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Nudging Effective Climate Policy Design

Bowman, Megan (2011) Nudging Effective Climate Policy Design. International Journal of Global Energy Issues, 35 (2/3/4). pp. 242-254. ISSN 0954-7118 (print) 1741-5128 (online)

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Abstract

This paper applies insights from behavioural economics literature to design options in climate policy in order to make suggestions on how to create and pass effective climate regulation. It posits that policymakers can have a more comprehensive toolkit for tackling climate change by utilising knowledge of flawed human behaviour. It makes three main suggestions. First, when pricing carbon, the use of policy bundling helps to counter cognitive biases such as 'loss aversion'. Second, financial incentives are required for clean tech and renewable energy sectors to become competitive with traditional energy markets. Third, climate policy needs to target the finance sector, particularly the banking industry, to encourage capital flow to these alternative energy markets. In this way, effective climate policy may have a nudging effect on a spectrum of decision-makers, with the net benefit of facilitating climate change mitigation and timely transition to a low-carbon global economy.

Item Type: Article
Uncontrolled Keywords: ResPubID24313, climate change, mitigation, climate policy design, climate regulation, banks, finance sector, incentives, nudges, renewable energy, clean tech, markets, carbon price, tax, emissions trading, low carbon economy, behavioural economics, cognitive psychology, biases, carbon trading, policy bundling, financial incentives, banking industry, clean technology
Subjects: Faculty/School/Research Centre/Department > School of Law
FOR Classification > 1801 Law
SEO Classification > 8598 Environmentally Sustainable Energy Activities
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Depositing User: VUIR
Date Deposited: 10 Sep 2012 03:31
Last Modified: 10 Sep 2012 03:31
URI: http://vuir.vu.edu.au/id/eprint/9398
DOI: 10.1504/IJGEI.2011.045031
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Citations in Scopus: 0 - View on Scopus

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