Experts from NERA’s Environment Group have authored a chapter in The Oxford Handbook of Climate Change and Society, a new book from Oxford University Press. The chapter, “Economic Policy Instruments for Reducing Greenhouse Gas Emissions,” considers the use of economic instruments to address climate change, including lessons from previous experience as well as a list of the key design elements. The authors focus on the cap-and-trade approach and complementary credit-based programs, as these have been most prominent in existing policies and proposals. The chapter begins with an overview of the conceptual similarities and differences between cap-and-trade programs and carbon taxes. The authors then summarize experiences with emissions trading and taxes that provide lessons on how the programs work in practice. The authors also describe key policy issues that arise in designing a greenhouse gas cap-and-program, many of which apply to carbon taxes as well.
 
The Oxford Handbook of Climate Change and Society is available for purchase on the Oxford University Press website.