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Implementing Policy

  • G. Cornelis van Kooten
Chapter

Abstract

What policy instruments are available to governments wishing to mitigate climate change by reducing greenhouse gas emissions? What role can and should government play? How effective is government action likely to be in reducing emissions and mitigating climate change? These are the subjects of this chapter. One concern is that government intervention to correct the market failure associated with global emissions of greenhouse gases leads to policy failure that worsens rather than helps the situation. The strengths and weaknesses of the main instruments in the policy – regulation, carbon taxes, subsidies and emissions trading – are examined in detail. While mandates are regularly employed, market instruments (taxes and cap-and-trade) are shown to be more efficient. With respect to emissions trading, corruption can be endemic because of potential windfalls from accessing grandfathered permits, from profits accruing to financial intermediaries, and from sale of dubious certificates or carbon offsets. The European Union’s Emissions Trading System, failed efforts by the U.S. Congress to agree on carbon legislation, and other cases are discussed. Regulation and subsidies play a dominant role, and are often justified on the grounds that they create green jobs; however, mandates and subsidies have resulted in policy failure, high costs to the economy, fewer and not greater numbers of jobs, and little in the way of reduced emissions of greenhouse gases. Evidence provided in the chapter indicates that there is little appetite among the public for mitigating climate change if the costs of doing so are What policy instruments are available to governments wishing to mitigate climate change by reducing greenhouse gas emissions? What role can and should government play? How effective is government action likely to be in reducing emissions and mitigating climate change? These are the subjects of this chapter. One concern is that government intervention to correct the market failure associated with global emissions of greenhouse gases leads to policy failure that worsens rather than helps the situation. The strengths and weaknesses of the main instruments in the policy – regulation, carbon taxes, subsidies and emissions trading – are examined in detail. While mandates are regularly employed, market instruments (taxes and cap-and-trade) are shown to be more efficient. With respect to emissions trading, corruption can be endemic because of potential windfalls from accessing grandfathered permits, from profits accruing to financial intermediaries, and from sale of dubious certificates or carbon offsets. The European Union’s Emissions Trading System, failed efforts by the U.S. Congress to agree on carbon legislation, and other cases are discussed. Regulation and subsidies play a dominant role, and are often justified on the grounds that they create green jobs; however, mandates and subsidies have resulted in policy failure, high costs to the economy, fewer and not greater numbers of jobs, and little in the way of reduced emissions of greenhouse gases. Evidence provided in the chapter indicates that there is little appetite among the public for mitigating climate change if the costs of doing so are $1,000 or more; surveys of policy experts are even less optimistic in this regard.,000 or more; surveys of policy experts are even less optimistic in this regard.

Keywords

Emission Reduction Clean Development Mechanism Emission Trading Credit Trading Marginal Abatement Cost 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media Dordrecht 2013

Authors and Affiliations

  • G. Cornelis van Kooten
    • 1
  1. 1.Department of EconomicsUniversity of VictoriaVictoriaCanada

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