Tapping the technical abatement potentials requires setting up
new incentive structures (taxes, emissions trading, technical
standards, voluntary agreements, subsidies) for production and
consumption, i.e. climate policies. In the following, empirical
models that measure net mitigation costs of climate policies are
reviewed in order to disentangle the reasons why certain policy
packages have similar or different outcomes in various
countries. As a first step, the results are presented at an
aggregated level; then the impact of measures meant to mitigate
the sectoral and distributional consequences of climate policies
is examined. Finally, in a third step, the ancillary benefits
from the joint reduction of carbon emissions and other
pollutants are considered to complete the picture. Introducing a
carbon tax (or auctioned tradable permits) provides an incentive
to change the technology over the short and long term. Such
policies generate tax revenues and the way these revenues are
used has major impacts on the