Rationales for Additional Climate Policy Instruments Under a Carbon Price‪.‬

1. Introduction With growing awareness of the huge costs of mitigating and adapting to climate change (and the great dangers of getting climate strategy wrong), the choice as to the most appropriate set of policy instruments to address this issue has been receiving significant attention (OECD 2008). The primary approach, particularly during the 1960s, to address environmental problems involved the use of command-and-control type policy instruments such as technology or emissions performance standards. The rise of environmental economics as an established sub-discipline of economics has led policy-makers over the last two decades to consider more market-based instruments, such as environmental taxes or permit trading schemes, to be the preferred policy solutions to environmental pollution problems (Stavins 2003).