Good policy, and bad
Some mitigation policies are effective,some are efficient, and some are neitherDec 3rd 2009 | from the print edition
GREENHOUSE-GAS emissions targets can be implemented through three sorts ofpolicy instruments—regulation, carbon-pricing and subsidies.
Governmentsgenerally like regulation (because it appears to be cost-free), economists likecarbon prices (because they are efficient) and businesses like subsidies (becausethey get the handouts).
Regulation can be useful where the market is not working well. Buildings are rarelydesigned to save energy, because those who put them up do not usually pay thebills and those who occupy them choose them for their views or their looks, not theirenergy-efficiency. The same goes for appliances, most of which do not use
enoughenergy to affect consumers' choices. Small regulatory changes (see box, next page)can cut energy consumption without distorting the market much. According toMcKinsey, around one-third of the required greenhouse-gas reductions will actuallysave money.
In this special reportGetting warmer Is it worth it? The green slump ?Good policy, and bad Vampires on a diet Cap and tirade Who cares? A long game Closing the gaps
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What needs to change Unpacking the problem
Sources & acknowledgementsReprints Related topicsSolar energy
China
European Union Alternative energy Europe
The European Union's Emissions-Trading Scheme, which started up in 2005, is theonly large-scale attempt so far to set a carbon price. Under the ETS, EU
countriesget national allocations which they then parcel out to over 11,500 factories in fivedirty industries. Companies can buy and sell allocations amongst themselves, andcan also buy “certified emission reductions” from developing countries to meet theircaps through Kyoto's “clean development mechanism”.
Europe's flagship
The ETS makes up the vast bulk of the global carbon market, which will be wortharound $122 billion this year. It is the principal way of financing the shift from high-to low-carbon power and industrial processes in the developing world. A wind farmin India; a methane-capture scheme for pig farms in Brazil; a forestry project inIndonesia; equipment to capture industrial gases in China—the ETS can financethem all.
Although it is still young, the ETS has had some impact on emissions. According toa 2008 study at the Massachusetts Institute of Technology, in its first three years itprobably reduced them by 120m-300m tonnes, or 2-5% a year, below what theywould otherwise have been.
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2000.
This sort of energy is expensive. The best indication of that is the carbon price thatwould be required to make investment in renewables worthwhile without
subsidy.According to New Energy Finance, onshore wind energy needs a carbon price of $38,offshore of $136 and solar cells of $
196. Europe's target for generating 20% of itsenergy from renewable sources therefore looks pricey. According to Richard Green,director of the Institute for Energy Research and Policy at Birmingham University,the implied marginal cost of carbon would be �129 a tonne—which suggests thatallocating such large resources to renewable-energy subsidies is, as Mr Green says,“seriously sub-optimal”. The worst example of a wasteful subsidy is America's support programme forhome-grown corn ethanol, which is coupled with tariffs on cheaper sugar-caneethanol from Brazil. The programme has raised global food prices (and thusincreased malnutrition among the world's poorest); lined the pockets of America'sfarmers; given policies to cut carbon a bad name; and cut little, if any, carbon.Solar flare
The resulting boom benefited manufacturers not just in Spain but also in
Germanyand China, the biggest producers of solar cells. Last year Spain accounted for 40%of world demand. The government had planned for 400MW of solar capacity to bebuilt by
2008. “There were all sorts of abuses,” says Jenny Chase, solaranalyst at New Energy Finance. “If you connected a single module to the grid beforeSeptember 29th, your whole project got financed. So modules were changing handsfor vast sums of money.” After the deadline the market collapsed.
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Mr Clover is concerned about the likely effect. “We're expecting a stampede in Globally, New Energy Finance reckons that only $24 billion of green-stimulus moneywill be disbursed this year, with another $58 billion to follow in 2010 and a further$56 billion in
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经贸专业英语报刊阅读教程 第一课 Good policy, and bad
