Does Climate Policy Drive Decarbonization?

Amid hopes that global CO2 emissions were plateauing, we got bad news last month when the International Energy Agency announced that global carbon dioxide emissions rose almost 2% last year, the highest annual growth rate since 2013, with the power sector accounting for a majority of the new CO2.

Some countries, however, bucked this trend, having managed to achieve meaningful decarbonization over the last decade. How did they do it, and what lessons can be gleaned from their success? A new paper in Nature Climate Change by Le Quéré et al. (2019) suggests that, in the 18 countries that saw significant decarbonization from 2005-2015, a policy-driven shift away from fossil fuels was the primary driver of reduced emissions.

The problem with Le Quéré et al.’s conclusion is that their own analysis doesn’t support it. A close look at their methods and assumptions reveals that economic growth — not climate policy — dominates emissions trends.

It is true that for those 18 countries that saw decarbonization, the largest driver was a decrease in the fossil share of final energy (47% of the decrease in emissions), and that the number of climate policies these countries enacted correlated with decreases in associated emissions metrics (energy use, non-fossil fuel share, or total CO2 emissions). But for the other 61 countries in the study’s two control groups, this wasn’t the case. In fact, in one control group, more climate policies were correlated with higher CO2 emissions. And in the other, more renewable energy policies were correlated with higher shares of fossil fuels.

What’s going on here? Really, it comes down to simple economics. The 18 decarbonizing countries are some of the wealthiest in their sample and experienced much slower economic growth over the study period. So it’s arguably not surprising that they reduced emissions; they very well might have decarbonized in the absence of climate policy.

By contrast, the economies of the non-decarbonizing countries are rapidly growing and industrializing, which fueled their rising energy use (accounting for 75-79% of emissions increase) and fossil share of final energy. Some of these countries did implement climate and energy policies, but the effect gets lost in the noise of growing emissions driven by economic growth.

To be fair, the study’s authors acknowledge the outsize role of economic variables. They caution that if strong economic growth returns in the decarbonizing countries, their progress could reverse. But in leaning so heavily on policy, the authors miss the real story.

So what can we actually do to reduce emissions globally, not just in the wealthiest post-material nations? We need climate policy that is robust to the economic realities and likely futures of most of the world. This means an innovation-focused agenda to develop clean energy technologies that are cheap and faster to build. If we plan to wait for two hundred countries to first reach European levels of wealth before they even start to reduce emissions, we can look forward to many more disappointing years of emissions updates.

April 25, 2019