One way how we could contribute most effectively is by fulfilling our role as an economic think tank, highlighting challenges and providing impartial advice on questions such as, what instruments to cut emissions are preferable: direct carbon taxation or emission trading or emission standards and other command and control regulation?
Nicholas Stern helps us to answer this question with his famous sentence “Climate change is a result of the greatest market failure the world has seen.” So, the answer would simply be to make the polluters pay. Carbon pricing is technologically neutral and cost-efficient. However, there is also some room for command-andcontrol and financial regulation to tackle other market failures such as asymmetric information.