We demonstrate that by differentiating the effective carbon price across technologies, changing the basis of the output subsidy has substantially larger price and emissions effects than increasing the carbon price for all generators.
Policy instruments to encourage decarbonization such as carbon pricing should include technology-based and behavior-based instruments to facilitate this transition to a low-carbon economy.
Future baseload electricity technology selection will be influenced by the total cost of technology substitution, including carbon pricing, which is synergistically related to both LCOE and emissions.
So, in the meantime, while these market failures are inadequately tackled and there is not yet a strong and stable carbon price, low-carbon technologies need government assistance through direct subsidies.
There was fretting too about carbon pricing and whether eagerly sought cash for new technology would materialise.
If these investments are funded by a modest carbon price, then all the better, but we can no longer make energy technology policy dependent on the carbon pricing agenda.
Policymakers hope carbon pricing will also spark innovations that lower emissions, such as technology to capture pollutants from power plants before they get into the atmosphere.
As a result, it can be beneficial to include instruments directed at technology diffusion in the policy mix, beyond improved carbon pricing and R&D support [118 120].
Our leadership role is best promoted by the actions we take on capping emissions, carbon pricing and supporting the development of new CCS (carbon capture and storage) technology.
It recommended the introduction of carbon pricing schemes, more emissions trading, and the development of environmentally friendly technologies.
