Key elements of a global deal on climate change

Abstract

The challenge is far-reaching, comprehensive, and global: but it is manageable. The activities and technologies necessary to eliminate the bulk of the risks associated with climate change are already available, or can be developed through appropriate policies to support innovation. Policies must be designed and applied carefully. Badly implemented policies can create additional market distortions, introduce perverse incentives, and foster protectionism. Care must be taken to ensure that additional policies are not simply layered on top of existing bad policies, such as distortionary energy market subsidies, trade restrictions, or agricultural policies. Where possible, policies must encourage market-based solutions, minimise transactions costs, and stimulate reform of existing distortion mechanisms.