For the first time, research has compared 1,500 climate policies across the world to reveal which have been effective and which have failed.
Policy proliferation has occurred over the last decade as governments have become increasingly serious about mitigating the impact of climate change, driven by the need to meet the Paris Agreement, which seeks to limit global average temperature increase to well below 2 degrees above pre-industrial levels. By 2022 the average number of climate policy adoptions ranged between four and eight policies per country. But the question of which of these has worked and which have failed has remained open; until now.
In a featured paper for Science journal, our international research team that was led by the Mercator Institute of Global Commons and Climate Change and the Potsdam Institute of Climate Impact Research has this week unveiled the first comprehensive global evaluation of 1,500 climate policy measures from 41 countries across six continents.
Using a methodology that was initially developed by Climate Econometrics at the Institute for New Economic Thinking at the Oxford Martin School (INET Oxford), we measured ‘emission breaks’ that followed policy interventions, pinpointing where policies have had a large impact. The break detection methodology, called indicator saturation estimation, developed at Climate Econometrics, allows break indicators for all possible dates to be examined objectively using a variant of machine learning. This unprecedented study provides a detailed impact analysis of the wide range of climate policy measures implemented across the planet over the last two decades.
The findings reveal a sobering reality: many policy measures have failed to achieve the necessary scale of emissions reductions. Only 63 cases of successful climate policies with large emission reductions were identified. The key characteristic of these successful cases is the inclusion of tax and price incentives in well-designed policy mixes.
However on the other hand, our study also shows that if more countries relied on policies like these ones, the remaining emissions gap for 2030 could be closed by as much as 26% to 41%. The identified successful policies have led to an average emission reduction of 19 percent. In total, the 63 policy interventions reduced emissions between 0.6 and 1.8 billion tonnes of CO2.
Lessons for the UK – an electricity success story but look to US on transport
Our findings provide timely advice for the new UK Government, having pledged £8.3 bn to capitalise Great British Energy, a publicly owned corporation that will aim to accelerate the energy transition.
The incoming Government wants to achieve net zero by 2050 (and zero carbon electricity by 2030), but a recent assessment from the Climate Change Committee suggests the UK is well off track, and that that only a third of the emissions reductions required to achieve the country’s targets are currently covered by credible plans.
The Climate Policy Explorer that was released alongside the research paper could help point the new government towards such credible plans, showing what policies to keep, what to ditch, and what to replicate from elsewhere.
We find that the UK has made very successful progress in the Electricity Sector with noticeable emissions breaks indicating the structural change achieved in this sector. But in no other sector any major emission reduction following a policy intervention was detected beyond what would be expected based on long-term economic and population dynamics.
In the electricity sector, we detected two adjacent breaks for the United Kingdom in 2015 and 2016. These follow the mid-2013 introduction of a carbon price floor that imposed a minimum price for UK power producers in the EU emission trading system and has been shown to have reduced emissions considerably. Although the existing literature has attributed most of this effect to the carbon price floor, our attribution method, combined with the OECD policy database, reveals that the carbon price floor was part of a wide policy mix that included command-and-control measures (renewable portfolio standards, renewable expansion planning, stricter air pollution standards, and the announcement of a phase-out of coal power plants) and other market-based incentives (renewable feed-in tariff and auctions). While there is some uncertainty regarding the precise timing and attribution of effect between those two breaks, our results show that emissions would have been around 43.6% percent higher in the absence of those policy interventions in the early 2010s.
However the UK’s success in electricity is not matched with similar success of its policies in other sectors. There are huge remaining challenges in other sectors like heating, transport and industry as more effective policies are desperately needed to decouple emissions from underlying economic and population dynamics.
For better policies the UK could use our tool to look elsewhere for success stories. The US, for example, has managed to reduce carbon emissions in the transport sector following actions taken in the aftermath of the financial crisis. While the US did not pass carbon pricing reform in the Obama administration, a policy mix that combines tax incentives and subsidies as well as performance standards has led to a reduction in carbon emissions in the transport sector of about 8.2% from 2008.
While the new UK government’s policies are moving in the right direction, they need to go further and faster to unlock their full emission reduction potential. Our research now provides evidence that an optimal mix of policies can achieve this, and rapidly lower a country’s emissions. The accompanying Climate Policy Explorer, released today, can be confidently leveraged as a tool to craft an efficient transition for the UK.
Lessons for the world - More policies do not equal better outcomes
Our findings demonstrate that more policies do not necessarily equate to better outcomes. Instead, the right mix of measures is crucial. For example, subsidies or regulations alone are often insufficient to induce substantial change; only in combination with price-based instruments, such as carbon and energy taxes, can they deliver substantial emission reductions.
Our results inform contentious policy debates in three main ways. First, we show evidence for the effectiveness of combining different types of policies in mixes. These include popular subsidy schemes and regulatory instruments such as bans, building codes, energy efficiency mandates and labels for which we find larger reduction effects in policy mixes with tax and price incentives compared to the case of a stand-alone implementation.
Second our findings highlight that successful policy mixes vary across sectors and that policy-makers should focus on sector-specific best practices.
Third our results stress that effective policies vary with economic development. For instance, in sharp contrast to developed economies, we do not find any successful pricing intervention with large emission reductions in the electricity sector of developing economies, even though around 13% of policies are pricing interventions.
We hope that policy makers will use our analysis to design better climate policies as we show that reaching net-zero is eminently achievable, if effort is redirected. We have made the data available to policy-makers across the world, and have produced a sector by sector, country by country data visualisation in a dashboard in the hope that policy-makers will take note.
The researchers have made the data available to policy-makers across the world, and have produced a sector by sector, country by country data visualisation in a dashboard: climate-policy-explorer.pik-potsdam.deNicolas Koch is one of the lead authors from Mercator Institute of Global Commons and Climate Change and the Potsdam Institute of Climate Impact Research.
Moritz Schwarz is a Research Fellow at the Technical University of Berlin and the Potsdam Institute of Climate Impact Research and an Associate at the University of Oxford.
ENDS.
