Strategic design of long-term climate policy instrumentations, with exemplary EU focus

Figures & data

FIGURE 1 CO₂ concentration at Mauna Loa, Hawaii

Source: http://www.esrl.noaa.gov/gmd/webdata/ccgg/trends/co2_data_mlo.png, downloaded 9 June 2016.

TABLE 1 Instrument types: from general, incentivizing, and enabling to specific and binding

Types	Examples
(1) Institutional framework	Environmental liability; generic emission tax; cap-and-trade (EU ETS); electricity markets (Unbundling Directive), etc.
(2) Public infrastructure and spatial planning	Electricity grid (obligatory high-voltage interconnections); hydrogen storage facility; CO2 transport infrastructure for CCS; etc.
(3) Publicly funded research and RD&D	Research programmes (parts of H2020; NER300); R&D subsidy schemes; exemplary CCS; etc.
(4) Regulating private actors:
(4.1) Informational instruments	Labelling schemes (electric appliances; NEDC measurement standards for cars); BAT information; Top Runner selections; etc.
(4.2) Financial instruments	Subsidies and taxes (non-fossils feed-in-tariffs, capital subsidies; gasoline excises; tax deductions renewables; etc.
(4.3) Standards and regulations	Generic standards (Fleet Standards; CO2/kWh; zero-energy buildings; speed limits; etc.

TABLE 2 Strategies for instrumentation design detailed

	Planning & Control strategy	Institutionalist strategy
1	From technical-economic sources analysis; to solution specification; to solution implementation for reducing climate emissions	From socio-economic problem analysis; to repairing the market deficiency of external effects of climate emitting activities
2	‘Practical effectiveness principle’	Polluter-Pays-Principle
3	Instruments defined broadly, as public policies reducing specific emissions, ultimately as mainstreaming ‘all’ policies	Instruments defined narrowly as public actions creating effective climate incentives, with enabling infrastructure
4	Broad overlap with other policy domains like for energy, income distribution, and employment	Single focus on climate, leaving other domains to other instrumentation
5	Sectoral approach, with main sectors: energy, industry, buildings and appliances, transport	Generic approach, avoiding sectoral specificness and specific technologies as much as possible
6	From specific technologies (Type 4) upward: From technology and behaviour policies; to focus on innovation with demonstration and creating learning curves; to public–private partnerships and publicly paid and regulated infrastructure; to repairs in negatively affected institutions	From generic institutions (Type 1) downward: From generic incentive creation; to enabling conditions; to solving specific market problems remaining, first in infrastructure and research, and finally incidentally subsidies for specific climate-relevant private technologies
7	Public–private partnerships for most relevant collective supply of key technologies and infrastructure	Public supply of natural monopolistic infrastructure; correction of monopolistic market tendencies
8	International cap agreement, specific per country, as many countries as possible, normative based, with compensations and retributions	International incentive agreement, open to all to join at the same conditions. Development policy is not part of climate policy

TABLE 3 Planning & Control and institutionalist instrumentations

	Planning & Control instrumentation	Institutionalist instrumentation
Type 1 Institutions	Cap-and-Trade fading; some regional electricity market repairs	Cap-and-trade into emission tax, encompassing, upstream, predictably rising to ‘$300 in 2050’
	Transmission interconnection rules	Equal for all real-time priced continental electricity market
	Increased patent protection for climate reasons, compensation for developing countries	Reduced patenting options, for generic reasons
Type 2 Infrastructure and its standards	Reducing natural gas distribution grid connections; limited bilateral supergrid	Public ownership infrastructure: electricity, hydrogen, CO2 transport for CCS
		Extensive supergrid
	Public–private partnerships in infrastructure	Public systems with high-risk and monopolistic tendencies (like the Internet)
Type 3 Research	Primarily RD&D, and public–private partnerships for market development	Primarily basic Research and some R&D
Type 4.1 Information	Like Japanese Front Runner	Like Japanese Front Runner
	BAT descriptions	Public reference databases on processes and technologies
Type 4.2 Financial	Feed-in premiums; renewables subsidies; capacity payment; including tax reductions	Possibly regional/local?
		No capacity payment; no tax reductions
	Preferential public purchasing	–
Type 4.3 Binding	Emission standards per kWh produced, −7% p.a.	–
	Installations standards, many	[For other reasons than climate]
	Total Fleet Standards, −11% p.a.	–
	Housing emission standards, new to near zero	If so, up to regional and local considerations. [coastal, windy, sunny, etc., regions all different]
	All existing stock on timeline to zero
	Product standards, many	[For other reasons than climate]