Emissions trading is a market-based approach to controlling pollution by providing economic incentives for reducing the emissions of pollutants. The concept is also known as cap and trade (CAT) or emissions trading scheme (ETS). Carbon emission trading for CO2 and other greenhouse gases has been introduced in China, the European Union and other countries as a key tool for climate change mitigation. Other schemes include sulfur dioxide and other pollutants.
Environmental finance is a field within finance that employs market-based environmental policy instruments to improve the ecological impact of investment strategies. The primary objective of environmental finance is to regress the negative impacts of climate change through pricing and trading schemes. The field of environmental finance was established in response to the poor management of economic crises by government bodies globally. Environmental finance aims to reallocate a businesses resources to improve the sustainability of investments whilst also retaining profit margins.
A carbon tax is a tax levied on the carbon emissions required to produce goods and services. Carbon taxes are intended to make visible the "hidden" social costs of carbon emissions, which are otherwise felt only in indirect ways like more severe weather events. In this way, they are designed to reduce carbon dioxide (CO
2) emissions by increasing prices of the fossil fuels that emit them when burned. This both decreases demand for goods and services that produce high emissions and incentivizes making them less carbon-intensive. In its simplest form, a carbon tax covers only CO2 emissions; however, it could also cover other greenhouse gases, such as methane or nitrous oxide, by taxing such emissions based on their CO2-equivalent global warming potential. When a hydrocarbon fuel such as coal, petroleum, or natural gas is burned, most or all of its carbon is converted to CO
2. Greenhouse gas emissions cause climate change, which damages the environment and human health. This negative externality can be reduced by taxing carbon content at any point in the product cycle. Carbon taxes are thus a type of Pigovian tax.
Climate change mitigation is action to limit climate change by reducing emissions of greenhouse gases or removing those gases from the atmosphere. The recent rise in global average temperature is mostly caused by emissions from fossil fuels burning. Mitigation can reduce emissions by transitioning to sustainable energy sources, conserving energy, and increasing efficiency. In addition, CO2 can be removed from the atmosphere by enlarging forests, restoring wetlands and using other natural and technical processes, which are grouped together under the term of carbon sequestration.
The economics of climate change concerns the economic aspects of climate change; this can inform policies that governments might consider in response. A number of factors make this and the politics of climate change a difficult problem: it is a long-term, intergenerational problem; benefits and costs are distributed unequally both within and across countries; and both the scientific consensus and public opinion on climate change need to be taken into account.
The Stern Review on the Economics of Climate Change is a 700-page report released for the Government of the United Kingdom on 30 October 2006 by economist Nicholas Stern, chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE) and also chair of the Centre for Climate Change Economics and Policy (CCCEP) at Leeds University and LSE. The report discusses the effect of global warming on the world economy. Although not the first economic report on climate change, it is significant as the largest and most widely known and discussed report of its kind.
Dale Weldeau Jorgenson was the Samuel W. Morris University Professor at Harvard University, teaching in the department of economics and John F. Kennedy School of Government. He served as chairman of the department of economics from 1994 to 1997.
Cap and Share is a regulatory and economic framework for controlling the use of fossil fuels in relation to climate stabilisation. Originally developed by Feasta, the foundation believed that climate change is a global problem and that there is a need to cap and reduce greenhouse gas emissions globally, the philosophy of Cap and Share maintains that the earth’s atmosphere is a fundamental common resource. Consequently, it is argued, each individual should get an equal share of the benefits from the limited amount of fossil fuels that will have to be burned and their emissions released into the atmosphere in the period until the atmospheric concentration of greenhouse gases has been stabilised at a safe level. Given the vast discrepancies in fossil fuel use between the wealthy and poor on a global level, Cap and Share would have a highly progressive economic effect, reducing inequality and helping to support climate justice and the energy transition in the Global South.
The Climate Change Committee (CCC), originally named the Committee on Climate Change, is an independent non-departmental public body, formed under the Climate Change Act (2008) to advise the United Kingdom and devolved Governments and Parliaments on tackling and preparing for climate change. The Committee provides advice on setting carbon budgets, and reports regularly to the Parliaments and Assemblies on the progress made in reducing greenhouse gas emissions. Notably, in 2019 the CCC recommended the adoption of a target of net zero greenhouse gas emissions by the United Kingdom by 2050. On 27 June 2019 the British Parliament amended the Climate Change Act (2008) to include a commitment to net zero emissions by 2050. The CCC also advises and comments on the UK's progress on Climate change adaptation through updates to Parliament.
