A key issue for policy makers is how to choose a climate change policy that recognises the uncertainties in the costs and benefits of abatement actions. This paper reviews the economic literature relative to the choice of the economic instruments that could be used to mitigate climate change. Because climate change is driven by the slow build-up of atmospheric concentrations of greenhouse gases, flexible instruments would be more economically efficient than fixed quotas.
They may help engage a broader set of countries into a common framework for mitigating climate change, and may facilitate the adoption of relatively more ambitious policies. The certainty of achieving at least some precise levels of emissions would decrease, but the probability of bettering these levels would increase.