Addressing policy credibility problems for low-carbon investment

Nemet, Gregory F.; Jakob, Michael; Steckel, Jan Christoph; Edenhofer, Ottmar

doi:10.1016/j.gloenvcha.2016.12.004

Cited by 82 publications

(70 citation statements)

References 47 publications

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“…In this case, technological improvements for renewable energies would most likely turn out to be 'too little, too late' to achieve the targets of the Paris Agreement. By contrast, policies to take most coal-fired power plants that are announced, planned or under construction out of the coal pipeline would constitute a smart hedging strategy decreasing political uncertainty and allowing for credible commitment to ambitious long-term mitigation targets [48].…”

Section: Discussionmentioning

confidence: 99%

Reports of coal’s terminal decline may be exaggerated

Edenhofer

Steckel

Jakob

et al. 2018

Environ. Res. Lett.

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107

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We estimate the cumulative future emissions expected to be released by coal power plants that are currently under construction, announced, or planned. Even though coal consumption has recently declined and plans to build new coal-fired capacities have been shelved, constructing all these planned coal-fired power plants would endanger national and international climate targets. Plans to build new coal-fired power capacity would likely undermine the credibility of some countries' (Intended) Nationally Determined Contributions submitted to the UNFCCC. If all the coal-fired power plants that are currently planned were built, the carbon budget for reaching the 2• C temperature target would nearly be depleted. Propositions about 'coal's terminal decline' may thereby be premature. The phase-out of coal requires dedicated and well-designed policies. We discuss the political economy of policy options that could avoid a continued build-up of coal-fired power plants.

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Section: Discussionmentioning

confidence: 99%

Reports of coal’s terminal decline may be exaggerated

Edenhofer

Steckel

Jakob

et al. 2018

Environ. Res. Lett.

Self Cite

107

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“…Finally, if demand depends on policies this adds additional risk to adopters in that the policies can change and thus payoffs can change as well. Policy credibility is an important issue in climate policy in general (Nemet et al 2017), and will likely become even more central to the success of NETs.…”

Section: Demand Pullmentioning

confidence: 99%

Negative emissions—Part 3: Innovation and upscaling

Nemet

Callaghan

Creutzig

et al. 2018

Environ. Res. Lett.

282

241

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We assess the literature on innovation and upscaling for negative emissions technologies (NETs) using a systematic and reproducible literature coding procedure. To structure our review, we employ the framework of sequential stages in the innovation process, with which we code each NETs article in innovation space. We find that while there is a growing body of innovation literature on NETs, 59% of the articles are focused on the earliest stages of the innovation process, 'research and development' (R&D). The subsequent stages of innovation are also represented in the literature, but at much lower levels of activity than R&D. Distinguishing between innovation stages that are related to the supply of the technology (R&D, demonstrations, scale up) and demand for the technology (demand pull, niche markets, public acceptance), we find an overwhelming emphasis (83%) on the supply side. BECCS articles have an above average share of demand-side articles while direct air carbon capture and storage has a very low share. Innovation in NETs has much to learn from successfully diffused technologies; appealing to heterogeneous users, managing policy risk, as well as understanding and addressing public concerns are all crucial yet not well represented in the extant literature. Results from integrated assessment models show that while NETs play a key role in the second half of the 21st century for 1.5 • C and 2 • C scenarios, the major period of new NETs deployment is between 2030 and 2050. Given that the broader innovation literature consistently finds long time periods involved in scaling up and deploying novel technologies, there is an urgency to developing NETs that is largely unappreciated. This challenge is exacerbated by the thousands to millions of actors that potentially need to adopt these technologies for them to achieve planetary scale. This urgency is reflected neither in the Paris Agreement nor in most of the literature we review here. If NETs are to be deployed at the levels required to meet 1.5 • C and 2 • C targets, then important post-R&D issues will need to be addressed in the literature, including incentives for early deployment, niche markets, scale-up, demand, and-particularly if deployment is to be hastened-public acceptance. Chen C and Tavoni M 2013 Direct air capture of CO 2 and climate stabilization: a model based assessment Clim. Change 118 59-72 Cheng N, Fürth M, Johnson M C, Tay Z Y, Shenoi R A and Wilson P A 2013 Engaging the community with a 'green town' concept Energy Procedia 37 7337-45 Choi S, Drese J H, Eisenberger P M and Jones C W 2011 Application of amine-tethered solid sorbents for direct CO 2 capture from the ambient air Environ. Sci. Technol. 45 2420-7 Coffman D M and Lockley A 2017 Carbon dioxide removal and the futures market Environ. Res. Lett. 12 015003 Cohen L R and Noll R G 1991 The Technology Pork Barrel (Washington: Brookings) Cohen W M, Goto A, Nagata A, Nelson R R and Walsh J R 2002 R&D spillovers, patents and the incentives to innovate in Japan and the United States Res. Policy ...

