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.
This is a preview of subscription content, access via your institution
Access options
Access Nature and 54 other Nature Portfolio journals
Get Nature+, our best-value online-access subscription
$29.99 / 30 days
cancel any time
Subscribe to this journal
Receive 12 print issues and online access
$209.00 per year
only $17.42 per issue
Buy this article
- Purchase on Springer Link
- Instant access to full article PDF
Prices may be subject to local taxes which are calculated during checkout
Similar content being viewed by others
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.
Change history
09 February 2021
A Correction to this paper has been published: https://doi.org/10.1038/s41558-021-00992-0
References
IPCC Special Report on Global Warming of 1.5 °C (eds Masson-Delmotte, V. et al.) (WMO, 2018).
van Soest, H. L. et al. Early action on Paris Agreement allows for more time to change energy systems. Climatic Change 144, 165–179 (2017).
Robiou du Pont, Y. & Meinshausen, M. Warming assessment of the bottom-up Paris Agreement emissions pledges. Nat. Commun. 9, 4810 (2018).
Anadón, L. D. Missions-oriented RD&D institutions in energy between 2000 and 2010: a comparative analysis of China, the United Kingdom, and the United States. Res. Policy 41, 1742–1756 (2012).
Breetz, H., Mildenberger, M. & Stokes, L. The political logics of clean energy transitions. Bus. Polit. 20, 492–522 (2018).
Schmidt, T. S. & Sewerin, S. Technology as a driver of climate and energy politics. Nat. Energy 2, 17084 (2017).
Zhang, Y., Smith, S. J., Bowden, J. H., Adelman, Z. & West, J. J. Co-benefits of global, domestic, and sectoral greenhouse gas mitigation for US air quality and human health in 2050. Environ. Res. Lett. 12, 114033 (2017).
A Clean Planet for All—A European Strategic Long-Term Vision for a Prosperous, Modern, Competitive and Climate Neutral Economy (European Commission, 2018).
The European Green Deal Communication from the Commission to the European Parliament, The European Council, The Council, The European Economic and Social Committee and The Committee of the Regions (European Commission, 2019).
Stokes, L. C. & Warshaw, C. Renewable energy policy design and framing influence public support in the United States. Nat. Energy 2, 17107 (2017).
Ansolabehere, S. & Konisky, D. M. Cheap and Clean: How Americans Think about Energy in the Age of Global Warming (MIT Press, 2014).
Deng, H.-M., Liang, Q.-M., Liu, L.-J. & Anadon, L. D. Co-benefits of greenhouse gas mitigation: a review and classification by type, mitigation sector, and geography. Environ. Res. Lett. 12, 123001 (2017).
Haddaway, N. R. & Pullin, A. S. The policy role of systematic reviews: past, present and future. Springer Sci. Rev. 2, 179–183 (2014).
Brannlund, R., Ghalwash, T. & Nordstrom, J. Increased energy efficiency and the rebound effect: effects on consumption and emissions. Energy Econ. 29, 1–17 (2007).
Fischer, C. & Newell, R. G. Environmental and technology policies for climate mitigation. J. Environ. Econ. Manage. 55, 142–162 (2008).
Anger, N., Böhringer, C. & Löschel, A. Paying the piper and calling the tune?: A meta-regression analysis of the double-dividend hypothesis. Ecol. Econ. 69, 1495–1502 (2010).
Scrimgeour, F., Oxley, L. & Fatai, K. Reducing carbon emissions? The relative effectiveness of different types of environmental tax: the case of New Zealand. Environ. Model. Softw. 20, 1439–1448 (2005).
Allan, G., Lecca, P., McGregor, P. & Swales, K. The economic and environmental impact of a carbon tax for Scotland: a computable general equilibrium analysis. Ecol. Econ. 100, 40–50 (2014).
Environmental Tax Statistics—Detailed Analysis (Eurostat, 2020); https://ec.europa.eu/eurostat/statistics-explained/index.php/Environmental_tax_statistics_-_detailed_analysis
Costantini, V. & Mazzanti, M. On the green and innovative side of trade competitiveness? The impact of environmental policies and innovation on EU exports. Res. Policy 41, 132–153 (2012).
Criscuolo, C. & Menon, C. Environmental policies and risk finance in the green sector: cross-country evidence. Energy Policy 83, 38–56 (2015).
