GHG policies and the role of innovations

The recent debate about the use of economic instruments aiming at achieving the GHG goals led to a number of important insights and conclusions. However, the implementation of these instruments is still rather weak. One reason is that the proposed GHG solutions (particularly CO2-taxes) are faced with some ambiguities and shortcomings, which require further analysis and discussion. Another reason is that any democratic government has problems to solve problems being identified through scientific analyses but not through daily experience. Any progress in implementing GHG policies requires to convince the larger public about the necessity of an active GHG policy and the unavoidability of costs associated to this policy. In this dilemma situation the change to implement GHG strategies can be improved by a sophisticated combination of voluntary agreements and monetary as well as non-monetary incentives to environmental innovations. According to the game theoretical view, voluntary agreements can't perform better than CO2-taxes that will be implemented in case of non-compliance. The paper argues that voluntary agreements can improve the credibility of governmental threats to implement hard measures at a later time. Still voluntary agreement s alone are negligible with respect to GHG emission reductions beyond business as usual. But they may be useful for focusing private business plans on ecological innovations. As far as such innovations become feasible they contribute to the low cost GHG reduction potential as well as the public support for a more active GHG policy. (Author)