Renewable Energy under the Kyoto Protocol: The Case for Mixing Instruments

This paper suggests that a mixture of measures may be needed to encourage renewable energy under the Kyoto Protocol. It explains that the goal of maximizing short term cost effectiveness tends to conflict with the goal of encouraging the long-term technological development that the world will need to move away from fossil fuels. Because of this tension, policy-makers should not, and generally have not, regarded global emissions trading as a panacea. The paper discusses how novel economic incentive measures and careful attention to design of emissions trading can help policy-makers use short term goals to lay the ground work for more ambitious long-term targets