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Market-based climate mitigation policies in emerging economies

Market-based policy instruments have been used by governments for decades to control environmental pollution. Policies that can be considered market-based include taxes and fees, subsidies and the use of pollution control trading systems. Market-based policy instruments provide financial incentive to elicit specific behaviour from entities responsible for greenhouse gas (GHG) emissions, whether consumers or producers. This paper provides an overview of market-based policies aimed at reducing GHG emissions in five emerging economies: Brazil, China, India, South Africa and South Korea. In all five countries, renewable energy development and deployment is a major goal of market-based policies, and climate change is not necessarily the single or principal driver. For example, in Brazil, with its already vast hydropower resources, the major drivers are diversification of energy supply sources and industrial development. For China, the need for more energy is a fundamental driver.