ClimateChangeandDevelopmentSeriesREWAICTHHINNavigatingthePoliticalEconomyofDecarbonizationStéphaneHallegatte,CatrinaGodinho,JunRentschler,PaoloAvner,IraIrinaDorband,CamillaKnudsen,JanaLemke,andPennyMealyWithinReachWithinReachNavigatingthePoliticalEconomyofDecarbonizationStéphaneHallegatte,CatrinaGodinho,JunRentschler,PaoloAvner,IraIrinaDorband,CamillaKnudsen,JanaLemke,andPennyMealy©2023InternationalBankforReconstructionandDevelopment/TheWorldBank1818HStreetNW,Washington,DC20433Telephone:202-473-1000;Internet:www.worldbank.orgSomerightsreserved123426252423ThisworkisaproductofthestaffofTheWorldBankwithexternalcontributions.Thefindings,interpretations,andconclusionsexpressedinthisworkdonotnecessarilyreflecttheviewsofTheWorldBank,itsBoardofExecutiveDirectors,orthegovernmentstheyrepresent.TheWorldBankdoesnotguaranteetheaccuracy,­completeness,orcurrencyofthedataincludedinthisworkanddoesnotassumeresponsibilityforanyerrors,omissions,ordiscrepanciesintheinformation,orliabilitywithrespecttotheuseoforfailuretousetheinforma-tion,methods,processes,orconclusionssetforth.Theboundaries,colors,denominations,andotherinformationshownonanymapinthisworkdonotimplyanyjudgmentonthepartofTheWorldBankconcerningthelegalstatusofanyterritoryortheendorsementoracceptanceofsuchboundaries.Nothinghereinshallconstituteorbeconstruedorconsideredtobealimitationuponorwaiveroftheprivi-legesandimmunitiesofTheWorldBank,allofwhicharespecificallyreserved.RightsandPermissionsThisworkisavailableundertheCreativeCommonsAttribution3.0IGOlicense(CCBY3.0IGO)http://creativecommons.org/licenses/by/3.0/igo.UndertheCreativeCommonsAttributionlicense,youarefreetocopy,­distribute,transmit,andadaptthiswork,includingforcommercialpurposes,underthefollowingconditions:Attribution—Pleasecitetheworkasfollows:Hallegatte,Stéphane,CatrinaGodinho,JunRentschler,PaoloAvner,IraIrinaDorband,CamillaKnudsen,JanaLemke,andPennyMealy.2023.WithinReach:NavigatingthePoliticalEconomyofDecarbonization.ClimateChangeandDevelopmentSeries.Washington,DC:WorldBank.doi:10.1596/978-1-4648-1953-7.License:CreativeCommonsAttributionCCBY3.0IGOTranslations—Ifyoucreateatranslationofthiswork,pleaseaddthefollowingdisclaimeralongwiththe­attribution:ThistranslationwasnotcreatedbyTheWorldBankandshouldnotbeconsideredanofficialWorldBanktranslation.TheWorldBankshallnotbeliableforanycontentorerrorinthistranslation.Adaptations—Ifyoucreateanadaptationofthiswork,pleaseaddthefollowingdisclaimeralongwiththe­attribution:ThisisanadaptationofanoriginalworkbyTheWorldBank.ViewsandopinionsexpressedintheadaptationarethesoleresponsibilityoftheauthororauthorsoftheadaptationandarenotendorsedbyTheWorldBank.Third-partycontent—TheWorldBankdoesnotnecessarilyowneachcomponentofthecontentcontainedwithinthework.TheWorldBankthereforedoesnotwarrantthattheuseofanythird-party-ownedindividualcomponentorpartcontainedintheworkwillnotinfringeontherightsofthosethirdparties.Theriskofclaimsresultingfromsuchinfringementrestssolelywithyou.Ifyouwishtoreuseacomponentofthework,itisyourresponsibilitytodeterminewhetherpermissionisneededforthatreuseandtoobtainpermissionfromthecopyrightowner.Examplesofcomponentscaninclude,butarenotlimitedto,tables,figures,orimages.AllqueriesonrightsandlicensesshouldbeaddressedtoWorldBankPublications,TheWorldBank,1818HStreetNW,Washington,DC20433,USA;e-mail:pubrights@worldbank.org.ISBN(paper):978-1-4648-1953-7ISBN(electronic):978-1-4648-1954-4DOI:10.1596/978-1-4648-1953-7Coverimage:©Arthimedes/Shutterstock.UsedwiththepermissionofArthimedes/Shutterstock.Furtherpermissionrequiredforreuse.Coverdesign:BillPragluski,CriticalStages,LLCLibraryofCongressControlNumber:2023919988ClimateChangeandDevelopmentTheClimateChangeandDevelopmentSerieswascreatedin2015toshowcaseeconomicandscientificresearchthatexplorestheinteractionsbetweenclimatechange,climate­policies,anddevelopment.Theseriesaimstopromotedebateandbroadenunderstandingofcurrentandemergingquestionsabouttheclimate-developmentnexusthrough­evidence-​basedanalysis.TheseriesissponsoredbytheSustainableDevelopmentVicePresidencyoftheWorldBank,anditspublicationsrepresentthehighestqualityofresearchandoutputintheinstitutionontheseissues.TheWorldBankiscommittedtosharingrelevantandrigorouslypeer-reviewedinsightsontheopportunitiesandchallengespresentintheclimate-­developmentnexuswithpolicymakers,theacademiccommunity,andawiderglobalaudience.TITLESINTHISSERIESWithinReach:NavigatingthePoliticalEconomyofDecarbonization(2023)byStéphaneHallegatte,CatrinaGodinho,JunRentschler,PaoloAvner,IraIrinaDorband,CamillaKnudsen,JanaLemke,andPennyMealyRealityCheck:Lessonsfrom25PoliciesAdvancingaLow-CarbonFuture(2023)byWorldBankTheEffectofMultinationalEnterprisesonClimateChange:SupplyChainEmissions,GreenTechnologyTransfers,andCorporateCommitments(2023)byVictorSteenbergenandAbhishekSauravDiversificationandCooperationinaDecarbonizingWorld:ClimateStrategiesforFossilFuel-DependentCountries(2020)byGregorzPeszko,DominiquevanderMensbrugghe,AlexanderGolub,JohnWard,DimitriZenghelis,CorMarijs,AnneSchopp,JohnA.Rogers,andAmeliaMidgley.Unbreakable:BuildingtheResilienceofthePoorintheFaceofNaturalDisasters(2017)byStephaneHallegatte,AdrienVogt-Schilb,MookBangalore,andJulieRozenbergShockWaves:ManagingtheImpactsofClimateChangeonPoverty(2016)byStephaneHallegatte,MookBangalore,LauraBonzanigo,MarianneFay,TamaroKane,UlfNarloch,JulieRozenberg,DavidTreguer,andAdrienVogt-SchilbDecarbonizingDevelopment:ThreeStepstoaZero-CarbonFuture(2015)byMarianneFay,StephaneHallegatte,AdrienVogt-Schilb,JulieRozenberg,UlfNarloch,andTomKerrContentsForeword.....................................................................................................................xiAcknowledgments....................................................................................................xiiiAbouttheAuthors....................................................................................................xvMainMessages.........................................................................................................xviiAbbreviations............................................................................................................xxiOverview........................................................................................................................1Navigatingpolitics:Akeyobstacletourgentclimateaction.............................................1Thedefiningfeaturesofeverypoliticaleconomysetting..................................................5Climategovernance:Strategicallyadapttheinstitutionalarchitectureandembedclimateobjectivesintoapositivedevelopmentnarrative....................................7Policysequencing:Balancefeasibilityandlong-termambition.......................................9Policydesign:Focusonpeopleandmanagethedistributionaleffectsofclimatepolicies..........................................................................................................................15Policyprocess:Usepublicengagementandcommunicationtoimprovepoliciesandtheirlegitimacy..................................................................................................20Awayforward:Enactingclimateaction.............................................................................22Notes............................................................................................................................................23References...................................................................................................................................231PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments..............................................................................................27Theurgentneedtoalignpolicieswithpledgesandcommitments...............................27Thepoliticaleconomyasamajorbarriertomoreambitiousclimatepolicy.............28Widespreadprogressinspiteofpoliticaleconomybarriers..........................................28Thescopeofthisbook.............................................................................................................31Outlineofthisbook..................................................................................................................35The4iFrameworkforunderstandingpoliticaleconomybarriers................................35Inanutshell:Adynamicstrategytoprogressivelyreduceconstraintsandbuildsupportforclimatepolicies.................................................................................45Note.............................................................................................................................................46References..................................................................................................................................46viiviiiWithinReach2ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition.........................................................................................55Keyinsights................................................................................................................................55Usingformalinstitutionstoaddressclimatechangeonanationallevel.....................55Strategicclimateinstitutions:Frameworklegislation,long-termstrategies,andjusttransitionframeworks..............................................................................................65Note..............