The recent analysis of climate policies for reducing carbon emissions (Stechemesser et al., 2024) and the application of thermodynamics to the world economy (Garrett et al., 2020) present a sobering new outlook on emissions strategies.

Looking at strong emission reductions, the recent analysis found that only 63 policy measures of 1500 analyzed over two decades (1998-2022) produced these sizable declines or breaks in carbon emissions. In most of the 63 measures, combinations or packages of related measures in a given sector (electricity production, industry, housing, or transport) produced greater reductions. The "silver bullet" of a single effective policy instrument is rare.

The authors present a helpful picture of the role of policy types. "In developed countries, pricing stands out individually, with 20% out of all successful detected interventions being associated with pricing individually. However, subsidies are the most complimentary instrument, especially in combination with pricing (33%). By contrast, in developing economies, regulation is the most powerful policy. It is highly effective as an individual policy (33%) and in combination with the duo of subsidies and pricing (33%) and information (33%)."(Stechemesser et al., 2024).

The study implies that regulatory and subsidy schemes may require complementary instruments to reduce emissions substantially. The authors identified a number of policy instruments where the empirical evidence suggests complementary impacts. The fundamental achievement of the study is that these policy mixes have been identified for each sector and can be studied and experimented by countries that have yet to realize such reductions. Italy, which has achieved an emissions break in industry, can look to France (and others) for their transport or housing mix, for example.

Popular subsidy schemes and regulatory instruments such as building codes, energy efficiency mandates, and labels have greater impact in policy mixes. This “is in line with the theoretical understanding that these specific instruments alone often have limited scope (for example, only new cars or new appliances are subject to rebound effects (28)”(Stechemesser et al., pg 2, 2024).

The second earlier study indicates the importance of rebound effects and difficulty avoiding them. From the view of thermodynamic modeling, one is not so surprised that only 63 of the 1500 policies studied produced significant reductions in emissions. Continued economic growth makes emission targets difficult to meet.

The slowing of economic growth and the possibility of curtailing it, as suggested by thermodynamic analysis, reminds us of the inequalities that have always accompanied climate warming. First, there is the inequality between the developed countries that have contributed most to the creation of climate change and the developing nations that will bear most of the damages. Moreover, the inequalities in the distribution of income and wealth within each of our nations leave lower and many middle-income families at greater risk of climate harm. In the US, the bottom 50% of households by wealth hold only 2.5% of total household wealth, while the top 10% hold 67% (Kent & Ricketts, 2024). Finally, the inequality between generations could leave our youth with a horrible climate and a second-class world.

Stechemesser and team simulate two scenarios where all 41 countries achieve emission reductions of the average (or the highest) detected sectoral effect at least once before 2030. This would close the 2030 emissions gap by 26 or 41 percent. These are significant results, but closing the gap would imply four such average policy mixes per country, or two and one-half maximum breaks per country, in the next six years. Researchers are increasingly skeptical that the world is committed to achieving the 1.5°C goal (Matthews & Wynes, 2022).

I wonder if the status quo is still acceptable. We allowed the oil and gas industry to engage in years of misinformation campaigns, and I wonder if it is still acceptable to allow them to delay effective climate policy. Is it still acceptable that our economic elite continues to underestimate the damage of climate change, even as we reach critical points of no return? Is it acceptable that politicians pass weak emission policies, as evidenced above?

It's time to double down on climate policy. We need to implement the sector mixes that have worked for neighboring and similar countries. The status quo is outrageous.

Notes

Garrett, T.J., Grasselli, M., Keen, S. (2020). Past world economic production constrains current energy demands: Persistent scaling with implications for economic growth and climate change mitigation, ed: August 27, 2020, Plos One. Kent, A.H., Ricketts, L.R., (2024). The State of US Wealth Inequality, August 02, Federal Reserve Bank of St. Lewis.
Matthews, H.D., Wynes, S., (2022). Current global efforts are insufficient to limit warming to 1.5°C. August 27, Science376,1404-1409(2022). Stechemesser, A., Koch, N., Mark, E., Dilger, E., Klösel, P., Menicacci, L., Nachtigall, D., Pretis, F., Ritter, N., Schwarz, M., Vossen, H., & Wenzel, A. (2024). Climate policies that achieved major emission reductions: Global evidence from two decades. Science.