TY - JOUR A1 - Flachsland, Christian A1 - Brunner, S. A1 - Marschinski, M. T1 - Credible commitment in carbon policy JF - Climate Policy N2 - In this article the problem of credible commitment in carbon policy is discussed. Investors favour long-term predictability of the policy, but without any external enforcement mechanisms a commitment made by a government can be withdrawn, leading to scepticism and lack of credibility. This results in increased market risks and investment hold-up. Regulatory uncertainty stems from (i) strategic interactions between government and firms, (ii) potential learning about climate damage and abatement cost and (iii) political volatility. Although commitment to future policy encourages private investment, it also imposes costs in the form of reduced flexibility to accommodate new information or preferences. The article reviews devices that may help policy makers raise the level of commitment while also leaving some room for flexible adjustments. In particular, legislation of a long-term governance framework, delegation to an independent carbon agency and securitization of investors' stakes in emission markets offer palliative approaches. KW - Carbon pricing KW - Climate policy frameworks KW - Incentive mechanisms KW - Regulatory uncertainty Y1 - 2012 U6 - https://doi.org/10.1080/14693062.2011.582327 SN - 1752-7457 VL - 12 IS - 2 SP - 255 EP - 271 PB - Taylor & Francis CY - Abingdon ER -