Fiddling while carbon burns: why climate policy needs pervasive emission pricing as well as technology promotion

Effective climate policy requires global emissions of greenhouse gases to be cut drastically, which in energy sectors can be achieved by lower emissions supply technologies, greater energy use efficiency, and substitution in demand. For policy to be efficient requires fairly uniform, pervasive emission pricing from taxes, permit trading, or hybrid combinations of the two, as well as significant government support for low-emission technologies. We compare the kind of technology-focused climate policies currently adopted by Australia and the USA, the ‘Asia- Pacific Partnership on Clean Development and Climate’ (AP6), against this ideal policy yardstick. We find that they omit the need for emission pricing to achieve abatement effectively and efficiently; that they over-prescribe which abatement actions should be used most; that they make unrealistic assumptions about how much progress can be achieved by voluntarism and cooperation, in the absence of either adequate funding or mandatory policies; and that they unjustifiably contrast technology-focused policy and the Kyoto Protocol approach as the only two policies worth considering, and thus ignore other important options.