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Carbon trading in the policy mix
The Kyoto Protocol is stimulating the development of emissions-trading schemes at the national and international levels. These are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements, leading to complex problems of policy interaction. But the topic of policy interaction remains under-researched. This paper aims to improve understanding of such interactions by examining the conditions under which a cap-and-trade scheme for carbon-dioxide emissions may usefully coexist with carbon/energy taxes, support mechanisms for renewable electricity, and policies to promote energy efficiency. The paper argues that each of these instrument combinations may be acceptable, provided they contribute to either improving the static or dynamic efficiency of the trading scheme, or delivering other valued policy objectives. But, since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions, the objectives and trade-offs within the policy mix must be explicit.
History
Publication status
- Published
Journal
Oxford Review of Economic PolicyISSN
0266-903XPublisher URL
External DOI
Issue
3Volume
19Page range
420-436Pages
17.0Department affiliated with
- SPRU - Science Policy Research Unit Publications
Notes
The paper shows that emissions-trading schemes of kinds advocated by the Kyoto Protocol are in practice being introduced alongside existing policy instruments, with little regard for their overall compatibility or integration. These latter may negate much of the specific positive contribution of the new schemes. Dr Sorrell was the principal author of the study.Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2012-02-06Usage metrics
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