4.5 Policies and instruments

4.5.1 Emission reduction policies

The reduction of GHG emissions from energy-supply systems is being actively pursued through a variety of government policies and private sector research. There are many technologies, behavioural changes and infrastructural developments that could be adopted to reduce the environmental impacts of current energy-supply systems (see Chapter 13). Whereas planning policies provide background for climate-change mitigation programmes, most climate policies relating to energy supply tend to come from three policy ‘families’ (OECD, 2002a):

• economic instruments (e.g. subsidies, taxes, tax exemption and tax credit);
• regulatory instruments (e.g. mandated targets, minimum performance standards, vehicle-exhaust emission controls); and
• policy processes (e.g. voluntary agreements and consultation, dissemination of information, strategic planning).

In addition, governments support RD&D programmes with financial incentives or direct investment to stimulate the development and deployment of new innovative energy-conversion technologies and create markets for them (Section 4.5.6).

Many GHG emission-reduction policies undertaken to date aim to achieve multiple objectives. These include market and subsidy reform, particularly in the energy sector (Table 4.21). In addition, governments are using a variety of approaches to overcome market barriers to energy-efficiency improvements and other ‘win-win’ actions.

Selecting policies and measures is not an easy task. It depends on many factors, including costs, potential capacity, the extent to which emissions must be reduced, environmental and economic impacts, rates at which the technology can be introduced, government resources available and social factors such as public acceptance. When implementing policies and measures, governments could consider the impacts of measures on other economies such as the specific needs and concerns of least developed countries arising from the adverse effects of climate change, on those nations that rely heavily on income generated from fossil-fuel exports, and on oil-importing developing countries.

Table 4.21: Examples of policy measures given general policy objectives and options to reduce GHG emissions from the energy-supply sector.