Government Policy

According to the Organisation for Economic Co-operation and Development (OECD) and IPCC, atmospheric greenhouse gas concentrations may be stabilized at costs less than 0.1% of GDP growth per year.  However, this requires widespread use of research and development combined with market-based policies, such as carbon taxes and emissions trading. A single approach will not be sufficient, and achieving global cooperation on multiple approaches may be the biggest challenge to reducing greenhouse gases in the atmosphere to prevent extreme, swift changes in climate.

Government Policy
The graphs below show projected increases in atmospheric greenhouse gas concentration and how this correlates with increases in global temperature.  These projections involve a scenario where governments do not implement climate change policies.  The consequence of this scenario is a global temperature increase of 3°C - 8°C over the next century.  Temperature increases of this magnitude are extreme, especially when an increase of 0.6°C over the previous century has already caused significant environmental changes.  The message is clear:  governments must take action.

Source: OECD ENV-Linkages model and IPCC (2007).  Click to enlarge.

Cap-and-trade systems may provide incentives to reduce greenhouse gas emissions.  Cap-and-trade, or emissions trading, involves setting a target or "cap" on overall emissions on a national or international level.  Greenhouse gas emitters are then required to get permits for planned emissions, where the total emissions permitted do not exceed the cap.  Emitters can trade permits among themselves.  When emissions approach the target level, permits may increase in price and create incentive to cut emissions.  Carbon credits, such as investments in carbon sinks like rainforests, may also be purchased to offset an entity's total emissions. Some economists argue over whether cap-and-trade systems will be the most effective way of reducing greenhouse gas emissions.  However, these systems carry the benefit of creating long-term incentives of reducing emissions.  Once permit holders have invested in the system, they have a financial interest to see the system through (Stavins 2007).

Carbon taxes have already been implemented in some countries, typically on energy products and motor vehicles rather than direct carbon dioxide emissions.  Taxes on greenhouse gas emissions have been proposed, as they are thought to be more transparent, direct, and efficient than cap-and-trade systems.  However, they require long-term and worldwide implementation to be effective and are likely to create unwelcome trade-offs such as reduction in GDP and household consumption (Scrimgeour 2005).  Countries such as the USA, China, and Russia are huge emitters of greenhouse gases, but they resist imposing carbon taxes due to their large dependency on fossil fuels.  Carbon taxes may also be subject to short-term changes, especially when governments shift from one political party to another.

The OECD suggests that policies combining these two approaches will help to greatly reduce overall greenhouse gas emissions.  Financial pressures from carbon taxes will directly create incentive for a reduction in emissions, while a cap-and-trade policies and carbon credits may provide some flexibility in which entities face the highest costs for emissions.

Direct government regulation aside from financial pressure has also been proposed and is already being implemented to a degree.  In the USA, the Environmental Protection Agency (EPA) is in the process of creating and enacting the regulation of greenhouse gas emissions from vehicles, refineries and power plants, although they face political challenges in enacting these policies.  The EU issued mandates to increase the use of renewable energy sources, supported the development of carbon capture storage technologies, and launched the European Climate Change Programme (ECCP) encompassing measures such as an emissions trading system.

Research and development funded by the government must also continue, according to the OECD.  The development of renewable energy, low carbon fuels, vehicle efficiency, and electricity efficiency can be advanced by providing tax incentives to companies that pursue green energy initiatives.  However, depending on the the private sector alone is insufficient, and many propose that the government should increase direct funding for research and development in climate change mitigation (Hald-Mortensen 2008).

In addition to reducing green house gas emissions, research and development could help by addressing some uncertainties:  what exactly are the effects of aerosols, dust, smoke, and soot?  How much will sea level rise in various scenarios, and what can we do about it?  How will precipitation, ocean circulation, and clouds feedback into climate change, and to what degree?  These factors may play larger roles in climate change than previously anticipated, and they may have to be included in climate change scenarios in order for people to prepare for future impacts (OECD).

Source: Natural Resources Defense Council (NRDC)

Various "wedge analyses" such as the one above depict how a variety of changes can greatly reduce greenhouse gas emissions, especially changes in transportation and how energy is generated.  Scientists have already identified a number of possible ways to reduce greenhouse gas emissions, but no single solution provides a quick fix to climate change.  Multiple changes must be made effectively in order to reduce greenhouse gas emissions significantly.  Not only must governments address climate change through a variety of policies, but these policies must target multiple sectors, phasing out some of the biggest drivers of climate change while encouraging growth in renewable energy sources and carbon sinks.