Cover Image
close this bookThe Global Greenhouse Regime. Who Pays? (UNU, 1993, 382 p.)
View the documentList of contributors
View the documentPreface
View the documentAcknowledgements
close this folderPart I Measuring responsibility
close this folder1 Introduction
View the document(introduction...)
View the documentThe greenhouse effect
View the documentWhat was decided at Rio?
View the documentProtocol negotiating difficulties
View the documentKey issues for climate change negotiations
View the documentReferences
close this folder2 The basics of greenhouse gas indices
View the document(introduction...)
View the documentApples and oranges
View the documentImplications
View the documentConclusion: indices do matter
View the documentReferences
close this folder3 Assessing emissions: five approaches compared
View the document(introduction...)
View the documentIntroduction
View the documentComprehensiveness compared
View the documentAccuracy by category
View the documentRegional and national emissions by source
View the documentConclusions
View the documentReferences
View the documentAppendix A: Estimates of greenhouse gas emissions
View the documentAppendix B: Calculating cumulative and current emissions
close this folder4 Who pays (to solve the problem and how much)?
View the document(introduction...)
View the documentIndices of allocation: a brief review
View the documentAccountability
View the documentEquity and efficiency
View the documentConclusion
View the documentReferences
close this folderPart II Resource transfers
close this folder5 North-South carbon abatement costs
View the document(introduction...)
View the documentClimate change convention
View the documentMethod overview
View the documentImplications for the South
View the documentNotes and references
close this folder6 North-South transfer
View the document(introduction...)
View the documentObligation to pay indices
View the documentRedistribution of incremental cost
View the documentBenchmarks
View the documentUN scale of payments
View the documentFinancing mechanisms
View the documentConclusion
View the documentNotes and references
close this folder7 Insuring against sea level rise
View the document(introduction...)
View the documentInsurability of losses
View the documentOil pollution
View the documentNuclear damage
View the documentImplications
View the documentThe insurance scheme proposed by AOSIS
View the documentThe Climate Change Convention
View the documentNotes and references
View the documentAppendix: Scheme proposed by AOSIS for inclusion in the Climate Change Convention
close this folderPart III National greenhouse gas reduction cost curves
close this folder8 Integrating ecology and economy in India
View the document(introduction...)
View the documentIntroduction
View the documentEmissions inventory
View the documentEnergy efficiency and fuel substitution
View the documentEmissions and sequestration from forest biomass
View the documentConclusions
View the documentReferences
close this folder9 Carbon abatement potential in West Africa
View the document(introduction...)
View the documentIntroduction
View the documentLong-term energy and carbon emissions scenarios
View the documentOptions for rational energy use and carbon conservation
View the documentEconomic opportunities for implementation
View the documentPolicy issues for the region
View the documentConclusions
View the documentReferences
close this folder10 Abatement of carbon dioxide emissions in Brazil
View the document(introduction...)
View the documentBrazil energy economy
View the documentEnergy subsector analyses
View the documentChanging land-use trends
View the documentConclusion
View the documentReferences
close this folder11 Thailand's demand side management initiative: a practical response to global warming
View the document(introduction...)
View the documentIntroduction
View the documentEnd-use energy efficiency policies
View the documentCosts and benefits of the DSM master plan
View the documentCO2 reductions from the DSM Plan
View the documentWhy should other developing countries adopt DSM?
View the documentThe role of the multilateral development banks
View the documentConclusions
View the documentReferences
close this folder12 Carbon abatement in Central and Eastern Europe and the Commonwealth of Independent States
View the document(introduction...)
View the documentEnergy-environment nexus
View the documentScenarios for the future
View the documentCountry results
View the documentPolicy implications
View the documentConclusion
View the documentReferences
close this folder13 Greenhouse gas emission abatement in Australia
View the document(introduction...)
View the documentAbatement of energy sector emissions
View the documentEconomic impact of abatement strategies
View the documentNon-energy emission abatement
View the documentAustralia's international role
View the documentCarbon taxes, externalities and other policy instruments
View the documentReferences
close this folderPart IV Conclusion
close this folder14 Constructing a global greenhouse regime
View the document(introduction...)
View the documentConditionality and additionality
View the documentTechnology transfer
View the documentMulti-pronged approach
View the documentImplementation procedures
View the documentRegional building blocks
View the documentNorth-'South' conflicts
View the documentConclusion
View the documentNotes and references
close this folderAppendix: The Climate change convention
View the documentIntroduction
View the documentBackground
View the documentClimate change convention
View the documentArticle 1. Definitions
View the documentArticle 2. Objective
View the documentArticle 3. Principles
View the documentArticle 4 Commitments
View the documentArticle 5. Research and systematic observation
View the documentArticle 6. Education, training and public awareness
View the documentArticle 7. Conference of the Parties
View the documentArticle 8. Secretariat
View the documentArticle 9. Subsidiary body for scientific and technological advice
View the documentArticle 10. Subsidiary Body for implementation
View the documentArticle 11. Financial mechanism
View the documentArticle 12. Communication of information related to implementation
View the documentArticle 13. Resolution of questions regarding implementation
View the documentArticle 14. Settlement of disputes
View the documentArticle 15. Amendments to the Convention
View the documentArticle 16. Adoption and amendment of annexes to the Convention
View the documentArticle 17. Protocols
View the documentArticle 18. Right to vote
View the documentArticle 19. Depositary
View the documentArticle 20. Signature
View the documentArticle 21. Interim arrangements
View the documentArticle 22. Ratification, acceptance, approval or accession
View the documentArticle 23. Entry into force
View the documentArticle 24. Reservations
View the documentArticle 25. Withdrawal
View the documentArticle 26. Authentic texts

Carbon taxes, externalities and other policy instruments

Aggregate economic models typically assume a uniform price elasticity of demand for energy across broad groups of energy users, if not the whole economy, and also assume a uniform elasticity across all sizes of price changes. The case of the aluminium industry demonstrates the invalidity of these assumptions. Aluminium smelters typically embody state-of-the-art technology at the time they were built. Apart from trivial adjustments, efficiency improvements can only be made by building a new smelter. Thus a smelter's price elasticity of demand for electricity is virtually zero up to a certain size price increase, while beyond that size, the elasticity becomes infinite. That is, the smelter shuts down because it is uneconomic to operate.

It is important to distinguish between a carbon tax which is imposed as a proxy for environmental costs not yet internalized; and a carbon tax imposed as an instrument to achieve a pre-determined level of emission abatement to respond to climate change. The two are identical only in a world of perfect markets. It is difficult to argue in principle against the full internalization of environmental costs. But the cost of climate change is potentially so pervasive that the costs of the greenhouse effect (and the economic benefits of avoiding it) simply cannot be expressed in monetary units. These fundamental issues cannot be pursued here, where the point is simply that different criteria may be used to assess policy instruments and options for achieving greenhouse gas abatement.

Given the nature and extent of the 'efficiency gap' in the market for energy services, it is quite likely that a level of carbon tax sufficient to put half of Australia's aluminium smelters out of business would still not be sufficient to induce some small-scale industrial and commercial businesses to make efficiency improvements having a payback of only a few months. Such an outcome would be neither fair to the aluminium smelters nor efficient for the Australian economy. Carbon taxes have many advantages (Pearce 1991), particularly when careful consideration is given to their place in overall fiscal policy But in the real, imperfect world, the carbon tax should be combined with other, more precisely aimed policy instruments to achieve emission abatement of greenhouse gases.