Governments, markets and climate change mitigation

Research programme 4 involves two interrelated projects that look at design, delivery and impacts of different forms of policy on business. A key challenge is to identify the characteristics of individual firms that have been responsive or resistant to climate change policies, and also to other signals from governments and markets about the need to change. This research will allow policy-makers to adopt much more targeted interventions that recognise the variability of firm level conditions, and which facilitate innovation across socio-technical systems. 

• Project 4a focuses on the targeting of governmental policies for climate change mitigation;
• Project 4b focuses on the development of markets for carbon finance and emissions trading.

Both projects consider questions such as:

• What roles should governments and markets play in stimulating the changes that are needed if tougher targets for climate change mitigation are to be met?
• What levels of change might be possible in the way that businesses operate, and what are the likely side effects of such changes?
• It seems that climate change policies and innovations in carbon finance and emissions trading are starting to lead to changes in performance – but are these changes real, or are carbon intensive activities just being shifted away from the balance sheets of countries or companies?
• If we are currently in a phase where some relatively easy options for carbon reduction can be exploited, how long will this phase last and what happens when further change becomes more expensive or more challenging?

Projects 4a and 4b are complemented by two other projects, which seek to improve the prospects for market-based approaches to climate change mitigation.

• Project 4c considers the extent to which market activities can be informed by reliable forms of carbon accounting, and the extent to which they allow meaningful benchmarks of corporate performance on climate change;
• Project 4d looks at changes in carbon markets and emissions trading in more detail, and the way that their future evolution might help to promote efficient, effective markets for the post-2012 period.