Carbon pricing, also known as cap and trade (CAT) or emissions trading scheme (ETS), is a method for nations to reduce global warming. The cost is applied to greenhouse gas emissions in order to encourage polluters to reduce the combustion of coal, oil and gas – the main driver of climate change. The method is widely agreed and considered to be efficient. Carbon pricing seeks to address the economic problem that emissions of CO2 and other greenhouse gases (GHG) are a negative externality – a detrimental product that is not charged for by any market.
Carbon leakage occurs when there is an increase in greenhouse gas emissions in one country as a result of an emissions reduction by a second country with a strict climate policy.
Mark Kenneth Jaccard is a Canadian energy economist and author. He develops and applies models that assess sustainability policies for energy and material. Jaccard is a professor of sustainable energy in the School of Resource and Environmental Management (REM) at Simon Fraser University.
Integrated assessment modelling (IAM) or integrated modelling (IM) is a term used for a type of scientific modelling that tries to link main features of society and economy with the biosphere and atmosphere into one modelling framework. The goal of integrated assessment modelling is to accommodate informed policy-making, usually in the context of climate change though also in other areas of human and social development. While the detail and extent of integrated disciplines varies strongly per model, all climatic integrated assessment modelling includes economic processes as well as processes producing greenhouse gases. Other integrated assessment models also integrate other aspects of human development such as education, health, infrastructure, and governance.
Emission trading (ETS) for carbon dioxide (CO2) and other greenhouse gases (GHG) is a form of carbon pricing; also known as cap and trade (CAT) or carbon pricing. It is an approach to limit climate change by creating a market with limited allowances for emissions. This can lower competitiveness of fossil fuels and accelerate investments into low carbon sources of energy such as wind power and photovoltaics. Fossil fuels are the main driver for climate change. They account for 89% of all CO2 emissions and 68% of all GHG emissions.
The economics of climate change mitigation is the part of the economics of climate change related to climate change mitigation, that is actions that are designed to limit the amount of long-term climate change. Mitigation may be achieved through the reduction of greenhouse gas (GHG) emissions and the enhancement of sinks that absorb GHGs, for example forests.
Citizens' Climate Lobby (CCL) is an international grassroots environmental group that trains and supports volunteers to build relationships with their elected representatives in order to influence climate policy. The CCL is a registered 501(c)(4) with approximately $680,000 in revenue in the United States in 2018. Operating since 2007, the goal of CCL is to build political support across party lines to put a price on carbon, specifically a revenue-neutral carbon fee and dividend (CF&D) at the national level. CCL is supported by notable climate scientists James Hansen, Katharine Hayhoe, and Daniel Kammen. CCL's advisory board also includes former Secretary of State George P. Shultz, former US Representative Bob Inglis, actor Don Cheadle, and RESULTS founder Sam Daley-Harris.
The Dynamic Integrated Climate-Economy model, referred to as the DICE model or Dice model, is a neoclassical integrated assessment model developed by 2018 Nobel Laureate William Nordhaus that integrates in the neoclassical economics, carbon cycle, climate science, and estimated impacts allowing the weighing of subjectively guessed costs and subjectively guessed benefits of taking steps to slow climate change. Nordhaus also developed the RICE model, a variant of the DICE model that was updated and developed alongside the DICE model. Researchers who collaborated with Nordhaus to develop the model include David Popp, Zili Yang, and Joseph Boyer.
Co-benefits of climate change mitigation are the positive benefits related to mitigation measures which reduce greenhouse gas emissions or enhance carbon sinks. The beneficial or adverse impacts of deploying climate-change mitigation measures are highly context-specific and also depend on the scale. With regards to the transport sector, possible co-benefits of mitigation strategies include: air quality improvements, health benefits, equitable access to transportation services, reduced traffic congestion, and reduced material demand. For example, measures promoting walkable urban areas can create health co-benefits from cleaner air and benefits from enhanced mobility. The increased use of green and blue infrastructure can reduce the urban heat island effect and heat stress on people, which will improve the mental and physical health of urban dwellers. Country-specific co-benefits can include biodiversity conservation, ecosystem services, and livelihoods.
Gilbert E. Metcalf is the John DiBiaggio Professor of Citizenship and Public Service and a professor of economics at Tufts University. In addition, he is a research associate at the National Bureau of Economic Research and a University Fellow at Resources For The Future. Under the Obama Administration, he served as the Deputy Assistant Secretary for Environment and Energy at the U.S. Department of Treasury where he was the founding U.S. Board Member for the UN based Green Climate Fund. His research interests are in the areas of energy, environmental, and climate policy.
Green recovery packages are proposed environmental, regulatory and fiscal reforms to build prosperity in the wake of an economic crisis, like the COVID-19 pandemic or the Global Financial Crisis. They pertain to fiscal measures that intend to recover economic growth while also positively benefitting the environment, including measures for renewable energy, efficient energy use, nature based solutions, sustainable transport, green innovation and green jobs, amongst others.
