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A framework to decarbonise the economy

Author

Listed:
  • Filippo Maria D’Arcangelo
  • Ilai Levin
  • Alessia Pagani
  • Mauro Pisu
  • Åsa Johansson
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.

Suggested Citation

  • Filippo Maria D’Arcangelo & Ilai Levin & Alessia Pagani & Mauro Pisu & Åsa Johansson, 2022. "A framework to decarbonise the economy," OECD Economic Policy Papers 31, OECD Publishing.
    • Handle: RePEc:oec:ecoaab:31-en
    DOI: 10.1787/4e4d973d-en
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    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;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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