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A framework to decarbonise the economy

Filippo Maria D’Arcangelo, Ilai Levin, Alessia Pagani, Mauro Pisu and Åsa Johansson

No 31, OECD Economic Policy Papers from OECD Publishing

Abstract: Global progress towards tackling climate change is lagging. This paper puts forward a framework to design comprehensive decarbonisation strategies while promoting growth and social inclusion. It first highlights the need of evaluating a country’s national climate targets and current policy mix, in conjunction with facilitating monitoring tools to assess current and future progress, as a key step to design effective decarbonisation strategies. It then provides a detailed comparison of several policy instruments across different assessment criteria, which indicates that no single instrument is clearly superior to all others. This highlights the need for developing decarbonisation strategies based on a wide policy mix consisting of three main components: 1) emission pricing policy instruments; 2) standards and regulations; 3) complementary policies to facilitate the reallocation of capital, labour and innovation towards low-carbon activities and to offset the adverse distributional effects of reducing emissions. However, there is no one-size-fits-all policy mix, as feasible policy choices depend on countries’ industrial structure, social preferences and political constraints. A robust and independent institutional framework, stakeholders engagement and credible communication campaigns are key to managing these constraints and ultimately enhancing public acceptance of climate mitigation policies.

Keywords: climate change; emission pricing; green investments; green R&D and innovation; green standards and regulations; growth and inclusion; mitigation policies; political economy of climate policy (search for similar items in EconPapers)
JEL-codes: H54 P48 Q42 Q52 Q54 Q55 Q58 (search for similar items in EconPapers)
Date: 2022-02-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-his and nep-tid
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