................................................................................................................................73References...................................................................................................................................733PolicySequencing:BalancingFeasibilityandLong-TermAmbition..........75Keyinsights................................................................................................................................75Strategiestobuildgreaterinstitutionalcapacitytointroduceclimatepolicies.........76Sequencingtobuildgreaterpoliticalsupportforclimateaction...................................85Introducingthenecessarypoliciesearly,evenwhentheyarepoliticallychallenging................................................................................................................................90Buildingpolicyambitionandstringencythroughfeedbackandtippingpoints........91Note..............................................................................................................................................95References...................................................................................................................................954PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies.......99Keyinsights...............................................................................................................................99Driversofsocialexclusionandinjustice..........................................................................100Distributionaleffectsofclimateaction..............................................................................101References.................................................................................................................................1215PolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy.........................................................129Keyinsights..............................................................................................................................129Policyprocesses:Engagingwithsupportandopposition.............................................129Buildingpublicsupportthroughcitizenengagementandstrategiccommunication........................................................................................................................132Publicperceptions:Whenwinnersfeellikelosers.........................................................132Usingcivicengagementtoincreasesupportthroughthepolicyprocess..................135Usingcivicinputstoimprovepolicydesignandimplementation..............................136Communicatingrationale,design,andriskstoincreasepublicsupport...................138Notes..........................................................................................................................................141References.................................................................................................................................141BoxesO.1Whatthisbookdoesnotcover..........................................................................................3O.2Genderandclimatemitigationpoliciesinagriculture..............................................19O.3Processlegitimacydependsonhowdecisionsaremade..........................................211.1TheParisAgreementratchetingmechanism...............................................................321.2Thechallengeofindirectcarbonpricing:Hiddenincentivesandinterests.........39Contentsix1.3Policymakershavetheirowninterests........................................................................401.4Mappingoutactors’interests,ideas,andinfluence...................................................432.1TheWorldBank’sClimateChangeInstitutionalAssessment.................................582.2HowconsensusenabledtheUnitedKingdom’sstrategicclimateinstitutionsand2008ClimateChangeAct..................................................................602.3PoliticaleconomybarrierstoBrazil’sActionPlanforthePreventionandControlofDeforestationintheLegalAmazon....................................................612.4TheemergenceofopportunisticclimateinstitutionsinIndia...............................622.5PoliticalpolarizationunderminesclimateinstitutionsinAustralia.......................632.6WhycoalpoliticstrumpclimateinstitutionsinSouthAfrica..................................632.7Climatechangelitigationasatoolforimprovedclimateaction............................662.8Mexico’sGeneralLawonClimateChange..................................................................692.9SouthAfrica’sJustTransitionFramework...................................