Market-based mechanisms (MBMs) are increasingly common policy tools that create incentives for managing greenhouse gases (GHGs) cost-effectively and can be used to satisfy broader economic and environmental objectives. Countries in Asia are steadily addressing the need to reduce emissions through the deployment of MBMs such as carbon taxes, cap and trade programs, baseline and credit programs, and the development of renewable electricity and energy efficiency standards. Authors of the case study found that MBMs provide regulated entities with the flexibility to reduce emissions in the most cost-effective way by internalizing the cost of emissions into decision-making and business processes. These regulating instruments foster innovation, engage the private sector, and provide more options for reducing GHGs than a typical command-and-control regulation.
This paper conducted by the RALI project provides a comprehensive overview of market-based policies through lessons learned from MBMs in Asia. Click here to read the full document.