Separating the Wheat from the Chaff: Regulating Greenhouse Gases in a Climate of Uncertainty

Abstract:     
This article explores the difficulties faced by regulators when they decide to regulate greenhouse gas emissions. For a long time, there was sufficient scientific uncertainty as to encourage a 'wait and see' approach. More recently, as the science has hardened with the release of the IPCC Fourth Assessment Report in 2007, the case for regulation has become an urgent imperative. As with climate change science, there has also been considerable disputation around the economics of climate change as witnessed by the Carter-Byatt critiques of the Stern Review Report. Even absent these contestations, there are various regulatory approaches which could be adopted to curb emissions. Although emissions trading has emerged as the instrument of choice, the variety of schemes either established or proposed around the world, demonstrates that choosing the parameters of a scheme is not a simple matter. This article concludes with a study of these issues in the Australian context.

Keywords: Climate science, the 'Hockey Stick' debate , IPCC Assessment Reports, Stern Review Report, the Carter-Byatt critique of Stern, Stern's responses, options for regulating greenhouse gases, designing an emissions trading scheme

JEL Classifications: K32, K30, K10, Q20, Q28, N50, N57

Accepted Paper Series