Energy pricing which better reflects costs is potentially a win-win strategy. Nonetheless, moving towards elimination of subsidies and incorporation of identifiable externalities into prices will in general be a key component of climate change responses. In a complex world, no single response option is uniquely viable. Because of widely varying effects of given policy measures in different national circumstances, it is difficult to define in general terms a mix of policies and measures which would be universally applicable. This suggests that policies are part of a learning process, whereby the implementation of responses provides information about their effectiveness and enables improved development of a flexible and adaptable policy framework over time.
Policy also has a role to play in technological development.
The major challenge is to combine a favourable context for research, development and deployment with market-based evaluation and implementation mechanisms. Efficiency standards have demonstrated their effectiveness. By accelerating the introduction of more efficient equipment, efficiency standards have positive effects on end-users' welfare. International or national emissions trading offers a potentially efficient means of reducing the marginal and overall cost of controlling greenhouse gas emissions, while providing an incentive for early action by those participants for which it is cost-effective. Joint implementation of activities and projects between industrialised and developing countries could complement an emissions trading scheme subject to addressing issues such as baselines, performance monitoring and crediting of avoided emissions.