Policy instruments for reducing greenhouse gas emissions
Benjamin Franklin once said that `In this world, nothing is certain but death and taxesÃÂ¿and a significant body of the scientific literature including the IPCC have indicated thatthe climate change problem has become such a pressing issue that we now face a starkchoice between the premature death of hundreds of millions of the people on this planet(from storm, flood, starvation, war or pestilence) and the use of taxation or other financialstrategies to change the relative cost of carbon intensive sources of energy compared tothe cost of `greenÃÂ¿ sources of energy. A change in the relative cost of `green energyÃÂ¿ willnot itself solve the problem, but it is a necessary (though not sufficient) step if there is tobe the required behavioural change which will support the application of engineeringsolutions to the problem which has been signaled by a large group of climate scientists.This paper addresses possible approaches to solving the problem of climate change byreducing greenhouse gas emissions (GHGEs). It considers the European UnionÃÂ¿semissions trading scheme (ETS) as an example of a market and government failure toachieve a reduction in emissions through a neoliberal approach to pricing emissions. Thediscussion then focuses on the design features of a carbon tax and some alternative policyinstruments that could contribute to a solution to the problem and it raises the mainadvantages of a carbon tax over an ETS.
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