Climate policy success needs mix of three factors, study finds

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The best way for nations to tackle the emissions behind climate change involves using a combination of several financial and regulatory levers, pioneering analysis of 41 countries across six continents has found.

The most successful moves in nations such as the UK, Norway, the US and China, involved a mix of policies that included subsidies as well as regulations and pricing mechanisms, the study concluded.

For example, the UK’s effort in winding back coal-fired power generation and Norway’s rollout of electric vehicles was successful only because the policy was in tandem with tax or price incentives.

The study of up to 1,500 approaches to climate change around the world to assess the many policy attempts to curb global warming was led by the Potsdam Institute for Climate Impact Research and assisted by artificial intelligence.

The right mix of measures was “crucial” to driving down emissions, said Nicolas Koch, a co-author. Relying solely on subsidies or regulations, for example, was “insufficient”, he added.

“For instance, we show that bans on coal-fired power plants or combustion engine cars do not result in major emissions reductions when implemented alone,” said Koch, who is also head of the policy evaluation lab at Mercator Research Institute on Global Commons and Climate Change.

In the US, an effective policy combination was the tax incentives, subsidies for low-emitting vehicles and CO₂ efficiency standards that helped it cut transport emissions after 2008.

In China, industrial emissions were curbed by accompanying pilot carbon trading systems with reduced fossil fuel subsidies, and more financing incentives for energy efficiency, the research concluded. 

The study used AI-enhanced statistical techniques to evaluate various policies in place from 1998 to 2022 in countries that imposed them versus those that did not, based on the OECD climate policy database. 

The research comes as countries are under pressure to draw up strong climate plans, known as nationally determined contributions, which are due to be submitted to the UN’s climate change arm in early 2025. 

While other experts welcomed the work, some warned it might not fully capture all the policies driving emissions cuts, arguing the effects could take years to become clear and that falls in emissions might be gradual.

The researchers deemed only 63 policy interventions out of the 1,500 as “successful”, defined as achieving cuts of between 0.6bn and 1.8bn tonnes of CO₂. The paper covered four sectors: buildings, electricity, industry and transport.

Taxation was the “notable exception” in causing large falls in emissions without other policies. 

Examples of success were provided by South Africa on building emissions, Brazil on power generation, South Korea on industry efficiency and Germany on transport.

Bob Ward, policy director at the Grantham Research Institute, said the research was “interesting” but had “serious limitations” because its methodology overlooked key policies “that have driven long-term emissions reductions, but without creating a sharp break in emissions trends”.

Ward pointed to the focus on the UK’s introduction of a carbon price floor in 2013, which was followed by a sharp fall in emissions. It neglected the importance of the introduction of the 2008 Climate Change Act, he said. That “created the crucial system of five-year carbon budgets” and helped pave the way for future effective policies, Ward added.

The researchers acknowledged that some successful interventions might have been set up by previous policies.

Paul Ekins, professor of resources and environmental policy at the UCL Institute for Sustainable Resources, said the analysis reinforced the growing view that a single climate policy was rarely enough.

“While the successful policies in one country may guide a policymaker in another, nothing can replace detailed policy design that is specific and sensitive to each country’s special social and political conditions.”

The research found a difference between the types of policies that worked well in developed economies, where pricing stood out, while regulation was the most effective in developing economies.