ABSTRACT
The adoption of the Paris Agreement laid out emission reduction targets for East Asian countries in 2030 and the world as a whole in 2050. Policy makers now face the question of how best to reduce emissions to meet these targets, while still promoting economic development and national prosperity. Economists often recommend carbon pricing measures as being the most efficient policy option but, from a policy maker’s perspective, carbon pricing alone may not be attractive, or even feasible.
In this chapter, we assess a range of options and show that a combination of instruments, including carbon taxes, low-carbon subsidies and regulations, is likely to produce the best results for national economies in East Asia. While some pricing measure appears necessary, our modelling approach shows that implementing a mix of measures could reduce the necessary carbon tax rate required to meet long-term emission reduction targets, benefitting energy-intensive industries. Our conclusion is that the modelling tools used by economists must be able to assess a range of different policies, so as to meet the current requirements of policy makers.