Howell, S. T. Financing Innovation: evidence from R&D grants. Am. Econ. Rev. 107, 1136–1164 (2017).
Oruezabala, G. & Rico, J.-C. The impact of sustainable public procurement on supplier management—the case of French public hospitals. Ind. Mark. Manage. 41, 573–580 (2012).
Spyridaki, N.-A., Banaka, S. & Flamos, A. Evaluating public policy instruments in the Greek building sector. Energy Policy 88, 528–543 (2016).
Collection of Statistical Information on Green Public Procurement in the EU Report on data collection results (PricewaterhouseCoopers, 2009).
del Río, P. & Linares, P. Back to the future? Rethinking auctions for renewable electricity support. Renew. Sustain. Energy Rev. 35, 42–56 (2014).
Wigand, F., Förste, S., Amazo, A. & Tiedemann, S. Auctions for Renewable Support: Lessons Learnt from International Experiences Report D4.2 (Horizon 2020 Framework, 2016).
Oikonomou, V. & Mundaca, L. Tradable white certificate schemes: what can we learn from tradable green certificate schemes? Energy Effic. 1, 211–232 (2008).
Gupta, S. K. & Purohit, P. Renewable energy certificate mechanism in India: a preliminary assessment. Renew. Sustain. Energy Rev. 22, 380–392 (2013).
Klenert, D. et al. Making carbon pricing work for citizens. Nat. Clim. Change 8, 669–677 (2018).
Rentschler, J., Bleischwitz, R. & Flachenecker, F. in Fossil Fuel Subsidy Reforms. A Guide to Economic and Political Complexity (ed. Rentschler, J.) 154–179 (Routledge, 2018).
del Río, P. & Gual, M. A. An integrated assessment of the feed-in tariff system in Spain. Energy Policy 35, 994–1012 (2007).
Frondel, M., Ritter, N., Schmidt, C. M. & Vance, C. Economic impacts from the promotion of renewable energy technologies: the German experience. Energy Policy 38, 4048–4056 (2010).
Menanteau, P., Finon, D. & Lamy, M.-L. Prices versus quantities: choosing policies for promoting the development of renewable energy. Energy Policy 31, 799–812 (2003).
Jacobsson, S. et al. EU renewable energy support policy: faith or facts? Energy Policy 37, 2143–2146 (2009).
del Río, P. et al. A techno-economic analysis of EU renewable electricity policy pathways in 2030. Energy Policy 104, 484–493 (2017).
Bean, P., Blazquez, J. & Nezamuddin, N. Assessing the cost of renewable energy policy options—a Spanish wind case study. Renew. Energy 103, 180–186 (2017).
Callan, T., Lyons, S., Scott, S., Tol, R. S. J. & Verde, S. The distributional implications of a carbon tax in Ireland. Energy Policy 37, 407–412 (2009).
Flues, F. & Thomas, A. The Distributional Effects of Energy Taxes Taxation Working Paper (OECD, 2015); https://doi.org/10.1787/5js1qwkqqrbv-en
Kerkhof, A. C., Moll, H. C., Drissen, E. & Wilting, H. C. Taxation of multiple greenhouse gases and the effects on income distribution: a case study of the Netherlands. Ecol. Econ. 67, 318–326 (2008).
Marion, J. & Muehlegger, E. Fuel tax incidence and supply conditions. J. Public Econ. 95, 1202–1212 (2011).
Lees, E. Evaluation of the Energy Efficiency Commitment 2002–2005 (DECC, 2006).
Giraudet, L.-G. & Finon, D. European Experiences with White Certificate Obligations: A Critical Review of Existing Evaluations (HAL, 2015); https://doi.org/10.5547/2160-5890.4.1.lgi
Joosen, S. Evaluation of the Dutch Energy Performance Standard in the Residential and Services Sector (Ecofys, 2006).
Pless, J. Are ‘Complementary Policies’ Substitutes? Evidence from R&D Subsidies in the UK (SSRN, 2018); https://doi.org/10.2139/ssrn.3379256
Cerutti, A. K., Ardente, F., Contu, S., Donno, D. & Beccaro, G. L. Modelling, assessing, and ranking public procurement options for a climate-friendly catering service. Int. J. Life Cycle Assess. 23, 95–115 (2018).
