96% of climate policies since 1998 have failed, but only 63 of 1,500 have been successful

A comprehensive report has been published that examines the effectiveness of 1,500 climate policies implemented around the world since 1998. It reveals that 96% of climate policies have failed, and that to be successful, it is important that 'taxes and price incentives are incorporated into a well-designed policy mix.'

Climate policies that achieved major emission reductions: Global evidence from two decades | Science

https://www.alumni.ox.ac.uk/article/96-of-climate-policy-since-1998-failed

The first comprehensive study has been conducted to examine the effectiveness of climate policies implemented in 41 countries across six continents from 1998 to 2022. The findings are published in the journal Science, which provides a detailed analysis of the impact of climate policies. Of the 1,500 climate policies analyzed, only 63 (about 4%) were assessed as having successfully reduced greenhouse gas emissions by 19% or more. The main characteristic of successful cases is that 'tax and price incentives are incorporated into a well-designed policy mix.'

The study was led by experts from the Potsdam Institute for Climate Impact Research (PIK), the Mercator Institute for Global Commons and Climate Change (MCC), the University of Oxford, Victoria University and Organisation University.

'We have systematically assessed previously little-studied policy measures and provided new insights on the right mix of complementary policy instruments, leading to best practices across the buildings, power, industry and transport sectors, and in both developed and often-neglected developing countries,' said Nicholas Koch, lead author of the report. 'Our findings show that a greater number of policies does not necessarily lead to better results. Rather, the right mix of measures is key. For example, subsidies and regulations alone are not enough. Only in combination with price-based instruments such as carbon or energy taxes can significant emissions reductions be achieved.'

The report points out that outright bans on coal-fired power plants or internal combustion engine cars would not lead to meaningful greenhouse gas emissions reductions, and that to be successful, tax or price incentives would need to be put in place, as in the UK coal power policy and Norway's car policy.

The study employs 'indicator saturation estimation,' a methodology developed by climate econometricians at the Institute for New Economic Thinking at the Oxford Martin School (INET Oxford) to measure the impact of policy interventions on greenhouse gas emissions. Indicator saturation estimation uses a form of machine learning to objectively explore all possible reduction indicators.

Of the 1,500 climate policies analyzed by the research team, only 63 were judged to be successful. Specifically, China's experimental emissions trading scheme, complemented by 'reductions in fossil fuel subsidies' and 'strong financing incentives for energy efficiency,' the UK's coal-fired power plant phase-out policy, Norway's large-scale subsidy program to replace old car fleets with electric vehicles (EVs), the US's combination of tax incentives and subsidies for low-emission vehicles and carbon efficiency standards, and Germany's combination of environmental tax reform and the introduction of truck tolls were evaluated as successful in reducing greenhouse gas emissions.

The research team assessed that most climate policies have not produced the significant greenhouse gas emissions reductions expected based on long-term economic and demographic trends. Three key findings from the study include:

1. The Paris Agreement emissions gap (the gap between greenhouse gas emission reduction targets and the amount of emission reductions needed to meet those targets) can be closed
Focusing on the effects of 63 climate policies deemed successful in the study, the emissions gap could be closed by 26-41%.

2. Climate policies are more effective when combined with other policies
In most cases, policy instruments are more effective when they are part of a policy mix than when implemented in isolation.

3. Developed and developing countries have different climate policy needs
In developed countries, monetary policy is important, but in developing countries, regulation is the strongest.

Dr Anupama Sen, Head of Policy at Oxford University's Smith School of Business and Environment, said of UK climate policymaking: 'To achieve our goal of net-zero greenhouse gas emissions, UK policymaking needs to move away from focusing only on the upfront costs of climate change and start to consider the significant benefits that will accumulate over many years to come. For more than 80% of investments, the total lifetime costs of clean technologies are significantly lower than those of fossil technologies. UK government policy is moving in the right direction, but we need to go further, and faster, to realise these lower costs. New research from the University of Oxford provides evidence that an optimal policy mix can achieve this and rapidly reduce the country's greenhouse gas emissions.'