Emission reduction policies and carbon prices in key economies

• More than 1000 carbon policy measures were identified in the nine countries studied, ranging from (limited) emissions trading schemes to policies that support particular types of abatement technology.
  • As policies have been particularly targeted at electricity generation and road transport emissions, the Commission analysed major measures in these sectors.
• While these disparate measures cannot be expressed as an equivalent single price on greenhouse gas emissions, all policies impose costs that someone must pay. The Commission has interpreted 'effective' carbon prices broadly to mean the cost of reducing greenhouse gas emissions - the 'price' of abatement achieved by particular policies.
• The Commission's estimates essentially provide a snapshot of the current cost and cost effectiveness of major carbon policies.
  • The subsidy equivalent, abatement achieved and implicit abatement subsidy have been calculated for policies and aggregated by sector in each country.
• As a proportion of GDP, Germany was found to have allocated more resources than other countries to abatement policies in the electricity generation sector, followed by the UK, with Australia, China and the US mid-range.
• Estimates of abatement relative to counterfactual emissions in the electricity generation sector followed a similar ordering, with Germany significantly ahead, followed by the UK, then Australia, the US and China.
• The estimated cost per unit of abatement achieved varied widely, both across programs within each country and in aggregate across countries.
  • Emissions trading schemes were found to be relatively cost effective, while policies encouraging small-scale renewable generation and biofuels have generated little abatement for substantially higher cost.
• The relative cost effectiveness of price-based approaches is illustrated for Australia by stylised modelling that suggests that the abatement from existing policies for electricity could have been achieved at a fraction of the cost.
  • However, the estimates cannot be used to determine the appropriate starting price of a broadly-based carbon pricing scheme.
• The estimated price effects of supply-side policies have generally been modest, other than for electricity in Germany and the UK.
  • Such price uplifts are of some relevance to assessing carbon leakage and competitiveness impacts, but are very preliminary and substantially more information would be required.

• Preliminaries
  Cover, Copyright, Foreword, Terms of reference, Contents and Abbreviations
• Overview - including key points
• Chapter 1 Introduction
  1.1 The Commission's task in brief
  1.2 Background to the study
  1.3 Scope of the study
  1.4 Conduct of the study
• Chapter 2 Emissions-reduction policies
  2.1 Approach
  2.2 Cross-sectoral policy measures
  2.3 Policy measures specific to electricity generation
  2.4 Policy measures specific to transport
  2.5 Forestry and agriculture
  2.6 Energy efficiency
• Chapter 3 Methodology
  3.1 How emissions-reduction policies work
  3.2 Measurement issues
  3.3 Adding it up
• Chapter 4 The electricity generation sector
  4.1 Reducing emissions from electricity generation
  4.2 Subsidy equivalents and abatement compared
  4.3 Results for each country
  4.4 Demand-side abatement
• Chapter 5 The road transport sector
  5.1 Reducing emissions from road transport
  5.2 Supply-side results
  5.3 Demand-side results
• Chapter 6 Conclusions and implications
  6.1 Recapping on the Commission's approach
  6.2 Some key results
  6.3 Implications for 'effort'?
  6.4 Implications for competitiveness?
• Appendix A Study participants
• Appendix B Policies selected for analysis
• Appendix C Energy efficiency policies
• References

Please note: Appendices D to P are only available from this web page and are not included in the printed copy.

• Appendix D Australia's electricity generation sector
• Appendix E China's electricity generation sector
• Appendix F Germany's electricity generation sector
• Appendix G Japan's electricity generation sector
• Appendix H New Zealand's electricity generation sector
• Appendix I South Korea's electricity generation sector
• Appendix J The United Kingdom's electricity generation sector
• Appendix K The United States' electricity generation sector
• Appendix L Demand-side analysis for electricity
• Appendix M Road transport fuels
• Appendix N Supply-side analysis for road transport
• Appendix O Demand-side analysis for road transport
• Appendix P Country stocktake

Contractors for the study provided the following reports that are not published elsewhere.

• Dispatch reports - Vivid Economics (PDF - 466 Kb)
• Data - Vivid Economics (XLS - 102 Kb)
• Report - Joshua Linn (Resources for the Future) (PDF - 379 Kb)
• Report - Joshua Linn (Resources for the Future) (Word - 163 Kb)

The following errata have been issued for the 'Carbon Emission Policies in Key Economies' research report. The chapters on the website have been amended to reflect these errata.

Download the errata

• Errata - Carbon Emission Policies in Key Economies (PDF - 23 Kb)
• Errata - Carbon Emission Policies in Key Economies (Word - 48 Kb)