberg & Lawrence H. Goulder, 2000. "Neutralizing the Adverse Industry Impacts of CO2 Abatement Policies: What Does it Cost?," NBER Working Papers 7654, National Bureau of Economic Research, Inc.
  5. Jaffe, Adam B. & Newell, Richard G. & Stavins, Robert N., 2005. "A tale of two market failures: Technology and environmental policy," Ecological Economics, Elsevier, vol. 54(2-3), pages 164-174, August.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. 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.
  12. Jacoby, Henry D. & Ellerman, A. Denny, 2004. "The safety valve and climate policy," Energy Policy, Elsevier, vol. 32(4), pages 481-491, March.
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Citations

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Cited by:
  1. 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.
  2. Warwick McKibbin, 2007. "The 2006 Sir Leslie Melville Lecture: From National To International Climate Change Policy," CAMA Working Papers 2007-05a, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  3. Pezzey, John C.V. & Mazouz, Salim & Jotzo, Frank, 2010. "The Logic Of Collective Action And Australia'S Climate Policy," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 59577, Australian Agricultural and Resource Economics Society.
  4. 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.
  5. 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.
  6. repec:reg:wpaper:601 is not listed on IDEAS
  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. 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.
  9. Mathews, John, 2007. "Seven steps to curb global warming," Energy Policy, Elsevier, vol. 35(8), pages 4247-4259, August.
  10. 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.
  11. Warwick J. McKibbin, 2007. "From National to International Climate Change Policy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(4), pages 410-420, December.
  12. 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.
  13. 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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