................................713.1TheClimatePolicyDatabase...........................................................................................773.2CalculatingPolicyRelatedness........................................................................................813.3China’ssustainableenergytransitionpolicysequence.............................................864.1Genderandclimatechangemitigationpoliciesinagriculture.............................1004.2Achievingajusttransitioninagriculture...................................................................1084.3Greenindustrialpolicies:Howtominimizetheriskofcapture............................1115.1Processlegitimacy:Howdecisionsaremade.............................................................1315.2Deliberativeandinclusivepolicyprocessesgovernmentscanusetoengagecitizensonclimateaction.................................................................................1365.3Consejo5C:Citizens’AdvisoryCouncilonClimateChange.................................137FiguresO.1The4iFrameworkandaniterativeapproachtoclimatepolicy................................6O.2Theclimatepolicyspace....................................................................................................11O.3Currentandfeasibleclimatepolicies,TürkiyeandVietNam..................................12O.4Illustrationoftheconsumptionimpactsofa(noncompensated)increaseinfuelprices,inasubsetofcountries,byincomelevel.............................................16O.5Shareofpopulationthatreportedbeing“satisfied”or“verysatisfied”withElSalvador’s2011subsidyreform,2011–13.........................................................211.1Climatepoliciesannouncedglobally,1980–2020......................................................29B1.1.1ParisAgreement:Mechanismstoratchetambitionandmonitorprogress...........32B1.1.2NetGHGemissionspercapita,bycountryincomegroup,population,andGDPpercapita,2019.................................................................................................341.2The4iFrameworkandfour-prongedapproachforclimatepolicy........................371.3Shareofrespondentswhosupporteddifferentclimatechangepoliciesacross28countriesin2022..............................................................................................411.4Relationshipbetweendeterminantsandpublicopinionaboutclimatechangetaxesandlaws......................................................................................................43B1.4.1Power-interestmatrix......................................................................................................442.1Governancedimensionsandfrequentgovernanceproblems..................................56B2.1.1ThefivepillarsoftheCCIA.............................................................................................58B2.3.1DeforestationinBrazil,1996–2020................................................................................61B2.6.1SouthAfrica’spowermix,1990–2021...........................................................................64B2.7.1Climatechange-relatedlawsuits,2000–21..................................................................66xWithinReach2.2Fourprinciplesforajusttransition................................................................................723.1EstimatedeffectsofdifferentpolicyinstrumentsonreducingCO2emissions.......783.2Triangular(nested)distributionofclimatepoliciesannouncedbycountries........793.3TheClimatePolicySpace................................................................................................803.4ClimatePolicySpaceandCPFFs,TürkiyeandVietNam..........................................83B3.3.1EvolutionofChina’senvironmentalpolicymix,1980–2020...................................863.5Enablingconditionstotriggerpositivetippingpoints.............................................923.6Upward-scalingtippingcascadestomeetclimategoals..........................................944.1Consumptionimpactsofa(noncompensated)increaseinfuelpricesinasubsetofcountries,byincomelevel.....................................................................1024.2Effectsofclimatepolicypackagesonjoblossesandgainsin121countries,bycarbonintensityofcountries’economies..............................................................1074.3Amatrixtodeterminewhenandhowtodeploygreenindustrialpolicies.........1104.4CoalproductionandemploymentinGermanyandtheUnitedKingdom,1958–2018...........................................................................................................................1174.5Jobmultipliersforcreatingjobsinthetradablesector...........................................