Climate-change policy

Abstract:

This work arises from the Oxford Review of Economic Policy issue of autumn 2003 which has been revised and built upon with new chapters. Its main themes are the science of climate change, the social cost of carbon, the choice of policy instruments, and the appropriate institutions.

The book is organised in five parts spread over fifteen chapters. Following an introduction, chapter one provides a useful background survey of the important elements of climate-change policy. Chapter two offers evidence to support the argument that global warming is the most serious threat facing the world today, and explores the current attempts by the UK government to try to combat that threat both domestically and as an international player. Chapter three examines the inhibiting effect of uncertainty surrounding global warming and the contingent climate-change policy with the tensions of greenhouse-gas emissions and ‘learn-then-act’ attitudes. Chapter four closes part one with an examination of Integrated Assessment Models - the formal, computerised, representations created to understand and cope with climate change.

Part two addresses the social cost of carbon. Chapter five presents a detailed analysis of work done to estimate the monetary value of world-wide damage done by anthropogenic CO2 emissions, then chapter six offers a similar examination of the social costs of greenhouse gases. The marginal damage costs of CO2 emissions are defined as the net present value of the difference in monetized climate-change impacts induced by an infinitesimally small change in current emissions of CO2; chapter seven examines the difficulties surrounding the use of such estimates.

Part three covers tradable permits and carbon taxes. In chapter eight their role in climate-change policy is explored, while chapter nine discusses the interaction of cap-and-trade emissions trading schemes for CO2 with and within a wider range of climate-policy instruments. Fiscal interactions and the case for carbon taxes over grandfathered carbon permits are examined in chapter ten, which proffers the case for an internationally harmonised carbon tax. Chapter eleven looks at the implications for compliance, monitoring, and enforcement arising from the use of tradable permits in climate-change, air and water pollutants and natural resources.

Part four is devoted to consideration of Kyoto. The Protocol is put under the microscope in chapter twelve which broadly concludes that it is a ‘deeply flawed’ agreement both economically and practically. Chapter thirteen explores the potential for building on Kyoto - an enhanced Kyoto Plus policy. The final part contains two chapters which address institutional design and energy policy. Chapter fourteen considers the necessary elements to be included in a credible carbon policy. Contingent upon such a policy is the need to design an energy policy able to meet multiple objectives of which a reduction in carbon emissions is only one.

The work will interest scholars and students, policy researchers and policy makers, environmentalists and green politicians engaged in climate-change issues.

Dieter Helm is an economist specialising in the environment, regulation and the utilities. He is Official Fellow in Economics at New College, Oxford, and holds a number of advisory board appointments, including the Council for Science and Technology, and is Chair of the DEFRA Academic Economic Panel. He is a member of the Sustainable Energy Policy Advisory Board, and the Ministerial Task Force on Sustainable Development.