Credible Carbon Policy

Dieter Helm, Cameron Hepburn () and Richard Mash ()

Oxford Review of Economic Policy, 2003, vol. 19, issue 3, 438-450

Abstract: The paper sets out the credibility problem in carbon policy, provides a number of examples of non-credibility in recent energy policy, and identifies the costs of failing to address it. The time inconsistency of carbon policy--arising because of multiple objectives, the irreversibility of energy investments, and the scope for ex-post reneging on ex-ante commitments to set policy instruments, such as carbon taxes or emission permits, at appropriate levels--is set in a conceptual framework. Analogies with monetary policy are drawn, and a solution to the time-inconsistency problem is proposed through the establishment of an energy/carbon agency. Copyright 2003, Oxford University Press.

Date: 2003
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Persistent link: https://EconPapers.repec.org/RePEc:oup:oxford:v:19:y:2003:i:3:p:438-450

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