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Study: Emissions pricing is the best way to combat climate change

Study: Emissions pricing is the best way to combat climate change

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WASHINGTON — To find out what really works as nations try to combat climate change, researchers looked at 1,500 methods countries have used to try to curb the heat-trapping gases. Their answer: Not many have succeeded. And success often means someone has to pay a price, whether at the gas station or elsewhere.

According to a new study published in the journal Science on Thursday, researchers have only been able to identify measures that led to a significant reduction in carbon dioxide emissions in 63 cases since 1998.

Efforts to phase out the use of fossil fuels and gasoline-powered engines, for example, have not worked on their own. However, they would be more successful if combined with some kind of energy tax or additional cost system, the study authors concluded after a comprehensive analysis of global emissions, climate policies and laws.

“If you want to reduce emissions, pricing in the policy mix is ​​crucial,” says study co-author Nicolas Koch, climate economist at the Potsdam Institute for Climate Impact Research. “If subsidies and regulations come alone or in combination, there will not be major emission reductions. But if pricing instruments such as a carbon tax come into the mix, they will lead to these significant emission reductions.”

The study also found that what works in rich countries does not always work so well in developing countries.

Nevertheless, the study shows how important public finances are in the fight against climate change – something economists have always suspected, said several outside policy experts, climate researchers and economists who praised the study.

“We will not solve the climate problem in the richer countries unless the polluter pays for it,” says Rob Jackson, climate researcher at Stanford University and author of the book “Clear Blue Sky.” “Other measures help, but they are only a small step.”

“Carbon pricing puts the onus on the owners and products that cause the climate crisis,” Jackson said in an email.

A good example of what works is the UK’s electricity sector, says Koch. The country has introduced a mix of 11 different measures since 2012, including phasing out coal and an emissions trading pricing system that has almost halved emissions – “a huge effect”.

Of the 63 success stories, the largest reduction was seen in the South African construction sector, where a combination of regulation, subsidies and equipment labelling reduced emissions by almost 54 percent.

The United States’ only success story was in the transportation sector. Thanks to a combination of fuel standards – which are essentially regulations – and subsidies, emissions fell by eight percent between 2005 and 2011.

But even the political instruments that appear to be working can hardly slow the ever-increasing carbon dioxide emissions. Overall, the 63 successful climate policies have reduced emissions of the heat-trapping gas by 600 million to 1.8 billion tons, according to the study. Last year, 36.8 billion tons of carbon dioxide were emitted worldwide through the combustion of fossil fuels and cement production.

Even if every major country learned the lessons from this analysis and took the most effective actions, the United Nations’ “emissions gap” of 23 billion tonnes of greenhouse gases could only be reduced by about 26 percent, the study found. The gap is the difference between the amount of carbon the world will emit into the atmosphere in 2030 and the amount that would keep warming at or below internationally agreed levels.

“It basically shows that we need to do our job better,” said Koch, who is also head of the Policy Evaluation Laboratory at the Mercator Research Institute in Berlin.

Niklas Hohne of the New Climate Institute in Germany, who was not involved in the study, said: “The world really needs to make a fundamental change, go into emergency mode and make the impossible possible.”

Koch and his team looked at emissions and efforts to reduce them between 1998 and 2022 in 41 countries – not including the nearly $400 billion U.S. climate package passed two years ago as the cornerstone of President Joe Biden’s environmental policy – and tracked 1,500 different policy measures. They grouped the measures into four broad categories – pricing, regulation, subsidies and information – and analyzed four different economic sectors: electricity, transportation, buildings and industry.

In what Koch called the “reverse causal approach,” the team looked for emissions declines of 5% or more in different sectors of the countries’ economies, then used observations and machine learning to figure out what caused them. The researchers compared emissions with similar countries as control groups, taking weather and other factors into account, Koch said.

The team developed a statistically transparent approach that others can use to update or reproduce it. It also includes an interactive website where users can select countries and economic sectors to see what worked. And that approach could eventually be applied to Biden’s 2022 climate package, he said. That package was heavily subsidized.

John Sterman, a management professor at MIT’s Sloan Sustainability Institute who was not involved in the study, said politicians find it easier to pass policies that subsidize and promote low-carbon technologies. He said that is not enough.

“It is also necessary to limit the use of fossil fuels by bringing their prices closer to their full costs, including the costs of the climate damage they cause,” he said.

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