Cutting with both arms of the scissors: the economic and political case for restrictive supply-side climate policies

By Fergus Green, R. Denniss. Climatic Change, 2018

175 citations recorded by the source corpus.

Proponents of climate change mitigation face difficult choices about which types of policy instrument(s) to pursue. The literature on the comparative evaluation of climate policy instruments has focused overwhelmingly on economic analyses of instruments aimed at restricting demand for greenhouse gas emissions (especially carbon taxes and cap-and-trade schemes) and, to some extent, on instruments that support the supply of or demand for substitutes for emissions-intensive goods, such as renewable energy. Evaluation of instruments aimed at restricting the upstream supply of commodities or products whose downstream consumption causes greenhouse gas emissions—such as fossil fuels—has largely been neglected in this literature. Moreover, analyses that compare policy instruments using both economic and political (e.g. political “feasibility” and “feedback”) criteria are rare. This article aims to help bridge both of these gaps. Specifically, the article demonstrates that restrictive supply-side policy instruments (targeting fossil fuels) have numerous characteristic economic and political advantages over otherwise similar restrictive demand-side instruments (targeting greenhouse gases). Economic advantages include low administrative and transaction costs, higher abatement certainty (due to the relative ease of monitoring, reporting and verification), comprehensive within-sector coverage, some advantageous price/efficiency effects, the mitigation of infrastructure “lock-in” risks, and mitigation of the “green paradox”. Political advantages include the superior potential to mobilise public support for supply-side policies, the conduciveness of supply-side policies to international policy cooperation, and the potential to bring different segments of the fossil fuel industry into a coalition supportive of such policies. In light of these attributes, restrictive supply-side policies squarely belong in the climate policy “toolkit”.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/7d8188aa631e1f1f53f53e7b9540e5a6571275f6

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Citations in the corpus

Just cuts for fossil fuels? Supply-side carbon constraints and energy transition (2020, background): “In this context, calls to curtail fossil fuel production are growing (Green and Denniss, 2018; Verkuijl et al., 2018), and a number of instruments are becoming used, ranging from voluntary moratoriums to divestments and blockades.”
A systematic review of the evidence on decoupling of GDP, resource use and GHG emissions, part II: synthesizing the insights (2020, background): “Similar considerations apply to the use of many other biophysical resources (Green and Denniss 2018, Lazarus and van Asselt 2018).”
Decarbonization and its discontents: a critical energy justice perspective on four low-carbon transitions (2019, background): “…diverse as energy policy, climate policy, environmental science, geography, and innovation studies has begun to examine the social dimensions of pathways (in the broadest sense) towards deep reductions in global emissions (Creutzig et al. 2018; Green and Denniss 2018; Geels et al. 2018; IPCC 2019).”
Lessons from Germany’s hard coal mining phase-out: policies and transition from 1950 to 2018 (2019, background): “…climate policies thus differentiates between supply-side policies targeting the extraction of fossil fuels (van Asselt & Lazarus, 2018; Green & Denniss, 2018), and demand-side policies that provide indirect incentives to reduce fossil fuel consumption (e.g. Fais, Blesl, Fahl, and Voß…”
Equity, climate justice and fossil fuel extraction: principles for a managed phase out (2020, background): “A key problem with this approach is that leaving the allocation to markets means forgoing policy restriction of fossil fuel supply (Gaulin and le Billon 2020), which is a valuable and necessary lever of climate mitigation (Green and Denniss 2018; Muttitt 2016).”