E. POLICIES, MEASURES AND INSTRUMENTS TO MITIGATE
22. A wide variety of national policies and instruments are available to governments to create the incentives for mitigation action. Their applicability depends on national circumstances and an understanding of their interactions, but experience from implementation in various countries and sectors shows there are advantages and disadvantages for any given instrument (high agreement, much evidence).
- Four main criteria are used to evaluate policies and
instruments: environmental effectiveness, cost
effectiveness, distributional effects, including equity, and
institutional feasibility [13.2].
- All instruments can be designed well or poorly, and be
stringent or lax. In addition, monitoring to improve
implementation is an important issue for all instruments.
General findings about the performance of policies are:
- Integrating climate policies in broader
development policies makes implementation and
overcoming barriers easier.
- Regulations and standards generally provide
some certainty about emission levels. They may be
preferable to other instruments when information or
other barriers prevent producers and consumers from
responding to price signals. However, they may not
induce innovations and more advanced technologies.
- Taxes and charges can set a price for carbon,
but cannot guarantee a particular level of
emissions. Literature identifies taxes as an
efficient way of internalizing costs of GHG
- Tradable permits will establish a carbon
price. The volume of allowed emissions determines
their environmental effectiveness, while the
allocation of permits has distributional
consequences. Fluctuation in the price of carbon
makes it difficult to estimate the total cost of
complying with emission permits.
- Financial incentives
tax credits) are frequently used by governments to
stimulate the development and diffusion of new
technologies. While economic costs are generally
higher than for the instruments listed above, they
are often critical to overcome barriers.
- Voluntary agreements between industry and
governments are politically attractive, raise
awareness among stakeholders, and have played a role
in the evolution of many national policies. The
majority of agreements has not achieved significant
emissions reductions beyond business as usual.
However, some recent agreements, in a few countries,
have accelerated the application of best available
technology and led to measurable emission
- Information instruments (e.g. awareness
campaigns) may positively affect environmental
quality by promoting informed choices and possibly
contributing to behavioural change, however, their
impact on emissions has not been measured yet.
- RD&D can stimulate technological
advances, reduce costs, and enable progress toward
- Some corporations, local and regional authorities,
NGOs and civil groups are adopting a wide variety of
voluntary actions. These voluntary actions may limit GHG
emissions, stimulate innovative policies, and encourage the
deployment of new technologies. On their own, they generally
have limited impact on the national or regional level
- Lessons learned from specific sector application of
national policies and instruments are shown in Table
23. Policies that provide a real or implicit price of carbon could create incentives for producers and consumers to significantly invest in low-GHG products, technologies and processes. Such policies could include economic instruments, government funding and regulation (high agreement, much evidence).
- An effective carbon-price signal could realize
significant mitigation potential in all sectors [11.3,
- Modelling studies,
consistent with stabilization at around 550
ppm CO2-eq by 2100
(see Box SPM.3) show carbon prices rising to 20 to 80
US$/tCO2-eq by 2030 and 30 to 155
US$/tCO2-eq by 2050. For the same stabilization
level, studies since TAR that take into account induced
technological change lower these price ranges to 5 to 65
US$/tCO2eq in 2030 and 15 to 130
US$/tCO2-eq in 2050 [3.3, 11.4, 11.5].
- Most top-down, as well as some 2050 bottom-up
assessments, suggest that real or implicit carbon prices of
20 to 50 US$/tCO2-eq, sustained or increased over
decades, could lead to a power generation sector with
low-GHG emissions by 2050 and make many mitigation options
in the end-use sectors economically attractive. [4.4,11.6]
- Barriers to the implementation of mitigation options
are manifold and vary by country and sector. They can be
related to financial, technological, institutional,
informational and behavioural aspects [4.5, 5.5, 6.7, 7.6,
8.6, 9.6, 10.5].
Table SPM-7. Selected sectoral policies,
measures and instruments that have shown to be environmentally
effective in the respective sector in at least a number of
24. Government support through financial contributions, tax credits, standard setting and market creation is important for effective technology development, innovation and deployment. Transfer of technology to developing countries depends on enabling conditions and financing (high agreement, much evidence).
- Public benefits of RD&D investments are bigger
than the benefits captured by the private sector, justifying
government support of RD&D.
- Government funding in real absolute terms for most
energy research programmes has been flat or declining for
nearly two decades (even after the UNFCCC came into force)
and is now about half of the 1980 level [2.7, 3.4, 4.5,
- Governments have a crucial supportive role in
providing appropriate enabling environment, such as
institutional, policy, legal and regulatory frameworks, to
sustain investment flows and for effective technology
transfer – without which it may be difficult to achieve
emission reductions at a significant scale. Mobilizing
financing of incremental costs of low-carbon technologies is
important. International technology agreements could
strengthen the knowledge infrastructure [13.3].
- The potential beneficial effect of technology transfer
to developing countries brought about by Annex I countries
action may be substantial, but no reliable estimates are
- Financial flows to developing countries through CDM
projects have the potential to reach levels of the order of
several billions US$ per year, which is higher than the
flows through the Global Environment Facility (GEF),
comparable to the energy oriented development assistance
flows, but at least an order of magnitude lower than total
foreign direct investment flows. The financial flows through
CDM, GEF and development assistance for technology transfer
have so far been limited and geographically unequally
distributed [12.3, 13.3].
25. Notable achievements of the UNFCCC and its Kyoto protocol are the establishment of a global response to the climate problem, stimulation of an array of national policies, the creation of an international carbon market and the establishment of new institutional mechanisms that may provide the foundation for future mitigation efforts (high agreement, much evidence).
The impact of the protocol’s first commitment period relative
to global emissions is projected to be limited. Its economic
impacts on participating Annex-B countries are projected to be
smaller than presented in TAR, that showed 0.2-2% lower
GDP in 2012 without
emissions trading, and 0.1-1.1% lower GDP with emissions trading
among Annex-B countries [1.4, 11.4, 13.3].
26. The literature identifies many options for achieving reductions of global GHG emissions at the international level through cooperation. It also suggests that successful agreements are environmentally effective, cost-effective, incorporate distributional considerations and equity, and are institutionally feasible (high agreement, much evidence).
- Greater cooperative efforts to reduce emissions will
help to reduce global costs for achieving a given level of
mitigation, or will improve environmental effectiveness
- Improving, and expanding the scope of, market
mechanisms (such as emission trading, Joint Implementation
and CDM) could reduce overall mitigation costs [13.3].
- Efforts to address
climate change can
include diverse elements such as emissions targets;
sectoral, local, sub-national and regional actions;
RD&D programmes; adopting common policies;
implementing development oriented actions; or expanding
financing instruments. These elements can be implemented in
an integrated fashion, but comparing the efforts made by
different countries quantitatively would be complex and
resource intensive [13.3].
- Actions that could be taken by participating countries
can be differentiated both in terms of when such action is
undertaken, who participates and what the action will be.
Actions can be binding or non-binding, include fixed or
dynamic targets, and participation can be static or vary
over time [13.3].