IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

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.

Policy objectives Policy options Economic instruments Regulatory instruments Policy processes 
Voluntary agreements Dissemination of information and strategic planning Technological RD&D and deployment 
Energy efficiency   Higher energy taxes Lower energy subsidies Power plant GHG taxes Fiscal incentives Tradable emissions permits  Power plant minimum efficient standards Best available technologies prescriptions  Voluntary commitments to improve power plant efficiency  Information and education campaigns.  Cleaner power generation from fossil fuels  
Energy source switching  GHG taxes Tradable emissions permits Fiscal incentives   Power plant fuel portfolio standards  Voluntary commitments to fuel portfolio changes  Information and education campaigns.   Increased power generation from renewable, nuclear, and hydrogen as an energy carrier 
Renewable energy  Capital grants Feed-in tariffs Quota obligation and permit trading GHG taxes radable emissions permits   Targets Supportive transmission tariffs and transmission access  Voluntary agreements to install renewable energy capacity  Information and education campaigns Green electricity validation  Increased power generation from renewable energy sources  
Carbon capture and storage  GHG taxes Tradable emissions permits   Emissions restrictions for major point source emitters  Voluntary agreements to develop and deploy CCS  Information campaigns  Chemical and biological sequestration Sequestration in underground geological formations