A Taxonomy of Instruments to Reduce Greenhouse Gas Emissions and their Interactions

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A Taxonomy of Instruments to Reduce Greenhouse Gas Emissions and their Interactions

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Romain Duval

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Romain Duval

Abstract

This paper reviews alternative (national and international) climate change mitigation policy instruments and interactions across them. Carbon taxes, cap-and-trade schemes, standards and technology-support policies (R&D and clean technology deployment) in particular are assessed according to three broad costeffectiveness criteria, their: i) static efficiency, defined to cover not just whether the instrument is costeffective per se but also whether it provides sufficient political incentives for wide adoption; ii) dynamic efficiency, which implies an efficient level of innovation and diffusion of clean technologies in order to lower future abatement costs; iii) ability to cope effectively with climate and economic uncertainties. Multiple market failures and political economy obstacles need to be addressed in order to meet these criteria. In this regard, carbon taxes or cap-and-trade schemes appear to perform better than alternatives. However, their cost-effectivenes can be enhanced through targeted use of other instruments. There is therefore room for climate policy packages.

Une taxonomie des instruments de réduction des émissions de gaz à effet de serre et de leurs interactions
Cet article passe en revue les différents instruments de politique économique (nationaux et internationaux) envisageables dans la lutte contre le changement climatique, ainsi que leurs interactions. Taxes carbone, marchés de permis négociables, standards et politiques de soutien au progrès technique (R&D et déploiement de technologies propres) en particulier sont évalués au regard de trois critères d’efficacité coût, à savoir: i) l'efficience statique, qui recouvre non seulement l’efficacité coût intrinsèque de l’instrument, mais aussi les incitations politiques à son adoption à grande échelle ; ii) l'efficience dynamique, impliquant un niveau efficient d’innovation et de diffusion des technologies propres permettant de réduire les coûts futurs de réduction des émissions ; iii) la capacité à s’adapter aux incertitudes climatiques et économiques. De multiples échecs de marché et obstacles relevant de l’économie politique doivent être surmontés pour vérifier ces critères. De ce point de vue, il apparaît que les taxes carbone et les marchés de permis négociables sont plus performants que les alternatives. Néanmoins, leur efficacité coût peut être améliorée par un usage ciblé des autres instruments. Il y a donc matière à la mise en place d’un éventail de politiques.

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Paper provided by OECD, Economics Department in its series OECD Economics Department Working Papers with number 636.

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Date of creation: 17 Sep 2008
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Handle: RePEc:oec:ecoaaa:636-en

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Find related papers by JEL classification:
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters

This paper has been announced in the following NEP Reports:

NEP-AGR-2008-10-07 (Agricultural Economics)
NEP-ALL-2008-10-07 (All new papers)
NEP-ENE-2008-10-07 (Energy Economics)
NEP-ENV-2008-10-07 (Environmental Economics)

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