IEA Report Offers Guidance on Climate and Energy Policy Integration

IEA5 December 2013: The International Energy Agency (IEA) provides guidance for policymakers in its report “Managing Interactions between Carbon Pricing and Existing Energy Policies.” The report, part of IEA's 2013 Insight Series, considers options for designing climate-energy policy packages that maximize policy synergies and minimize tradeoffs which could undermine policy objectives, raise societal costs, create investment uncertainties, and increase risk of stranded assets.

The report describes types of interactions that should be anticipated in national climate-energy policy packages, comprised of climate policies that aim to reduce emissions through carbon pricing and carbon taxes and emission trading, and energy policies pursued for other goals such as energy security and energy efficiency.

The report proposes a framework for enhancing policy integration by: mapping the energy and climate policy landscape; aligning initial energy and carbon pricing policies; maintaining policy alignment over time; managing the phase-in of carbon pricing; and reviewing carbon pricing and energy policies. It further explores options for improving institutional coordination for policy integration through the identification and communication of policy objectives, overlaps, interactions, and management at both the technical and institutional level. The report describes how such interactions are particularly important when climate and energy policies cover the same sectors or timeframe, and how the nature of these interactions can be different for carbon taxes and emission trading systems.

The conclusion of the report considers how the management of policy interactions offers opportunities to enhance both climate and energy policies through, inter alia: assessing whether the costs of increased policy complexity outweigh benefits; designing energy policies that reduce uncertainty over carbon prices; and improving inter-ministerial communication. [Publication: Managing Interactions between Carbon Pricing and Existing Energy Policies]