96% OF CLIMATE POLICY SINCE 1998 FAILED

An international research team has unveiled the first comprehensive global evaluation of 1,500 climate policy measures from 41 countries across six continents, between 1998 and 2022.

Published in the prestigious journal Science, this unprecedented study provides a detailed impact analysis of the wide range of climate policy measures implemented over the last two decades.

The findings reveal a sobering reality, that the vast majority of policy measures failed. Only in 63 cases of climate policies, or approximately 4% of the total analysed, was there a meaningful emission reduction of 19%. The key characteristic of these successful cases is the inclusion of tax and price incentives in well-designed policy mixes.

The new analysis is sophisticated and expansive in ways that previous analysis was not. Led the Potsdam Institute for Climate Impact Research (PIK), the Mercator Research Institute on Global Commons and Climate Change (MCC) and experts from the Universityof Oxford, the University of Victoria, and the Organi y accessible online portal allowing complete access to results and showing the nuance – what works in one sector or country doesn’t work as well in another, for example (link is at the bottom).

‘We systematically evaluated policy measures that have rarely been studied until now, providing new insights into well-designed combinations of complementary policy instruments. From this, we derive best practices - for the building, electricity, industry and transport sectors, and in both industrialized countries and often neglected developing countries,’ explains lead author Nicolas Koch from PIK and MCC. ‘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 insufficient; only in combination with price-based instruments, such as carbon and energy taxes, can they deliver substantial emission reductions.’

The study highlights specific examples to illustrate this point. For instance, outright bans on coal-fired power plants or combustion-engine cars do not result in meaningful emissions reductions. Success requires tax or price incentives, as shown in the UK for coal-fired power generation or in Norway for cars.

The research uses a methodology developed by Climate Econometrics at The Institute for New Economic Thinking at the Oxford Martin School (INET Oxford), that measures ‘emission breaks’ that follow 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.

Success stories include China’s pilot emissions trading systems, which were complemented by reduced fossil fuel subsidies and stronger financing incentives for energy efficiency. The UK achieved success phasing out coal-fired power generation, and Norway successfully applied large subsidies to replace its legacy car fleet with EVs. The US is an example of meaningful emission reductions in the transport sector, resulting from a mix of tax incentives and subsidies for low-emitting vehicles and CO2 efficiency standards. Germany’s eco-tax reform and truck toll introduction is also judged to be a success.

Yet in the vast majority of policies there was no discernible emissions reduction beyond what would be expected based on long-term economic and population dynamics.

The Research Team concluded:

1. The Paris emissions gap can be closed: Focusing on the typical effects that the 63 effective identified policies had would close the emissions gap by 26%-41% – a significant contribution to meeting Paris Targets.
2. Climate policies are more effective as part of a mix: In the majority of cases, effect sizes are larger if a policy instrument is part of a policy mix rather than implemented alone.
3. Developed and developing countries have different climate policy needs: In developed countries, pricing stands out, whereas in developing countries, regulation is the most powerful policy.

Dr Anupama Sen, Head of Policy at the Oxford Smith School of Enterprise and the Environment says of UK policy-making:

‘In order to meet its zero goals, UK policymaking must shift from focusing solely on the upfront costs of the climate transition, and start accounting for the considerable benefits that will accrue over years to come. In more than 80% of investments the total lifetime cost of a clean technology is considerably lower than that of a fossil technology. While the new UK government’s policies are moving in the right direction, they need to go further and faster to unlock these lower costs. New Oxford 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.