Firms, Governments and Climate Policy

Firms, Governments and Climate Policy

Incentive-based Policies for Long-term Climate Change

ESRI Studies Series on the Environment

Edited by Carlo Carraro and Christian Egenhofer

This book analyses the policy mixes that provide the best possible incentives for firms and governments to act on climate change and sign up to international climate agreements. In doing so, the authors address a multitude of related issues including the linkages between flexible mechanisms and voluntary agreements; regulation and taxation; the opportunities and barriers of the Kyoto Protocol for industry; and the incentives for firms to undertake climate-related R & D and investments. As well as illustrating the environmental benefits and cost-effectiveness of alternative policy mixes in reducing GHG emissions, the authors also offer sensible policy prescriptions for increasing the numbers of countries that ratify and implement climate agreements.

Chapter 2: Negotiated agreements and climate change mitigation

Patrick ten Brink, Marina Morère and Jane Wallace-Jones

Subjects: economics and finance, environmental economics, environment, asian environment, climate change, environmental economics


Patrick ten Brink, Marina Morère and Jane Wallace-Jones 1. INTRODUCTION Aim of the Chapter The aim of this chapter is to present state-of-the-art insights into the actual and potential role of negotiated environmental agreements (NEAs) for climate change mitigation – whether to help meet the Kyoto targets or simply to meet national commitments independent of the Kyoto Protocol.1 It therefore spells out the key issues regarding the instrument’s use, impacts and context, and also methodologies for its assessment. The chapter will therefore give details of where the tool has been applied, and will also include an analysis of the incentives for adopting an agreement, and incentives for action within the agreement; this includes a brief review of the basic risks and rewards. Regarding the impacts, the chapter presents the available data on emissions reductions and also evaluates whether agreements offer sufficiently significant impacts to be considered a serious instrument to address climate change. Furthermore, it spells out the methods for the assessment of agreements and the limitations of these methods. The chapter also assesses the linkage of an NEA to other instruments in the policy instrument portfolio, and briefly addresses the question of whether NEAs can be stand-alone effective policy instruments, or whether their effectiveness can only be a result of a linkage to other policy tools within a portfolio of instruments that governments use to address climate change. Definition of NEAs When people speak of voluntary environmental agreements or initiatives, many different names and tools...

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