A comprehensive analysis of thousands of climate policy measures worldwide has revealed that only a fraction are effective in reducing emissions.
The study, led by researchers from the Potsdam Institute for Climate Impact Research (PIK) and the Mercator Research Institute on Global Commons and Climate Change (MCC), offers critical insights into which climate policies effectively reduce carbon emissions.
In collaboration with experts from the University of Oxford, the University of Victoria, and the Organisation for Economic Co-operation and Development (OECD), the study evaluates a broad range of policy measures, going beyond the limited scope of previous evaluations.
The importance of policy mixes in climate action
Over the past two decades, thousands of climate policies have been implemented worldwide, yet there is little consensus on which are most effective.
This new study fills that gap by analysing a wide variety of climate policies across different sectors, including building, electricity, industry, and transportation, in both industrialised and developing countries.
Lead author Nicolas Koch from PIK and MCC emphasises that simply increasing the number of policies does not necessarily lead to better outcomes.
Instead, the study reveals that the right mix of complementary climate policy instruments is crucial. For example, while subsidies or regulations alone may not be sufficient to drive significant emission reductions, their effectiveness can be greatly enhanced when combined with price-based instruments such as carbon and energy taxes.
Comprehensive analysis of global climate policies
The study embarked on a detailed analysis of 1,500 climate policy interventions implemented between 1998 and 2022.
This analysis leverages the most comprehensive global inventory of climate policies available, alongside advanced statistical techniques, to assess the real-world impact of these policies on emissions.
Among the 1,500 policies examined, only 63 were found to have significantly reduced emissions, with reductions ranging from 0.6 billion to 1.8 billion tonnes of CO2.
These findings underscore the importance of using a mix of climate policy instruments to achieve substantial emission reductions.
Contrary to some claims, the study demonstrates that effective policy combinations are not redundant but are essential in addressing different market failures.
Pricing mechanisms, for instance, have proven particularly effective in the industry and electricity sectors, while a combination of incentives and regulations works better in the building and transportation sectors.
Sector-specific insights and challenges in developing countries
The study also highlights the varying effectiveness of policy instruments across different sectors and regions.
In industrialised countries, pricing mechanisms have been highly successful in reducing emissions. However, in developing nations, regulatory and subsidy measures often need to precede or complement pricing mechanisms to be effective.
This nuance is crucial for designing climate policies that are tailored to the specific economic and developmental contexts of different countries.
Lead author Annika Stechemesser from PIK acknowledges the complexity of disentangling the effects of individual measures within a policy mix.
Nevertheless, the study’s 63 success stories provide valuable insights into how well-designed climate policy combinations can be tailored to specific sectors and development levels. This knowledge is essential for supporting policymakers in their efforts to transition toward climate neutrality.
Climate Policy Explorer: A tool for policymakers
To make these findings accessible and actionable, the study’s results are available through an interactive online tool called the ‘Climate Policy Explorer.’
This platform offers detailed insights into specific countries, sectors, and policy measures, allowing users to explore successful climate policy combinations in different contexts.
For example, the UK’s success in reducing emissions in the electricity sector, driven by a minimum carbon price and a coal phase-out plan, serves as a notable example of effective policy design.
Similarly, the US transportation sector’s emission reductions, achieved through a mix of tax incentives for low-emission vehicles and CO2 efficiency standards, demonstrate the importance of coordinated policy efforts.
These insights are crucial for policymakers worldwide as they design and implement strategies to meet the Paris Agreement’s climate targets.
The Climate Policy Explorer provides a comprehensive overview of the study’s findings, offering a valuable resource for those seeking to understand and apply effective climate policy combinations.
