Economic instruments for the reduction of carbon dioxide emissions
18 November 2002
There is an urgent requirement to decrease the amount of human produced greenhouse gas emissions, mainly carbon dioxide, in order to slow down the rate of climate change. Economic analysis shows convincingly that placing primary emphasis on the use of economic instruments provides the most cost-effective route for such emission reduction. This report studies two generic types of economic instrument that could provide the most effective solution to rising C02 emissions: a carbon tax imposed on all C02 emissions and the allocation of tradable emission permits.