Credible climate policy commitments are needed for keeping long-term climate goals within reach

Briera Thibault () and Julien Lefevre ()
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Briera Thibault: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique
Julien Lefevre: CIRED - Centre International de Recherche sur l'Environnement et le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École nationale des ponts et chaussées - Université Paris-Saclay - CNRS - Centre National de la Recherche Scientifique

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Abstract: Credible climate policy commitments are crucial for aligning decision-makers' expectations with policy objectives, thereby catalyzing timely low-carbon investments. However, Integrated Assessment Models (IAMs), the primary numerical tools for evaluating solution spaces, policy timing, and investment dynamics in mitigation scenarios, have largely neglected this critical issue. Here, we introduce a framework for addressing credible climate policy commitments with IAMs and conduct a quantitative assessment of their significance for global climate policy effectiveness in achieving long-term goals. We clarify the shortcomings of existing narratives and analytical approaches, proposing a method to integrate a more sophisticated representation of policy credibility in an IAM. Our findings demonstrate that failing to get expectations right can increase cumulative CO2 emissions by 11% compared to scenarios with perfect policy foresight. By 2035, the emissions gap can be as high as 45% in the power sector with regard to the perfect foresight case, under low credibility and limited foresight on policy implementation, highlighting the adverse interplay between capital inertia and low policy credibility. These results underscore the urgent need to explicitly incorporate the credibility of policy commitments into the tools used for climate policy-making.

Date: 2024-06-20
New Economics Papers: this item is included in nep-ene and nep-env
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