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  • 7 - Market-based Economic Instruments

  • Massimo Filippini, ETH Zürich and Università della Svizzera Italiana, Suchita Srinivasan, ETH Zürich
  • Book:
    An Introduction to Energy Economics and Policy
    Published online:
    19 December 2024
    Print publication:
    19 December 2024, pp 162-202
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  • Summary

    In this chapter, we first provide a general overview of energy and climate policy goals and their main instruments. We underline the common goals between energy and climate policy, as well as possible conflicts in objectives. In the next part, we illustrate monetary market-based instruments such as pollution taxes, product taxes, and energy taxes, as well as subsidies and pollution permit trading systems. We also discuss, using figures, the implications of behavioural anomalies on the effectiveness of these types of policy instruments. At the end of the chapter, we introduce non-monetary market-based instruments, giving some weight to nudges. At the end of the chapter, we discuss issues in developing countries related to the topics discussed in the chapter.