Decarbonizing the Industrial Sector: The Potential for Ambitious EU Member States to Use Flexible Performance Standards to Strengthen Carbon Price Signals
In this policy brief, we offer an introduction to the family of policy instruments known as “flexible performance standards.” We describe and examine the attributes of performance standards that elevate them to be chosen in many jurisdictions, often as a precursor to carbon pricing, and we explain why flexibility improves their cost effectiveness and the potential they may have as complementary policies to strengthen carbon pricing to drive innovation, with a specific focus on the industrial sector.
![E. Somanathan](/sites/default/files/styles/teaser_330x220/public/som_eaere_0.jpg?itok=7xu2oeKY)
Prof. E Somanathan on the expected impact of COVID-19 on global climate policy and carbon markets
Prof. E. Somanathan was invited to speak at a virtual event organized by FSR-Climate and the European Association of Environmental and Resource Economists (EAERE) to discuss the expected impacts of…
Research Projects with the MCC
The Emission Pricing for Development program is developed in partnership with the Mercator Research Institute on Global Commons and Climate Change ( MCC). The MCC has several ongoing projects which
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Climate policy in a polarized world
Around the world, societies are torn by discussions about the economic effects of climate policy measures. The fight against climate change can only be won if the international community takes…
How carbon prices could ensure equitable sustainable development
Effective climate change mitigation measures, such as carbon pricing or reforming fossil fuel subsidies, are often perceived to undermine inclusive economic development and are, thus, rejected. These…
Carbon Pricing Revenues Could Close Infrastructure Access Gaps
Introducing a price on greenhouse gas emissions would not only contribute to reducing the risk of dangerous anthropogenic climate change, but would also generate substantial public revenues. Some of these revenues could be used to cover investment needs for infrastructure providing access to water, sanitation, electricity, telecommunications, and transport.
The role of capital costs in decarbonizing the electricity sector
Low-carbon electricity generation, i.e. renewable energy, nuclear power and carbon capture and storage, is more capital intensive than electricity generation through carbon emitting fossil fuel power stations. High capital costs, expressed as high weighted average cost of capital (WACC), thus tend to encourage the use of fossil fuels. To achieve the same degree of decarbonization, countries with high capital costs therefore need to impose a higher price on carbon emissions than countries with low capital costs.
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