Climate policies that achieved major emission reductions: Global evidence from two decades
It is easy for countries to say they will reduce their emissions of greenhouse gases, but these statements do not mean that the policies they adopt will be effective. Stechemesser et al. evaluated 1500 climate policies that have been implemented over the past 25 years and identified the 63 most successful ones. Some of those successes involved rarely studied policies and unappreciated combinations. This work illustrates the kinds of policy efforts that are needed to close the emissions gaps in various economic sectors. —Jesse Smith
(...)
Here, we provide a global, data-driven causal impact assessment to identify effective policies that have led to large emission reductions out of a universe of about 1500 climate policy measures implemented over the past 2 decades across 41 countries from six continents, whose emissions altogether account for 81% of total global emissions in 2019 (19). The aim of this large-scale, cross-country assessment is to guide societies and decision-makers in effectively ratcheting up NDCs under the Paris Agreement by providing tangible evidence on which policy instruments have the potential to achieve large emission reductions. At the heart of our analysis is a meticulously collated climate policy database from the Organisation for Economic Co-operation and Development (OECD), which constitutes the most comprehensive, internationally harmonized policy inventory to date and addresses important prior data limitations. It is global, disaggregated by relevant economic sectors (buildings, electricity, industry, and transport), covers both policy adoptions and the tightening of existing policies, and is of high quality, ensured by drawing on official data verified by countries. Its consistent, theory-based categorization of 48 distinct climate policy instrument types enables systematic assessments of synergies between different instruments.
(...)
Association of breaks with known and unknown policies
The timing of the identified structural breaks matches well with newly adopted or tightened climate policies, which are visualized as squares along the time axes of Figs. 2 and 3. Of 69 breaks, 63 are associated with at least one policy adoption or tightening within a 2-year interval around the time of the break allowing for lagged or anticipatory policy effects (details on the policy attribution are available in the SM materials and methods). Of the matched breaks, four are associated with the heterogeneous effect of the introduction or tightening of a European Union (EU) policy that we control for (SM materials and methods). Most policies associated with our 21 breaks in developing economies have been rarely studied in the literature and highlight the benefit of our approach to detect hitherto insufficiently studied or unknown effective policy interventions that require more research. We show in fig. S45 how often each policy instrument coincides with a detected large emission reduction.
Most breaks are matched to two or more policies (70%). Before describing our systematic assessment of differential effects of policy mixes and stand-alone policies, we discuss here one prominent example for each country group that illustrates the power of our approach to identify both (i) known, headline policies for which some evidence already exists and (ii) previously unknown combinations of effective policies.
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).
In the industry sector, the break in China in 2016 occurs with some lag after the launch of seven pilot emission trading schemes beginning in 2013. Again, prior literature has shown that the carbon price reduced emissions, but these studies frequently do not consider the role of the simultaneous reduction of fossil fuel subsidies in 2016 and the strengthening of financing mechanisms for energy efficiency investments in 2015.
(lotsa graphs)
Second, our findings highlight that successful policy mixes vary across sectors and that policy-makers should focus on sector-specific best practices when designing climate policy rather than following a one-size-fits-all approach. In line with theoretical expectations, we have identified pricing as a particularly effective policy in those sectors dominated by profit-maximizing firms—namely, industry—but also the electricity sector in developed economies. By contrast, for the building and partly also the transport sectors, which both include a large share of private consumers subject to documented behavioral factors such as myopia (32, 33), we found most potential for complementarities between policy instruments. This is consistent with the hypothesis that broad incentives with a particular focus on adoption decisions (such as renewal of heating systems or cars) are needed in these sectors.
Third, our results stress that effective policies vary with economic development. For example, in sharp contrast to that of developed economies, we did not find any successful pricing intervention with large emission reductions in the electricity sector of developing economies, even though around 13% of policy adoptions or tightenings are pricing interventions. This finding is consistent with claims that the lack of liberalized markets and existence of other price distortions can limit the effectiveness of price-based instruments (35). It is also in line with the theory of policy sequencing, which states that in a first stage of climate policy-making, regulations and subsidies are effective in building economic interest in green technology and reducing the cost of technologies. In this respect, the observed differences in effective policies may partly reflect the climate policy stage. We may not observe some policies because they are not implemented owing to interest group opposition or limited state capacity in developing countries. However, for interpretation it is important to consider that our analysis for developing countries is based on a small set of estimates given the limited number of policies detected, particularly in the electricity sector.
https://www.science.org/doi/10.1126/science.adl6547
