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Decarbonizing the Industrial Sector: The Potential for Ambitious EU Member States to Use Flexible Performance Standards to Strengthen Carbon Price Signals

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  • Löfgren, Åsa
  • Burtraw, Dallas

    (Resources for the Future)

  • Keyes, Amelia

    (Resources for the Future)

Abstract

In this policy brief, we offer an introduction to the family of policy instruments known as “flexible performance standards.” We describe and examine the attributes of performance standards that elevate them to be chosen in many jurisdictions, often as a precursor to carbon pricing, and we explain why flexibility improves their cost-effectiveness and the potential they may have as complementary policies to strengthen carbon pricing to drive innovation, with a specific focus on the industrial sector. The brief ends with a discussion of the potential to apply flexible performance standards to the Swedish industrial sector to achieve emissions reductions in line with the national climate target.

Suggested Citation

  • Löfgren, Åsa & Burtraw, Dallas & Keyes, Amelia, 2020. "Decarbonizing the Industrial Sector: The Potential for Ambitious EU Member States to Use Flexible Performance Standards to Strengthen Carbon Price Signals," RFF Reports 20-03, Resources for the Future.
    • Handle: RePEc:rff:report:rp-20-03
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    References listed on IDEAS

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    1. Lawrence H. Goulder & Ian W.H. Parry & Roberton C. Williams III & Dallas Burtraw, 2002. "The Cost-Effectiveness of Alternative Instruments for Environmental Protection in a Second-Best Setting," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 27, pages 523-554, Edward Elgar Publishing.
    2. Jonas Meckling & Thomas Sterner & Gernot Wagner, 2018. "Publisher Correction: Policy sequencing toward decarbonization," Nature Energy, Nature, vol. 3(3), pages 243-243, March.
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    4. Löfgren, Åsa & Millock, Katrin & Nauges, Céline, 2008. "The effect of uncertainty on pollution abatement investments: Measuring hurdle rates for Swedish industry," Resource and Energy Economics, Elsevier, vol. 30(4), pages 475-491, December.
    5. Michael Pahle & Dallas Burtraw & Christian Flachsland & Nina Kelsey & Eric Biber & Jonas Meckling & Ottmar Edenhofer & John Zysman, 2018. "Sequencing to ratchet up climate policy stringency," Nature Climate Change, Nature, vol. 8(10), pages 861-867, October.
    6. Christian Flachsland & Michael Pahle & Dallas Burtraw & Ottmar Edenhofer & Milan Elkerbout & Carolyn Fischer & Oliver Tietjen & Lars Zetterberg, 2020. "How to avoid history repeating itself: the case for an EU Emissions Trading System (EU ETS) price floor revisited," Climate Policy, Taylor & Francis Journals, vol. 20(1), pages 133-142, January.
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