You are here

Policy in practice – domestic large final emitters

16 December, 2015 - 15:14

Governments frequently focus upon quantities emitted by individual firms, sometimes because governments are reluctant to introduce carbon taxes or a system of tradable permits. Specifically the focus is upon firms called large final emitters (LFEs). Frequently, a relatively small number of producers are responsible for a disproportionate amount of an economy’s total pollution, and limits are placed on those firms in the belief that significant economy-wide reductions can be achieved in this manner. A further reason for concentrating on these LFEs is that the monitoring costs are relatively small compared to the costs associated with monitoring all firms in the economy. It must be kept in mind that pollution permits may be a legal requirement in some jurisdictions, but monitoring is still required, because firms could choose to risk polluting without owning a permit.