It is crucial to know which climate policies can work at scale to achieve the Paris Agreement’s climate targets to limit global temperature rises to 1.5 deg C, and to keep them ‘well below’ 2.0 deg. C above those in pre-industrial times.
However, despite the implementation of thousands of climate policies worldwide over the past two decades, there is little consensus on which have been the most effective in the quest for net zero, the topic of a new gallery at the Science Museum.
To find out, a study was launched by researchers at the Potsdam Institute for Climate Impact Research and the Mercator Research Institute on Global Commons and Climate Change in collaboration with Ebba Mark, Felix Pretis and Moritz Schwarz from the University of Oxford, and experts from the University of Victoria, and the Organisation for Economic Co-operation and Development, OECD.
Annika Stechemesser and colleagues evaluated 1,500 climate policies implemented across 41 countries between 1998 and 2022, using data from the OECD.
To weigh up different approaches, they used a machine learning-based version of a common statistical method, called the ‘difference-in-differences’ approach, to estimate the causal effect of a climate policy by comparing changes over time between a group exposed to the policy and a group that is not.
Out of the 1,500 climate policies, the authors report today in the journal Science that they identified only 63 policies that reduced total emissions between 0.6 billion and 1.8 billion tons of planet heating carbon dioxide.
‘This knowledge is vital for supporting policymakers and society in the transition to climate neutrality,’ said Stechemesser.
‘We derive best practices – for the building, electricity, industry and transport sectors, and in both industrialised countries and often-neglected developing countries,’ added lead author Nicolas Koch.
The key characteristic of these 63 successful policies, which lead to average emission reductions of 19 per cent, is the inclusion of tax and price incentives in well-designed policy mixes.
According to the findings, combining various policy instruments is often more effective than using single measures, contradicting claims that policy mixes might be redundant.
‘The right mix of measures is crucial,’ said Koch. ‘For example, subsidies or regulations alone are insufficient; only in combination with price-based instruments, such as carbon and energy taxes, can they deliver substantial emission reductions.’
Bans on coal-fired power plants or combustion engine cars do not result in major emissions reductions when implemented alone, the analysis suggests. Successful cases only arise in tandem with tax or price incentives, as shown in the UK for coal-fired power generation, or in Norway for cars.
Effective policies typically involve a mix of subsidies and regulations that address different market failures. Pricing mechanisms excel in industry and electricity sectors, while a combination of incentives and regulations benefits buildings and transportation.
However, in developing countries, pricing was less effective, indicating that initial regulatory and subsidy measures might be necessary.
When it comes to the quest for Paris targets, where the UN estimates an ‘emissions gap’ of 23 billion metric tons of carbon dioxide by 2030, ‘our results provide a clear yet sobering perspective on the policy effort necessary,’ write the authors.
They also worked out what would happen if all 41 countries they studied achieved the biggest emission reductions and estimate that this would close the emissions gap by 41% but require significant more effort to achieve a future net zero economy.
An accompanying interactive website, the ‘Climate Policy Explorer,’ offers detailed insights into specific countries, sectors, and policy measures. In the electricity sector, for example, the UK achieved significant emissions reductions through a minimum carbon price, subsidies for renewable energy, and a coal phase-out plan.
Meanwhile the US saw major emission reductions in the transportation sector, resulting from a mix of tax incentives and subsidies for low-emitting vehicles and carbon dioxide efficiency standards. In the same sector, Germany’s eco-tax reform and truck toll introduction marked another notable success.