Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-55f67697df-zpzq9 Total loading time: 0 Render date: 2025-05-11T20:15:23.386Z Has data issue: false hasContentIssue false

25 - Climate policy design under uncertainty

from Part IV - Policy design and decisionmaking under uncertainty

Published online by Cambridge University Press:  06 December 2010

By
William Pizer
Edited by
Michael E. Schlesinger ,
Haroon S. Kheshgi ,
Joel Smith ,
Francisco C. de la Chesnaye ,
John M. Reilly ,
Tom Wilson  and
Charles Kolstad
William Pizer
Affiliation:
Resources for the Future 1616 P Street, NW Washington
Michael E. Schlesinger
Affiliation:
University of Illinois, Urbana-Champaign
Haroon S. Kheshgi
Affiliation:
ExxonMobil Research and Engineering
Joel Smith
Affiliation:
Stratus Consulting Ltd, Boulder
Francisco C. de la Chesnaye
Affiliation:
US Environmental Protection Agency
John M. Reilly
Affiliation:
Massachusetts Institute of Technology
Tom Wilson
Affiliation:
Electric Power Research Institute, Palo Alto
Charles Kolstad
Affiliation:
University of California, Santa Barbara
Get access

Summary

Introduction

The uncertainty surrounding the costs and benefits associated with global climate change mitigation creates enormous obstacles for scientists, stakeholders, and especially policymakers seeking a practical policy solution. Scientists find it difficult to accurately quantify and communicate uncertainty; business stakeholders find it difficult to plan for the future; and policymakers are challenged to balance competing interests that frequently talk past each other.

Most emissions trading programs to date have focused on absolute caps that either remain fixed or decline over time. Examples include the US SO2 trading program and NOx Budget Program, the EU Emissions Trading Scheme (EU ETS), Southern California's NOx RECLAIM program, and a host of other regional pollutant trading schemes in the United States. Even the Kyoto Protocol, by most accounts, is viewed as a first step in capping emissions that must then lead to even lower levels in subsequent periods.

Yet the uncertainty surrounding climate change suggests that such an approach to regulating greenhouse gas emissions is problematic. On the one hand, we are unsure about what atmospheric concentrations need to be in the long run to prevent dangerous interference with the climate system. And regardless of the stabilization target, considerations of the global economic system and its dependence on fossil fuels suggests that optimal global emissions trajectories will continue to grow for some time (Wigley et al., 1996; Manne and Richels, 1999).

Type
Chapter
Information
Human-Induced Climate Change
An Interdisciplinary Assessment
 , pp. 305 - 313
Publisher: Cambridge University Press
Print publication year: 2007

