Building Blocks for Climate Policy Instrumentation aligned to Governance Story lines and Scenarios

Climate policy is at a crossroads, in the EU and more broadly in the world. Diverging tendencies and options indicate different directions for the development of instruments and technologies. Such issues are not just administrative and technical but also link to the governance structure. When considering climate policy instrumentation, we need governance story lines in which to place different scenarios for instrument development.

Four feasible story lines have been developed in this study. Each story line shows a different direction for the development of governance for climate policy implementation and leads to core options for policy instrumentation such as instrument Building Blocks. The baseline for all story lines and scenario development that has been applied in this study involves the condition that each scenario could reach the 2 degrees target of climate stabilization.

The first option has a technology specific focus, called the Planning Federation. It involves instruments that stimulate or force specific technologies and products into the market. The second option is the Liberal Market Federation. This option leaves technologies more open, with stronger generic incentives in a market structure, by encompassing emission pricing. The third option is called the Mixed System. In this scenario different levels of policy and instrumentation are accepted. The major initiatives are coming from the member state level and the EU has a core coordinating role to align the national policies within an overall EU framework. It is the Mixed System we are mainly in now. The fourth option builds on a Re-Nationalized EU in which the development of climate policies is mainly pursued at the national level, while the EU has the role of a coordinator.

The story lines that have been developed within the scope of this study should be regarded as scenarios that indicate possible directions for development. Each option has its strengths and weaknesses but are not blueprints. However, the governance storylines have been developed in a way that their probability is well above zero and they can be regarded as a powerful tool to develop options for policy instrumentation. Because of this, they are highly relevant when bringing climate policy instruments in the domain of governance discussion.

Attachment: 

PDF icon Huppes and Huele (2014)_Instrument building blocks and governance scenarios.pdf

Citation: 

Huppes, Gjalt; Huele, Ruben. 2014. Building Blocks for Climate Policy Instrumentation aligned to Governance Story lines and Scenarios. CECILIA2050 WP3 Deliverable 3.5. Leiden: Institute of Environmental Sciences (CML), Leiden University.

Funding: 

European Commission

Authors: 

Gjalt Huppes, Institute of Environmental Sciences (CML) Leiden University; Ruben Huele, Institute of Environmental Sciences (CML) Leiden University

Year of publication: 

2014

Number of pages: 

107

Table of contents: 

 

Executive summary

6

1.

Governance scenarios and instrument types for building blocks in climate policy

18

2.

Governance story lines and scenarios for climate policy instrumentation

24

3.

Governance dimensions for climate instrument scenarios

28

3.1.

General considerations

29

3.2.

Current IPCC approaches

35

3.3.

Scenario family dimensions: supranationality; markets & planning; and administrative capacity

37

3.4.

EU governance in a multi-country context

37

3.5.

Four directions for EU governance development

39

3.6.

Four story lines for EU governance

41

3.6.1.

Market Federation

41

3.6.2.

Planning Federation

42

3.6.3.

Mixed System

42

3.6.4.

Re-Nationalized Europe

43

3.7.

Exemplary: ETS development in different governance scenarios

44

4.

A hierarchy of basic instrument types

46

4.1.

From institutional framework to inducing market introduction of innovations

48

4.2.

Exemplary filling in of instrument types

49

4.2.1.

Institutional Framework

49

4.2.2.

Internalization of climate effects through GHG emission pricing

51

4.2.3.

Infrastructure for public and private use

53

4.2.4.

Basic research and development

54

4.2.5.

Technology specifications overruling market behavior

54

4.2.6.

Innovation implementation

55

4.3.

Building blocks and instrument mixes

56

5.

Instrument building blocks for four EU governance story lines

58

5.1.

Instrument Building Blocks for the Market Federation

60

5.2.

Instrument Building Blocks for the Planning Federation

62

5.3.

Instrument Building Blocks for the Mixed System

64

5.4.

Instrument Building Blocks for the Re-Nationalized EU

67

5.5.

Comparison of building blocks between governance scenarios

69

6.

Conclusions

72

 

References

74

 

Annex 1 Instrument building blocks for electricity policy in four governance scenarios

79

 

Governance based institutional development of smart EU electricity markets sketched

79

 

Introduction

79

 

Discussion on flexibility in electricity markets in the EU and the US

81

 

Technical-economic requirements on the electricity system

83

 

Governance options considered

85

 

A cost-effective market system

86

 

Market Federation

87

 

Planning Federation

89

 

Mixed Governance and Re-Nationalised EU

90

 

Summary

91

 

Annex 2 Instrument building blocks for road transport policy in four governance scenarios

93

 

Instruments for person car transport: from fleet standards to generic pricing

93

 

Sectoral Policy on Road Transport: Why and How?

93

 

Fleet standards and actual use

94

 

Mechanisms determining road transport emissions

96

 

Carbon pricing versus fleet standards

98

 

Costs of regulations with similar effectiveness

101

 

Instrument building blocks relevant for road transport, per governance scenario

101

 

Conclusions

107