Systematic review of the outcomes and trade-offs of ten types of decarbonization policy instruments

Abstract

The literature evaluating the technical and socio-economic outcomes of policy instruments used to support the transition to low-carbon economies is neither easily accessible nor comparable, and often provides conflicting results. We develop and implement a framework to systematically review and synthesize the impact of ten types of decarbonisation policy instruments on seven technical and socio-economic outcomes. Our systematic review shows that the selected types of regulatory and economic and financial instruments are generally associated with positive impacts on environmental, technological, and innovation outcomes.Several instruments are often associated with short-term negative impacts on competitiveness and distributional outcomes. We discuss how these trade-offs can be reduced or transformed into co-benefits by designing R&D and government procurement, deployment policies, carbon pricing and trading. We show how specific design features can promote competitiveness and reduce negative distributional impacts, particularly for small firms. An online interactive Decarbonisation Policy Evaluation Tool allows further analysis of the evidence.

Policy Characteristics, Electoral Cycles, and the Partisan Politics of Climate Change

“…Thus, more fine-grained time series data on policy introduction as well as partisan (and other) variables may be useful to verify the present initial findings. Second, while this aggregate analysis argues that conflict potential varies for different types of climate policies, it neither derives the conflict potential related to a given policy's intensity (for instance, the level of a given tax or subsidy) nor does it relate to the expected outcomes of a given policy or policy type (see Peñasco et al 2021). Future research may consider such details to further understand the nature and conditions of electoral incentives in climate policy making.…”

Climate policy design, competitiveness and income distribution: A macro-micro assessment for 11 EU countries

“…To ensure broad-based societal support for deep decarbonisation, the corresponding policy design will need to reconcile environmental targets with concerns about competitiveness of EU industries, jobs and income inequality. Carefully designing and aligning various policy instruments ( Peñasco et al, 2021 ) will ensure an effective policy mix for a fair transition towards a competitive low-carbon economy.…”

Households' Energy Demand and the Effects of Carbon Pricing in Italy

“…The effect of carbon pricing on the real economy is not conclusive: some empirical analyses find very small or nil negative effects on economic activity and job creation (Metcalf and Stock 2020); a recent meta-analysis points to firms' competitive and distributional impacts of carbon pricing a being significantly negative (Penasco et al, 2021).…”