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Book purchase

Temporarily unavailable

References

Anderson, S. and Newell, R. (2004). Prospects for carbon capture and storage technologies. Annual Review of Environment and Resources 29, 102–142.CrossRefGoogle Scholar
Braine, B. (2003). Sold!Electric Perspectives, January/February, 20–30.Google Scholar
Carlson, C., Burtraw, D., Cropper, M. and Palmer, K. L. (2000). SO2 control by electric utilities: what are the gains from trade. Journal of Political Economy 108 (6), 1292–1326.CrossRefGoogle Scholar
Council of Economic Advisers (2002). Economic Report of the President. Washington: Government Printing Office.Google Scholar
Ellerman, A. D. and Sue Wing, I. (2003). Absolute versus intensity-based emission caps. Climate Policy 3 (2), S7–S20.CrossRefGoogle Scholar
Ellerman, A. D., Joskow, P. L., Schmalensee, R., Montero, J. P. and Bailey, E. M. (2000). Markets for Clean Air: The US Acid Rain Program. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Energy Information Administration (EIA) (2004). Analysis of Senate Amendment 2028, the Climate Stewardship Act of 2003. Washington DC: EIA.
Forrester, D. (2004). Supplemental Report on EU National Allocation Plans. Washington: National Commission on Energy Policy, Research Compendium.Google Scholar
Gillingham, K., Newell, R. and Palmer, K. (2004). Retrospective Examination of Demand-Side Energy Efficiency Policies. Washington: RFF.Google Scholar
Goulder, L. and Bovenberg, L. (2002). Addressing Industry-Distributional Concerns in US Climate-Change Policy. Stanford: Stanford University.Google Scholar
Kelly, D. L. and Kolstad, C. D. (1999). Bayesian learning, growth, and pollution. Journal of Economic Dynamics and Control 23 (4), 491–518.CrossRefGoogle Scholar
Kete, N. (1993). The Politics of Markets: the Acid Rain Control Policy in the 1990 Clean Air Act Amendments. Unpublished Ph. D. thesis, The Johns Hopkins University, Baltimore.
Kopp, R. (2004). Near-term Greenhouse Gas Emissions Targets. Discussion Paper 04–41. Washington: Resources for the Future.
Kruger, J. and Pizer, W. (2004). Greenhouse gas trading in Europe: the new grand policy experiment. Environment 46 (8), 8–23.Google Scholar
Majone, G. (2002). What price safety? The precautionary principle and its policy implications. Journal of Common Market Studies 40 (1), 89–109.CrossRefGoogle Scholar
Manne, A. and Richels, R. (1999). The Kyoto Protocol: a cost-effective strategy for meeting environmental objectives?Energy Journal Special Issue, 1–23.Google Scholar
National Commission on Energy Policy (NCEP) (2004). Economic Analysis of Commission Proposals. Washington: NCEP.Google Scholar
National Mining Association (2005). Bingaman Climate Proposal Rations and Taxes US Coal Production and Consumption. Washington: National Mining Association.Google Scholar
Newell, R. and Pizer, W. (2003). Regulating stock externalities under uncertainty. Journal of Environmental Economics and Management 45, 416–432.CrossRefGoogle Scholar
Newell, R., Pizer, W. and Zhang, J. (2005). Managing permit markets to stabilize prices. Energy and Resource Economics, 31, 133–157.CrossRefGoogle Scholar
Nordhaus, W. D. (1994). Managing the Global Commons. Cambridge: MIT Press.Google Scholar
Office of Management and Budget (OMB) (2000). Report to Congress on the Costs and Benefits of Regulation. Washington: US OMB.Google Scholar
Parry, I. W. H. (1995). Pollution taxes and revenue recycling. Journal of Environmental Economics and Management 29 (3), S64–77.CrossRefGoogle Scholar
Payne, H. (2001). (Mmph) What camel? Detroit News, October 29.
Peabody Energy (2005). NCEP Climate Plan Cuts Coal Production. Washington: Peabody Energy.Google Scholar
Pizer, W. A. (2002). Combining price and quantity controls to mitigate global climate change. Journal of Public Economics 85 (3), 409–434.CrossRefGoogle Scholar
Pizer, W. (2004). The Case for Intensity Targets. Washington: Resources for the Future.Google Scholar
Point Carbon (2005). Midday Market Update. Carbon Market News, July 8.
Roberts, M. J. and Spence, M. (1976). Effluent charges and licenses under uncertainty. Journal of Public Economics 5 (3–4), 193–208.CrossRefGoogle Scholar
Sagoff, M. (2003). Cows are better than condos, or how economists help solve environmental problems. Environmental Values 12 (4), 449–470.CrossRefGoogle Scholar
Samuelsohn, D. (2003). Trading plans highlight differences between Clear Skies, competing bills. Greenwire, May 7.
Senate Energy Committee, Minority Staff (2005). Climate and Economy Insurance Act, draft legislation. Washington: Senate Energy Committee.Google Scholar
Tol, R. S. J. (2005). The marginal costs of carbon dioxide emissions. Energy Policy 33 (16), 2064–2075.CrossRefGoogle Scholar
US Environmental Protection Agency (EPA) (2004a). Acid Rain Program: 2003 Progress Report. Washington: US EPA.Google Scholar
US EPA (2004b). Progressive Flow Control in the OTC NOx Budget Program: Issues to Consider at the Close of the 1999 to 2002 Period. Washington: US EPA.Google Scholar
US EPA (2006). Acid Rain Program: 2005 Progress Report. Washington: US EPA.Google Scholar
US Senate (1997). A Resolution Expressing the Sense of the Senate Regarding the Conditions for the United States Becoming a Signatory to any International Agreement on Greenhouse Gas Emissions under the United Nations Framework Convention on Climate Change. Senate reports 105–54, S 98.
Weitzman, M. L. (1974). Prices vs. quantities. Review of Economic Studies 41 (4), 477–491.CrossRefGoogle Scholar
Weitzman, M. L. (1978). Optimal rewards for economic regulation. American Economic Review 68 (4), 683–691.Google Scholar
Weyant, J. P. and Hill, J. (1999). The costs of the Kyoto Protocol: a multi-model evaluation. Introduction and Overview. Energy Journal Special Issue.
White House (2001). Text of a Letter from the President to Senators Hagel, Helms, Craig, and Roberts. Available from www.whitehouse.gov/news/releases/2001/03/20010314.html. [cited July 7 2005].
White House (2002a). Global Climate Change Policy Book. White House 2002, Available from www.whitehouse.gov/news/releases/2002/02/climatechange.html. [cited August 23 2004].
White House (2002b). President Announces Clear Skies & Global Climate Change Initiatives. Available from www.whitehouse.gov/news/releases/2002/02/20020214-5.html. [cited July 7 2005].
Wigley, T. M. L., Richels, R. and Edmonds, J. A. (1996). Economic and environmental choices in the stabilization of atmospheric CO2 concentrations. Nature 379, 240–243.CrossRefGoogle Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×