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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

Author

Listed:
  • 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

    as
    1. 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.
    2. 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.
    3. Popp, David, 2019. "Environmental Policy and Innovation: A Decade of Research," International Review of Environmental and Resource Economics, now publishers, vol. 13(3-4), pages 265-337, September.
    4. 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.
    5. David Popp, 2019. "Environmental policy and innovation: a decade of research," CESifo Working Paper Series 7544, CESifo.
    6. 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.
    7. 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.
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    10. Perino, Grischa & Willner, Maximilian, 2016. "Procrastinating reform: The impact of the market stability reserve on the EU ETS," Journal of Environmental Economics and Management, Elsevier, vol. 80(C), pages 37-52.
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