Most climate policies fail to deliver impact, according to a new report, which calls for a global gear change.
The study, which assessed 1,500 policies implemented between 1998 and 2022 across 41 countries in six continents, found that, against the backdrop of an intensifying climate crisis, just 63 policy interventions (4.3 per cent) have actually been successful, with total emission reductions between 0.6 and 1.8 Gt CO2.
Led by Climate Econometricians at the University of Oxford, the Potsdam Institute for Climate Impact Research (PIK), and the Mercator Research Institute on Global Commons and Climate Change (MCC), the research marks the first time a global dataset of policies has been compared and ranked in this way.
The researchers concluded that:
- Climate policies are more effective as part of a mix,
- Climate policy needs vary between developed and developing countries,
- The Paris emissions gap can be closed by using successful policies as a template from which to draw.
Policy Mixes Most Effective
The study, published in the journal Science, found that policy instruments, such as bans and phase-outs, are more effective when part of a mix rather than being implemented alone.
Researchers used a methodology developed by Climate Econometrics at the Institute for New Economic Thinking at the Oxford Martin School (INET Oxford) to measure ’emission breaks’ that followed policy interventions.
The break detection methodology, called indicator saturation estimation, allows break indicators for all possible dates to be examined objectively using a variant of machine learning, it was shared.
Most (70 per cent) of the breaks were matched to two or more policies.
“Our findings demonstrate that more policies do not necessarily equate to better outcomes. Instead, the right mix of measures is crucial,” said lead author Nicolas Koch from PIK and MCC.
“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,” added Koch.
However, an outlier here, it said, is taxation, which was found to be the only policy instrument effective as a standalone policy.
Focus on Sector-Specific Best Practices
Alongside policy mixes, the report also recommended policymakers focus on sector-specific best practices when designing climate policy rather than following a “one-size-fits-all” approach.
Indeed, the report notes the combinations of complementary policy instruments vary across sectors and country groups, and although transport stood out as the sector with the most complementaries, the dominant sectoral policy differs across country groups.
For example, in this sector, when looking at developed economies, pricing stood out individually, with 20 per cent of all successful detected interventions being associated with pricing individually. Subsidies were found to be the most complementary instrument, especially in combination with pricing.
In contrast, in developing economies regulation was found to be the most powerful policy, “highly effective” as an individual policy, and also in combination with the duo of subsidies and pricing and information.
Meanwhile, in the industry sector, pricing was found to play a “prominent role,” effective individually in developed economies, and showing the most synergy with other policies in developing economies.
Effective policies also vary with economic development, the report outlined.
“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,” said Moritz Schwarz, a research fellow at the Technical University of Berlin and Potsdam Institute of Climate Impact Research and Climate Econometrics Associate at the University of Oxford.
However, the researchers noted that, due largely to a sparsity of data for developing countries, especially in Africa and Asia, the analysis suffers from regional imbalance.
It is also worth noting that the study only covered the building, electricity, industry, and transportation sectors, omitting other high-emitting sectors.
Closing The Emissions Gap
According to Professor Felix Pretis, a co-author of the study and the Co-Director of the Climate Econometrics Programme at Nuffield College, scaling up good-practice policies identified in the study can, in the short term, be a “powerful climate mitigation strategy.”
Indeed, the key characteristic of successful climate policies was found to be the inclusion of tax and price incentives in well-designed policy mixes.
In the UK, a successful example was found to be the introduction of a carbon price floor for power producers in the EU emissions trading system. This was brought in as part of a wider policy mix that included command-and-control measures such as renewable portfolio standards and a phase-out of coal power plants, alongside market-based incentives.
The researchers outlined that the results show emissions would have been nearly 50 per cent higher in the absence of those policy interventions in the early 2010s.
Elsewhere, in China, its pilot emissions trading systems were complemented by reduced fossil fuel subsidies and stronger financing incentives for energy efficiency.
The report noted that if more countries relied on such policies, the remaining emissions gap for 2030 could be closed by as much as 26 per cent to 41 per cent.
It does warn, however, that even if all countries in the sample were able to replicate past success, “more than four times” the effort witnessed so far would have to be exerted to close the emissions gap.
Indeed, UN estimates are that there remains a median emissions gap of 23 billion tonnes of CO2 equivalent by 2030, Ebba Mark, study co-author and a researcher at the Calleva Project at INET, Oxford shared.
Next Steps for Policymakers
Alongside the research paper, a Climate Policy Explorer was also released, aimed at helping governments gain deeper insight into what works and what doesn’t.
“The dashboard that we make available to policy-makers provides an accessible platform to conduct country-by-country, sector-by-sector comparisons and to find a suitable policy mix for different situations,” said Pretis.
This call for a recalibration of how countries approach climate policy comes against the backdrop of record-high global emissions and follows the first year-long breach of the 1.5-degree warming limit.
Indeed, as the world continues to heat, countries are off track from meeting climate goals.
Assessing the current situation, a 2023 UNEP report found that fully implementing unconditional Nationally Determined Contributions (NDCs) would limit temperature rise to 2.9°C above pre-industrial levels this century, while fully implementing conditional NDCs would lower this to 2.5°C – far above 1.5 °C.
However, imminent deadlines are ahead, including the 2025 deadline for submission of the next round of Nationally Determined Contributions (NDCs).
Back in March, UN Climate Change Executive Secretary Simon Stiell said that the next round of NDCs may be the most “important documents” to be produced in a multilateral context this century.
According to the Energy Transitions Commission (ETC), if governments reflect existing policy commitments made at COP28 and nationally and the latest technological progress in the next round of NDCs, “overall ambition levels could almost triple.”
This would result in 18 GtCO2e of mitigation per year in 2035 and put the world on the path to limit global heating to 2°C, it said.
By Madaline Dunn, Editor, ESG Mena.
