Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/223417
Title: ECONOMIC INSTRUMENTS FOR REDUCING CARBON DIOXIDE EMISSIONS : AN EXPLORATORY APPROACH
Authors: SAURABH JOSHI
Keywords: Environmental Management
Master (Environmental Management)
Study report
Shreekant Gupta
2009/2010 EnvM
Issue Date: 14-Apr-2011
Citation: SAURABH JOSHI (2011-04-14). ECONOMIC INSTRUMENTS FOR REDUCING CARBON DIOXIDE EMISSIONS : AN EXPLORATORY APPROACH. ScholarBank@NUS Repository.
Abstract: Climate change and global warming have today become issues that dominate scientific, economic and political discourse worldwide. The dramatic increase in atmospheric concentrations of carbon dioxide (CO2), one of the primary gases contributing to global warming, is well documented, and policymakers are focusing their efforts on examining tools to tackle the problem. Governments can choose between two broad approaches – adopting Command-and-Control (CAC) policies, or employing economic instruments. Economic analysis has proven that the cost-efficiency of using market-based instruments to reduce carbon dioxide emissions is far superior to a CAC approach, but the choice between market-based instruments is not clear cut. Uncertainty related to the marginal control costs and marginal benefits of reducing emissions complicates the option between instruments based on controlling price or quantity. In this report, three types of economic instruments that could provide effective solutions to controlling CO2 emissions are considered – carbon taxes, which represent price regulation and have been employed with some success in countries like Sweden, Finland and Denmark; tradeable CO2 emission permits, which correspond to quantity regulation and are being promoted in the international arena following the implementation of the European Union Emissions Trading Scheme (EU ETS); and hybrid policies, which combine elements of both price and quantity regulation. With climate change being a global issue, any proposed policy instrument must have international appeal. Countries are unlikely to submit to a global carbon tax, which would possibly undermine their sovereignty, and a potential international tradeable permits scheme would be hindered, inter alia, by fluctuations in price. A hybrid approach, with its flexibility and political appeal, could overcome the limitations of pure price or quantity regulation and presents an internationally-acceptable solution to the problem of rising CO2 emissions.
URI: https://scholarbank.nus.edu.sg/handle/10635/223417
Appears in Collections:Master's Theses (Restricted)

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