Cerutti, A. K., Contu, S., Ardente, F., Donno, D. & Beccaro, G. L. Carbon footprint in green public procurement: policy evaluation from a case study in the food sector. Food Policy 58, 82–93 (2016).
Testa, F., Iraldo, F., Frey, M. & Daddi, T. What factors influence the uptake of GPP (green public procurement) practices? New evidence from an Italian survey. Ecol. Econ. 82, 88–96 (2012).
Testa, F., Iraldo, F. & Frey, M. The effect of environmental regulation on firms’ competitive performance: the case of the building & construction sector in some EU regions. J. Environ. Manage. 92, 2136–2144 (2011).
Tarantini, M., Loprieno, A. D. & Porta, P. L. A life cycle approach to green public procurement of building materials and elements: a case study on windows. Energy 36, 2473–2482 (2011).
Ghisetti, C. Demand-pull and environmental innovations: estimating the effects of innovative public procurement. Technol. Forecast. Soc. Change 125, 178–187 (2017).
GPP: Green Public Procurement: A Collection of Good Practices (European Commission, 2012).
Fagiani, R., Barquín, J. & Hakvoort, R. Risk-based assessment of the cost-efficiency and the effectivity of renewable energy support schemes: certificate markets versus feed-in tariffs. Energy Policy 55, 648–661 (2013).
Ang, G., Röttgers, D. & Burli, P. The empirics of enabling investment and innovation in renewable energy. OECD Environment Working Papers No. 123 (OECD, 2017); https://doi.org/10.1787/67d221b8-en
Sun, P. & Nie, P. A comparative study of feed-in tariff and renewable portfolio standard policy in renewable energy industry. Renew. Energy 74, 255–262 (2015).
Johnstone, N., Haščič, I. & Popp, D. Renewable energy policies and technological innovation: evidence based on patent counts. Environ. Resour. Econ. 45, 133–155 (2010).
Schallenberg-Rodriguez, J. Renewable electricity support systems: are feed-in systems taking the lead? Renew. Sustain. Energy Rev. 76, 1422–1439 (2017).
Butler, L. & Neuhoff, K. Comparison of feed-in tariff, quota and auction mechanisms to support wind power development. Renew. Energy 33, 1854–1867 (2008).
Renewable Energy Auctions: Analysing 2016 (IRENA, 2017).
Eberhard, A. & Kåberger, T. Renewable energy auctions in South Africa outshine feed-in tariffs. Energy Sci. Eng. 4, 190–193 (2016).
Lucas, H., del Rio, P. & Sokona, S. Design and assessment of renewable energy auctions in sub-Saharan Africa. IDS Bull. 48, 5–6 (2017).
Konidari, P. & Mavrakis, D. A multi-criteria evaluation method for climate change mitigation policy instruments. Energy Policy 35, 6235–6257 (2007).
Martin, R., Muûls, M. & Wagner, U. The impact of the European Union emissions trading scheme on regulated firms: what is the evidence after ten years? Rev. Environ. Econ. Policy 10, 129–148 (2016).
Andersen, M. S. Europe’s experience with carbon-energy taxation. SAPIENS 3, 1–12 (2010).
Bosquet, B. Environmental tax reform: does it work? A survey of the empirical evidence. Ecol. Econ. 34, 19–32 (2000).
Conefrey, T., Fitz Gerald, J. D., Valeri, L. M. & Tol, R. S. J. The impact of a carbon tax on economic growth and carbon dioxide emissions in Ireland. J. Environ. Plan. Manage. 56, 934–952 (2013).
Oueslati, W., Zipperer, V., Rousselière, D. & Dimitropoulos, A. Energy taxes, reforms and income inequality: an empirical cross-country analysis. Int. Econ. 150, 80–95 (2017).
Beck, M., Rivers, N., Wigle, R. & Yonezawa, H. Carbon tax and revenue recycling: impacts on households in British Columbia. Resour. Energy Econ. 41, 40–69 (2015).
Köhler, J. et al. An agenda for sustainability transitions research: state of the art and future directions. Environ. Innov. Soc. Transit. 31, 1–32 (2019).
Perspectives on Transitions to Sustainability (EEA, 2018).
