Global Climate Policies: Successes, Failures, and the Role of Pricing
A comprehensive analysis of global climate policies has revealed a stark reality: most efforts to curb carbon emissions have fallen short, with only a few strategies making a significant impact. Researchers examined 1,500 policies implemented worldwide over the past two decades, identifying just 63 instances where measures effectively reduced carbon pollution. Their findings, published in the journal Science, underscore the critical importance of incorporating pricing mechanisms into climate policies to achieve meaningful results.
The Power of Pricing in Climate Policy
The study highlights that successful climate policies often involve making polluters pay, whether through carbon taxes, emission trading schemes, or other pricing instruments. Nicolas Koch, a climate economist at the Potsdam Institute for Climate Impact Research and co-author of the study, emphasised that while subsidies and regulations alone generally do not lead to substantial emission reductions, the inclusion of pricing mechanisms can drive significant changes.
One notable example of effective climate policy is the UK's approach to decarbonising its electricity sector. Beginning in 2012, the UK implemented a combination of 11 policies, including a coal phaseout and an emissions trading scheme, which collectively reduced emissions by nearly 50%. Similarly, South Africa's building sector achieved a 54% reduction in emissions through a mix of regulations, subsidies, and appliance labelling.
Limited Success in the United States
In the United States, the study found only one successful policy intervention: an 8% reduction in transportation emissions from 2005 to 2011, driven by fuel standards and subsidies. However, President Biden's nearly $400 billion climate initiative, which heavily relies on subsidies and could reshape the evaluation of US climate efforts in the future, remains unaccounted for in the analysis.
A Long Way to Go
Despite these success stories, the overall impact of effective climate policies remains modest. The 63 successful instances identified in the study collectively reduced global carbon emissions by 600 million to 1.8 billion metric tonnes. Yet, this is a small fraction of the 36.8 billion metric tonnes of carbon dioxide emitted in 2022 alone from burning fossil fuels and cement production.
The study also indicates that even if all major countries adopted the most effective policies identified, it would only close about 26% of the United Nations' "emissions gap"—the difference between projected emissions in 2030 and the level needed to keep global warming within internationally agreed limits.
Urgent Need for a Step Change
The findings suggest that the world needs to adopt a more aggressive and coordinated approach to climate policy. Niklas Hohne of the New Climate Institute in Germany, who was not involved in the study, called for a "step change" in global efforts, emphasising the need to shift into "emergency mode" to make the necessary breakthroughs.
Evaluating Policies with Precision
The research team, led by Koch, utilised a novel "reverse causal approach" to identify successful policies. By analysing emissions reductions in 41 countries across four economic sectors—electricity, transportation, buildings, and industry—they isolated the policies that drove significant decreases. The methodology, which includes observations and machine learning, provides a transparent and reproducible framework for evaluating climate policies, with the potential to inform future efforts.
Moving Beyond Subsidies
John Sterman of the MIT Sloan Sustainability Institute noted that while subsidies for low-carbon technologies are popular among politicians, they are insufficient on their own. He stressed the necessity of pricing fossil fuels closer to their truecost, including the environmental damage they cause, to drive more comprehensive and effective climate action.
As the world grapples with the escalating threat of climate change, this analysis serves as a crucial reminder that while progress has been made, much more needs to be done. The integration of effective pricing mechanisms into climate policies could be the key to unlocking the substantial emissions reductions required to safeguard our planet's future.