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

An Author Correction to this article was published on 09 February 2021

This article has been updated

Abstract

The literature evaluating the technical and socioeconomic 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 decarbonization policy instruments on seven technical and socioeconomic 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 research and development 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.

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Fig. 1: Evaluations by type of policy instrument and outcome.
Fig. 2: Geographical scope of the publications identified in the systematic review.
Fig. 3: Level of agreement in the literature by type of policy instrument and outcome.
Fig. 4: Direction of the impact of ten policy instruments on the competitiveness policy outcome.
Fig. 5: Direction of the impact of ten policy instruments on the distributional policy outcome.

Data availability

The details of the study design, all data and information compiled for this research and the procedures for their analysis are detailed in this published article and its Supplementary Information files. The datasets with the coding of the evidence generated during this study (including those available in the Supplementary Information) are available from the corresponding author upon request. The coded evidence can also be accessed free of charge through the online ‘Decarbonisation Policy Evaluation Tool’ (http://dpet.innopaths.eu/#/). This tool allows the reader to explore additional research questions or different aspects of the evidence. This tool includes various functionalities, including (1) allowing the user to filter different evidence according to the research method, (2) weighing the evidence using weights specified by the user, (3) filtering by policy instrument or outcome and (4) reading the systematic coding of the papers along different categories, including jurisdiction, time period, additional details regarding the data and research methods, the sector and so on. Source data are provided with this paper.

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Acknowledgements

This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement no. 730403. We thank all of the INNOPATHS partners for feedback during the development of the DPET online tool and this paper, and in particular S. Verde for the precious feedback and help with some of the systematic review coding as well as Nice & Serious and P. Larkin for the online development of the DPET tool. C.P. and L.D.A. also acknowledge the interactions enabled by the Economics of Energy Innovation and System Transition (EEIST) project—which is funded by the Department of Business, Energy and Industrial Strategy (BEIS) of the UK Government—during the last few months of this project.

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Contributions

C.P., L.D.A. and E.V. designed the systematic review. C.P. implemented the design of the systematic review, identifying the sample of papers included in the study. C.P., L.D.A. and E.V. coded the papers in the review, analysed the results and wrote the manuscript.

Corresponding author

Correspondence to Cristina Peñasco.

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The authors declare no competing interests.

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Peer review information Nature Climate Change thanks Andrew Jordan, William Lamb and Leah Stokes for their contribution to the peer review of this work.

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Extended data

Extended Data Fig. 1 Aggregated assessment of the impact of the ten policy instruments on the environmental effectiveness outcome.

The circles summarize the aggregated assessment from the systematic literature review. The outer circles represent the number of positive impact (blue), no impact (grey) and negative impact (orange) evaluations by type of policy instrument. The inner circles represent the type of methodology that was used in the evaluations determining the different impacts. The grid pattern denotes controlled trial methodologies, the checkered pattern denotes quantitative methodologies, the striped pattern represents qualitative methodologies, and the dotted pattern represents theoretical literature and models and/or ex-ante evaluations. For a list of the environmental effectiveness outcome indicators included in the publications analysed, see Supplementary Fig. 2 in Supplementary Section I. Source data

Extended Data Fig. 2 Aggregated assessment of the impact of the ten policy instruments on the technological effectiveness outcome.

The circles summarize the aggregated assessment from the systematic literature review. The outer circles represent the number of positive impact (blue), no impact (grey) and negative impact (orange) evaluations by type of policy instrument. The inner circles represent the type of methodology that was used in the evaluations determining the different impacts. The checkered pattern denotes quantitative methodologies, the striped pattern represents qualitative methodologies, and the dotted pattern represents theoretical literature and models and/or ex-ante evaluations. For a list of the technological effectiveness outcome indicators included in the publications analysed, see Supplementary Fig. 2 in Supplementary Section I. Source data

Extended Data Fig. 3 Aggregated assessment of the impact of the ten policy instruments on the cost-related outcomes.

The circles summarize the aggregated assessment from the systematic literature review. The outer circles represent the number of positive impact (blue), no impact (grey) and negative impact (orange) evaluations by type of policy instrument. The inner circles represent the type of methodology that was used in the evaluations determining the different impacts. The checkered pattern denotes quantitative methodologies, the striped pattern represents qualitative methodologies, and the dotted pattern represents theoretical literature and models and/or ex-ante evaluations. For a list of the cost-related outcome indicators included in the publications analysed, see Supplementary Fig. 2 in Supplementary Section I. Source data

Extended Data Fig. 4 Aggregated assessment of the impact of the ten policy instruments on the innovation outcomes.

The circles summarize the aggregated assessment from the systematic literature review. The outer circles represent the number of positive impact (blue), no impact (grey) and negative impact (orange) evaluations by type of policy instrument. The inner circles represent the type of methodology that was used in the evaluations determining the different impacts. The checkered pattern denotes quantitative methodologies, the striped pattern represents qualitative methodologies, and the dotted pattern represents theoretical literature and models and/or ex-ante evaluations. For a list of the innovation outcome indicators included in the publications analysed, see Supplementary Fig. 2 in Supplementary Section I. Source data

Extended Data Fig. 5 Aggregated assessment of the impact of the ten policy instruments on the other social outcomes.

The circles summarize the aggregated assessment from the systematic literature review. The outer circles represent the number of positive impact (blue), no impact (grey) and negative impact (orange) evaluations by type of policy instrument. The inner circles represent the type of methodology that was used in the evaluations determining the different impacts. The checkered pattern denotes quantitative methodologies, the striped pattern represents qualitative methodologies, and the dotted pattern represents theoretical literature and models and/or ex-ante evaluations. For a list of the other social outcome indicators included in the publications analysed, see Supplementary Fig. 2 in Supplementary Section I. Source data

Supplementary information

Supplementary Information

Supplementary Figs. 1–15, Tables 1–7 and Sections I–VII.

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Peñasco, C., Anadón, L.D. & Verdolini, E. Systematic review of the outcomes and trade-offs of ten types of decarbonization policy instruments. Nat. Clim. Chang. 11, 257–265 (2021). https://doi.org/10.1038/s41558-020-00971-x

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