Do industrial decarbonization policies deliver? A global assessment of policy effectiveness across 150 nations, 1990–2020

Abstract

Industry is the fastest growing sector of carbon dioxide emissions, as well as the single largest source of global greenhouse emissions. Industrial decarbonization policies have therefore emerged as critical components of any attempt to achieve net-zero energy transitions. However, little research has examined the effectiveness of those industrial decarbonization policies. We fill this gap by examining trends in industrial greenhouse gas emissions and whether industrial decarbonization policies (and particular policy instruments) are effective in reducing industrial sector emissions. We use panel data from 150 nations from 1990 to 2020 to examine the effect of industrial decarbonization policy instruments (drawing from an inventory of more than 700 policies across different countries) on industrial greenhouse gas emissions. We find that Norway, the United Kingdom, the Netherlands, and Cuba experienced the largest decreases in industrial emissions, whereas developing countries in Asia, Sub-Saharan Africa, and Kuwait experienced the greatest growth in emissions. We also find that industrial decarbonization policy leads to reductions in industrial greenhouse gas emissions, and that these effects are primarily driven by two policy types: (1) payments, finance, and taxation and (2) strategic plans. We also find some (but inconsistent) evidence that (1) regulation, (2) grants, (3) codes and standards, (4) minimum energy performance standards, (5) voluntary approaches, and (6) negotiated agreements (public–private sector) are associated with a reduction in emissions and that (1) payments and transfers, (2) information and education, and (3) targets, plans, and framework legislation may be associated with decreases or increases in emissions. By using dynamic modeling and event study approaches, we observe that the introduction of industrial decarbonization policy has persistent effects well into the future. The effect of each additional policy lasts between 4–19 years, and the effects of payments, finance, and taxation and strategic planning policies last between 4–18 years on average.

Keywords

• climate policy
• industrial strategy
• net-zero transitions
• energy policy
• industrial emissions