Carbon trading in the policy mix

Sorrell, Steven and Sijm, Jos (2003) Carbon trading in the policy mix. Oxford Review of Economic Policy, 19 (3). pp. 420-436. ISSN 0266-903X

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Abstract

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.

Item Type: Article
Additional Information: 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.
Schools and Departments: School of Business, Management and Economics > SPRU - Science Policy Research Unit
Depositing User: Steven Sorrell
Date Deposited: 06 Feb 2012 20:05
Last Modified: 03 Apr 2012 11:33
URI: http://sro.sussex.ac.uk/id/eprint/23955
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