The European Environment—State and Outlook 2020. Knowledge for Transition to a Sustainable Europe (EEA, 2019); https://doi.org/10.2800/96749
Haddaway, N. R. & Macura, B. The role of reporting standards in producing robust literature reviews. Nat. Clim. Change 8, 444–447 (2018).
Gurevitch, J., Koricheva, J., Nakagawa, S. & Stewart, G. Meta-analysis and the science of research synthesis. Nature 555, 175–182 (2018).
Siddaway, A. P., Wood, A. M. & Hedges, L. V. How to do a systematic review: a best practice guide for conducting and reporting narrative reviews, meta-analyses, and meta-syntheses. Annu. Rev. Psychol. 70, 747–770 (2019).
Borrás, S. & Edquist, C. The choice of innovation policy instruments. Technol. Forecast. Soc. Change 80, 1513–1522 (2013).
Brujin, H. A. & Hufen, H. A. in Public Policy Instruments. Evaluating the Tools of Public Administration (eds Peters, B. G. & Van Nispen, F. K.) 11–32 (Edward Elgar, 1998).
John, P. Making Policy Work (Routledge, 2010).
Rogge, K. S. & Reichardt, K. Policy mixes for sustainability transitions: an extended concept and framework for analysis. Res. Policy 45, 132–147 (2016).
Hood, C. C. & Margetts, H. Z. The Tools of Government in the Digital Age (Palgrave Macmillan, 2007).
Linder, S. H. & Peters, B. G. in Public Policy Instruments: Evaluating the Tools of Public Administration (eds Peters, B. G. & Van Nispen, F. K.) 33–45 (Edward Elgar, 1998).
IEA/IRENA Policies and Measures Databases (IEA and IRENA, 2019); https://vipo.iea.org/policiesandmeasures/renewableenergy/
Towards a Greener Economy: The Social Dimensions (ILO, 2011).
Instrument Mixes for Environmental Policy (OECD, 2007).
Renewable Energy in Latin America 2015: An Overview of Policies (IRENA, 2015).
Renewable Energy Benefits: Measuring the Economics (IRENA, 2016).
Neij, L. & Åstrand, K. Outcome indicators for the evaluation of energy policy instruments and technical change. Energy Policy 34, 2662–2676 (2006).
Denyer, D. & Tranfield, D. in The Sage handbook of organizational research methods (eds Buchanan, D.A. & Bryman, A.) 671–689 (Sage Publications Ltd, 2009).
Herfindahl, O. C. Concentration in the steel industry. Dissertation, Columbia Univ. (1950).
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.
Author information
Authors and Affiliations
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
Ethics declarations
Competing interests
The authors declare no competing interests.
Additional information
Peer review information Nature Climate Change thanks Andrew Jordan, William Lamb and Leah Stokes for their contribution to the peer review of this work.
Publisher’s note Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
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.
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.
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.
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.
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.
Supplementary information
Supplementary Information
Supplementary Figs. 1–15, Tables 1–7 and Sections I–VII.
Supplementary Dataset
Search strings.
Source data
Source Data Fig. 1
Source data for Fig. 1.
Source Data Fig. 2
Source data for Fig. 2.
Source Data Fig. 3
Source data for Fig. 3.
Source Data Fig. 4
Source data for Fig. 4.
Source Data Fig. 5
Source data for Fig. 5.
Source Data Extended Data Fig. 1
Source data for Extended Data Fig. 1.
Source Data Extended Data Fig. 2
Source data for Extended Data Fig. 2.
Source Data Extended Data Fig. 3
Source data for Extended Data Fig. 3.
Source Data Extended Data Fig. 4
Source data for Extended Data Fig. 4.
Source Data Extended Data Fig. 5
Source data for Extended Data Fig. 5.
Rights and permissions
About this article
Cite this article
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
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1038/s41558-020-00971-x
This article is cited by
-
The role of the IPCC in assessing actionable evidence for climate policymaking
npj Climate Action (2024)
-
Economic modelling fit for the demands of energy decision makers
Nature Energy (2024)
-
A research and development investment strategy to achieve the Paris climate agreement
Nature Communications (2023)
-
Expanding climate policy adoption improves national mitigation efforts
npj Climate Action (2023)
-
Taking stock of the implementation gap in climate policy
Nature Climate Change (2023)