A review of ten types of policy used to reduce carbon suggests that some costs fall on those less able to bear them – but it also shows these policies can form the bedrock of a ‘green recovery’ if specifically designed and used in tandem.
Some of the low-carbon policy options currently used by governments may be detrimental to households and small businesses less able to manage added short-term costs from energy price hikes, according to a new study. However, it also suggests that this menu of decarbonising policies, from quotas to feed-in tariffs, can be designed and balanced to benefit local firms and lower-income families – vital for achieving ‘Net Zero’ carbon and a green recovery.
University of Cambridge researchers combed through thousands of studies to create the most comprehensive analysis to date of widely used types of low-carbon policy, and compared how they perform in areas such as cost and competitiveness.
Preventing climate change cannot be the only goal of decarbonisation policies. Unless low-carbon policies are fair, affordable and economically competitive, they will struggle to secure public support – and further delays in decarbonisation could be disastrous for the planet.
Dr Cristina Peñasco, study lead author, University of Cambridge.
Researchers looked at whether each policy type had a positive or negative effect in various environmental, industrial and socio-economic areas. When it came to “distributional consequences” – the fairness with which the costs and benefits are spread – the mass of evidence suggests that the impact of five of the ten policy types are far more negative than positive.
“Small firms and average households have less capacity to absorb increases in energy costs,” said co-author Laura Diaz Anadon, Professor of Climate Change Policy.
Renewable electricity traded as ‘green certificates’ can redistribute wealth from consumers to energy companies – with 83% of the available evidence suggesting they have a “negative impact”, along with 63% of the evidence for energy taxes, which can disproportionately affect rural areas.
However, the vast tranche of data assembled by the researchers reveals how many of these policies can be designed and aligned to complement each other, boost innovation, and pave the way for a fairer transition to zero carbon.
Click here for the full University of Cambridge article.
Nature Climate Change publication, Systematic review of the outcomes and trade-offs of ten types of decarbonization policy instruments (Jan 2021).
Image credit: Thomas Richter