Journal Article

Carbon Trading in the Policy Mix

Steven Sorrell and Jos Sijm

in Oxford Review of Economic Policy

Published on behalf of The Oxford Review of Economic Policy Ltd

Volume 19, issue 3, pages 420-437
Published in print September 2003 | ISSN: 0266-903X
Published online September 2003 | e-ISSN: 1460-2121 | DOI:
Carbon Trading in the Policy Mix

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  • Economic Development and Growth
  • Public Economics
  • Political Economy
  • Public Policy


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The Kyoto Protocol is stimulating the development of emissions-trading schemes at the national and international levels. These are being introduced alongside existing policy instruments such as carbon taxes and negotiated agreements, leading to complex problems of policy interaction. But the topic of policy interaction remains under-researched. This paper aims to improve understanding of such interactions by examining the conditions under which a cap-and-trade scheme for carbon-dioxide emissions may usefully coexist with carbon/energy taxes, support mechanisms for renewable electricity, and policies to promote energy efficiency. The paper argues that each of these instrument combinations may be acceptable, provided they contribute to either improving the static or dynamic efficiency of the trading scheme, or delivering other valued policy objectives. But, since the coexisting instruments may raise overall abatement costs while contributing nothing further to emission reductions, the objectives and trade-offs within the policy mix must be explicit.

Journal Article.  0 words. 

Subjects: Economic Development and Growth ; Public Economics ; Political Economy ; Public Policy

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