Climate change is perhaps the greatest example of market failure ever seen - but by providing a strong policy framework to overcome that the failure, governments can harness the tremendous power of markets to find creative and cost-effective responses to the challenge. There are three dimensions to mitigation policy - carbon pricing, technology policy and tackling market failures and behaviours that prevent the take-up of lower cost emissions reductions. Climate change policy can make major contributions to other policy objectives if it is designed well. In a comprehensive assessment of the costs and benefits of climate change policy, it is therefore necessary to value these cobenefits. The co-benefits are delivered through pursuing the important harmonies between climate change, growth and energy security. Growth is supported by energy efficiency as, by definition, it increases resource productivity. Measures to improve energy efficiency can also help reduce expenditure on energy for vulnerable individuals and contribute to reducing fuel poverty. Diversifying energy generation into using more domestic renewable resources reduces dependency on foreign imports of fossil fuel, supporting energy security objectives. Using carbon capture and storage technologies to enable the exploitation of domestic coal reserves without unacceptable damage to the environment can also support energy security. Increasing investment in renewable technologies increases the potential for distributed energy generation, improving access to energy. Avoiding deforestation and improving the management of degraded land can provide protection against flooding and soil erosion and support local objectives for sustainable development. The pursuit of good policies now to adjust to a future with lower emissions will put countries in a strong position to exploit the future markets for new low carbon technologies- by 2050 these markets could be worth up to US $500 billion a year. It is for these reasons that countries across the world have begun to pursue the objectives of growth, energy security and climate change as mutually supportive policy goals.
Friday, 2 March 2007
Stern Report 2007
Climate change is perhaps the greatest example of market failure ever seen - but by providing a strong policy framework to overcome that the failure, governments can harness the tremendous power of markets to find creative and cost-effective responses to the challenge. There are three dimensions to mitigation policy - carbon pricing, technology policy and tackling market failures and behaviours that prevent the take-up of lower cost emissions reductions. Climate change policy can make major contributions to other policy objectives if it is designed well. In a comprehensive assessment of the costs and benefits of climate change policy, it is therefore necessary to value these cobenefits. The co-benefits are delivered through pursuing the important harmonies between climate change, growth and energy security. Growth is supported by energy efficiency as, by definition, it increases resource productivity. Measures to improve energy efficiency can also help reduce expenditure on energy for vulnerable individuals and contribute to reducing fuel poverty. Diversifying energy generation into using more domestic renewable resources reduces dependency on foreign imports of fossil fuel, supporting energy security objectives. Using carbon capture and storage technologies to enable the exploitation of domestic coal reserves without unacceptable damage to the environment can also support energy security. Increasing investment in renewable technologies increases the potential for distributed energy generation, improving access to energy. Avoiding deforestation and improving the management of degraded land can provide protection against flooding and soil erosion and support local objectives for sustainable development. The pursuit of good policies now to adjust to a future with lower emissions will put countries in a strong position to exploit the future markets for new low carbon technologies- by 2050 these markets could be worth up to US $500 billion a year. It is for these reasons that countries across the world have begun to pursue the objectives of growth, energy security and climate change as mutually supportive policy goals.
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