This paper assesses the merits and effectiveness of various policy instruments in securing carbon dioxide abatement from the industrial sector. The analysis refers to the UK situation. Particular attention is paid to the potential use of market-based regulatory instruments such as a carbon tax or tradeable emission permits. The background against which the different policy instruments might be implemented is assessed. Taking into account energy decision-making structures in industry and recent trends in energy prices, it is concluded that both fiscal measures and more traditional policy instruments have a role to play in developing future policies.
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