Economic textbooks predict that taxes and emission trading systems are the cheapest way for societies to reduce emissions of CO2. This book shows that this is also the case in the real world. It estimates the costs to society of reducing CO2 emissions in 15 countries using a broad range of policy instruments in 5 of the sectors that generate most emissions: electricity generation, road transport, pulp & paper and cement, as well as households’ domestic energy use. It finds wide variations in the costs of abating each tonne of CO2 within and among countries, as well as in the sectors examined and across different types of policy instruments. Market-based approaches like taxes and trading systems consistently reduced CO2 at a lower cost than other instruments. Capital subsidies and feed-in tariffs were among the most expensive ways of reducing emissions.
Table of contents:
Foreword Acknowledgments Executive Summary Chapter 1. Methodologies for estimating effective carbon prices -1.1 Introduction and background -1.2 Different approaches to estimate effective carbon prices -1.3 Key elements of a methodological approach -References Chapter 2.OECD’s approach to estimate effective carbon prices -2.1 Selection of policies for assessment -2.2 Strengths and weaknesses of the approach used -2.3 Coverage of the project -Reference -Annex 2.A1. Further description of the methodology used -Formal representation of the methodology -Graphical presentation of the methodology, using a stylised electricity market Chapter 3. Estimated effective carbon prices -3.1 Electricity generation -3.2 Road transport -3.3 The pulp & paper sector -3.4 The cement sector -3.5 Households’ energy use -3.6 General discussion of the estimated effective carbon prices -References