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“…In the United States, for example, tax collection covering 80 percent of CO 2 emissions from fossil fuel consumption could be accomplished by monitoring fewer than 3,000 points, mainly refineries, coal mines, and natural gas fields (Metcalf and Weisbach, 2009). This contrasts with dozen of millions households paying income taxes, businesses paying corporate taxes, and trillion of sales transactions happening every year.…”

Section: Carbon Pricing As a Fiscal Instrumentmentioning

confidence: 99%

“…For instance, the rapid decrease in the cost of solar electricity was not anticipated and affected the viability of European feed-in tariffs. To make this process more transparent, rules regarding when and how policies will be revised based on what new information can be enacted in advance (Aldy, 2017;Jakob and Brunner, 2014;Metcalf and Weisbach, 2009). …”

Section: Tackling Other Market and Government Failuresmentioning

confidence: 99%

“…Because flexibility increases the odds that the policy will survive unexpected shocks and changes, a flexible policy is also more credible over the long-term (Nemet et al, 2017). For instance, energy efficiency standards typically include flexibility: in the US, CAFE standards are negotiated, announced far in advanced, and revised at mid-road to adjust to new information on compliance costs and benef its.…”

Section: Tackling Other Market and Government Failuresmentioning

confidence: 99%

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Climate Policies and Nationally Determined Contributions: Reconciling the Needed Ambition with the Political Economy

Vogt-Schilb

Hallegatte

2017

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Countries have pledged to stabilize global warming at a 1.5 to 2°C increase. Either target requires reaching net zero emissions before the end of the century, which implies a major transformation of the economic system. This paper reviews the literature on how policymakers can design climate policies and their Nationally Determined Contributions (NDCs) to reach zero-net emissions before the end of the century in a socially and politically-acceptable manner. To get the ambition right, policymakers can use sectoral roadmaps with targets and indicators that track progress towards zero emissions (e.g. regarding renewable power or reforestation). Indeed, monitoring economy-wide emissions reductions alone would not ensure that short-term action contributes meaningfully to the long-term decarbonization goal. To get the political economy right, climate policies can be designed so that they contribute to nonclimate objectives and create coalitions of supporters. For instance, revenues from carbon taxes can fund social assistance and infrastructure investment, while reducing tax evasion and informality. To minimize social and economic disruptions and avoid stranded assets, policymakers can start with a low carbon price level and use complementary policies. Designed at the sector level, complementary policies such as performance standards or feebates for cars, building norms, or moratoriums on new coal power plants can be negotiated in partnership with local stakeholders and trigger a transition to zero carbon without creating disruptive stranded assets.

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Addressing policy credibility problems for low-carbon investment

Cited by 82 publications

References 47 publications

Reports of coal’s terminal decline may be exaggerated

Reports of coal’s terminal decline may be exaggerated

Negative emissions—Part 3: Innovation and upscaling

Climate Policies and Nationally Determined Contributions: Reconciling the Needed Ambition with the Political Economy

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