The climate policy toolkit has, to-date, mostly focused on demand side policies (i.e. policies that affect the pollution demand curve), some of which are ‘command-and control’ and others are market based (e.g. cap-and-trade schemes, carbon taxes). (a) Using a diagram or diagrams, explain how a cap-and-trade scheme could result in pollution reduction.  (b) What is the Emissions Reduction Fund and what are its pros and cons? 1 (c) Of the following four policy options, which one do you favour as a demandside policy and why? i. command-and-control in terms of a demand side climate change ii. carbon tax iii. Emissions Reduction Fund iv. cap-and-trade scheme

Micro Economics For Today
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Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
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The climate policy toolkit has, to-date, mostly focused on demand side policies (i.e. policies that affect the pollution demand curve), some of which are ‘command-and control’ and others are market based (e.g. cap-and-trade schemes, carbon taxes).

(a) Using a diagram or diagrams, explain how a cap-and-trade scheme could result in pollution reduction. 
(b) What is the Emissions Reduction Fund and what are its pros and cons? 1
(c) Of the following four policy options, which one do you favour as a demandside policy and why?

i. command-and-control in terms of a demand side climate
change

ii. carbon tax

iii. Emissions Reduction Fund

iv. cap-and-trade scheme

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