1205.1Shareofpopulationthatreportedbeing“satisfied”or“verysatisfied”withElSalvador’s2011subsidyreform,2011–13.......................................................1335.2SupportforandoppositiontosubsidyreforminIndonesia,byperceivedlevelofcorruption............................................................................................................134MapsLossesinaccessibilityofjobsinKinshasa,DemocraticRepublicofCongo,O.1inascenariowitha100percentfuelpriceincrease,byareaandincomedecile.......................................................................................................................184.1LossesinaccessibilityofjobsusingpublictransportationinKinshasaandRiodeJaneiro,100­percentfuelpriceincreasescenariowitha4.275-minutemaximumtraveltime,byareaandincomedecile.................................113Directimpactofthefueltaxonincomesnetoftransportationcosts(inclusiveofthecostoftime)underascenariothattaxesallpollutingmodes,CapeTown,SouthAfrica................................................................115TablesO.1Typesofclimategovernance..............................................................................................81.1Thefouri’sofpoliticaleconomy.....................................................................................362.1Climategovernance:Threecorefunctionsofinstitutions........................................572.2Typesofclimategovernance............................................................................................592.3Acomparisonofclimatechangeframeworklegislationacross33economies.......................................................................................................................67ForewordPoliticaleconomycanbeasensitivetopic.Atanindividuallevel,whypeopledowhattheydoandthinkwhattheythinkisinherentlypersonal,privateeven.Collectively,however,people’sthoughts,feelings,andbehaviorsshapecurrentandfutureevents.Itistemptingtoavoidanalyzingoraddressingthepoliticaleconomyforfearofcreat-ingunnecessarycontroversy.Butforclimatepolicymakers,thisstancewillnothold,asshownbythesuccessesandfailuresofthepastdecade.TheworldhasunitedaroundtheParisAgreementonclimatechange,committingtoholdglobaltemperaturerisetolessthan2°Cabovepreindustriallevelsandpursueeffortstolimititto1.5°C.Morethan70countries,representing76percentofglobalemissions,havepledgedtoreachnetzeroemissions.Meanwhile,thecostsoflow-carbontechnologieshavefallen,andtheircapabilitieshaverisen.Ifpeopleweredrivenpurelybyscienceandeconomics,theclimatecrisiswouldbehalfwaytosolvedbynow.But,asthelatestIntergovernmentalPanelonClimateChange(IPCC)reportlaysoutsounequivocally,itisnot.Moreover,unlessthepoliticaleconomyisconsideredasthoroughlyasthescienceandeconomicsofclimatechange,itwillnotbe.Whenwelookatclimatesuccessstoriesacrosstheworld,itistemptingtofocusonthesubstanceofpolicies,beitclimate-smartagriculture,renewableenergy,orgreenbuild-ingcodes.Thisisundoubtedlyuseful.Yetitisequallyusefultopeelbacktheparticularstoexposetheunderlyingcharacteristicsofsuccessfulpolicies.Indoingso,weareforcedtoreevaluatewhatisconsideredpossible.Asthisbookshows,overcomingpoliticaleconomybarriersiswithinreach.However,itdoesrequirepolicymakerstoadoptcertainapproaches.First,appreciatethatthepoliticaleconomyisnotastaticforcetonavigate.Rather,itisadynamicrelationshipthatevolves.Indeed,policymakershavetheabil-itytostrategicallyshapehowthepoliticaleconomyevolvesbydoingthingsthatbuild­supportovertime.Politiciansbuildsupportforwhattheywanttodobyknowinglypickingtheirbattlesandwordstochangeminds.Policymakerscanalsobridgethegapbetweenwhatispos-sibleandwhatisneededbyknowinglyadvancingpoliciesthatwillbewellreceivedbymost,ifnotall.This,inturn,facilitatesfurtheraction.Astheadagegoes,“newpolicycreatesnewpolitics.”Second,fullyconsiderwhatisreallymotivatingpeople.People’swillingnesstoembraceclimatepoliciesisnotpurelydrivenbyfearofextremeclimateimpactsorwhethertheythemselvespersonallybenefit.Thereareevencaseswheredirectbenefi-ciariesofparticularclimatepoliciesstillopposethembecausetheyperceivethemasunfairorillegitimate.Sometimes,theprimarydriverofindividuals’viewsonclimateactionisnottheirbudgetbuttheirbeliefs.Yes,policymakersneedtheharddatatoplainlyassesswherethecostsandbenefitsfall.Butitisessentialtoacknowledgethatthisisonlyhalftheequation.xixiiWithinReachThird,embracepragmatism.Thisiseasiersaidthandone.Asthesciencebecomesincreasinglygrimandthetimelinemoreurgent,itistemptingtobecomemoreunyieldinginwhatisconsideredanadequatepolicyresponse.Fightthaturge.Itwillonlyclosedoors.Instead,bemoreflexibleabouthowtoachieveclimateobjectivesontheinformedunderstandingthatdoingsowillopenmoredoorsthanitcloses.Inpractice,thatrequirespolicymakerstogivemuchmorethoughttopolicy­opponents—boththesubstancebehindtheiroppositionaswellasthepowertheywieldtosloworsinkaction.Findoutwhatfeedsthem,withoutpresumption,andmakeroomforthem.Theneedforemissionsreductionismoreurgentthanever.Theapproachproposedinthisbookisnotaboutslowingchange—quitetheopposite.Bystartingwithwhatispossi-ble,policymakerscancreatemomentumandhelpcatalyzenewt­echnologies,neweco-nomics,andnewpolitics,makingacceleratedchangepossible.Navigatingpoliticaleconomybarriersishard.Itiseasiertobelievethatifpeoplejustunderstandthescienceofclimatechange,theywillsupportemissionsreductionefforts.Orthatifpeoplebenefitfromaclimatepolicy,theywillsupportit.Thatmaybetruetoadegree,butitwillnoteverbeenough.Knowingwhathasbeenachieved,andtheurgencyofwhatislefttodo,policymakersneedtofavorclimateactionthatisdynamic,thatallowsfortheparadoxesofhumannature,andthatisaboveallpragmatic.Thesuccessofclimateactionoverthenextdecadeandbeyonddependsuponpolicymakersembracingtheirpowertoshapenotonly­economicandtechnologicalfortunes,butthepoliticaleconomytoo.JuergenVoegeleVice-PresidentforSustainableDevelopmentWorldBankAcknowledgmentsThepreparationofthereportwasledbyStéphaneHallegatte,CatrinaGodinho,andJunRentschler,withacoreteamcomprisingPaoloAvner,IraIrinaDorband,CamillaKnudsen,JanaLemke,andPennyMealy.StéphaneHallegattesupervisedthepreparation,review,andeditingofthereport.CatrinaGodinhoco-ledthewritingofthereportandprojectadministration,conceptualization,review,andediting.JunRentschlerco-ledthe­conceptualization,projectmanagement,andanalysis.PennyMealyledthepreparationofchapter3;IraIrinaDorbandandPaoloAvnerledthepreparationofchapter4;andCamillaKnudsenledthepreparationofchapters5.JanaLemkewasinstrumentalin­writing,aswellasreviewandproduction.Allauthorscontributedtowriting,reviewing,andpreparingthefinalmanuscript.ThereportincludesimportantcontributionsandinputsfromAlinaAverchenkova,PuneetChitkara,MathieuCloutier,JoseAntonioCuesta,HanchengDai,FrederickDaley,VerenaFritz,MichaelGanslmeier,ElishaGeorge,MeghanGordon,DavidGroves,MarekHanusch,GilangHardadi,DanielHerszenhut,KayenatKabir,TamaraKrawchenko,MarizaMontesdeOcaLeon,JiaLi,CharlotteLiotta,VivianLiu,AlexanderLotsch,JorgeMartinez-Vazquez,NicholasMenzies,TomMoerenhout,JonasNahm,ShoheiNakamura,AndrewNell,PeterNewell,SamuelOkullo,WeiPeng,JoePryor,SophiedeVriesRobbe,MarcusSaraiva,HughSearight,HarrisSelod,AnjaliSharma,IrynaSikora,JohannesUrpelainen,VincentViguié,AnyaVodopyanov,andFarahZahir.KeyfeedbackandsuggestionswereprovidedbyLucChristiaensen,JoerideWit,JosephDickman,ChandrasekarGovindarajalu,DirkHeine,StutiKhemani,XeniaVanessaKirchhofer,SomikLall,AlanDavidLee,NeilMcCulloch,SheoliPargal,RachelBernicePerks,JulieRozenberg,MarcelaRozo,NehaSharma,MichaelStanley,BrianJamesWalsh,MichaelWard,andMelvinH.L.Wong.Wegratefullyacknowledgetheinvaluablecommentsandadviceprovidedatdifferentstagesbyinternalandexternalpeerreviewers:AzizAmuzaini,EricArias,ChristianBodewig,ChiaraBronchi,ElizabethN.RuppertBulmer,KevinCarey,LouiseJ.Cord,ThomasFarole,MarianneFay,CarolineFischer,VivienFoster,AdrianFozzard,VerenaFritz,DefneGencer,NoraKaoues,TomKerr,JoseAntonioCuestaLeiva,DenaRingold,StephaneStraub,StephenStretton,RichardSutherland,WilliamSutton,IoannisVasileiou,AndreaFitriWoodhouse,andNkulumoZinyengere.MaryC.FiskoftheWorldBank’sPublishingUnitwastheproductioneditor.WearealsogratefultoLucySouthwoodforherskillfuldevelopmentaleditingofthemanuscriptandtoHonoraMaraforherthoroughcopyediting.BillPragluski,CriticalStages,wasthedesigner.CommunicationssupportwasprovidedbyCarlHanlon,FerzinaBanaji,MelissaBryant,CatherineSear,JessicaBrand,JoanaLopes,AlexisCondon,SarahFarhat,andJonRace.ThereportwaspreparedundertheguidanceandleadershipofJuergenVoegele,VicePresidentforSustainableDevelopment.Finally,theteamacknowledgesthegeneroussupportoftheClimateSupportFacilityandguidancefromJenniferSara,DirectoroftheClimateChangeGroup,andRenaudSeligmann,DirectorforStrategyandOperationsoftheSustainableDevelopmentPracticeGroup.xiiiAbouttheAuthorsPaoloAvnerisasenioreconomistwiththeWorldBankandtheGlobalFacilityforDisasterReductionandRecovery,whereheco-leadstheDisasterRiskAnalyticsandResilientInfrastructurethematicareas.Hiscurrentworkfocusesonthelinksbetweenurbanform,landuses,transportationsystems,labormarkets,andvulnerabilitytonaturalhazardsindevelopingcountrycities.Hehasworkedonanumberofanalyticalproducts,includingUrbanizationReviewsandflagshipreportsandistheauthorofseveralpolicy-orientedresearchpapers.BeforejoiningtheWorldBank,heworkedinFranceasaresearcheratLEPII(Grenoble)andtheCenterforInternationalResearchinEnvironmentandDevelopment(Paris).HegraduatedfromSorbonneUniversityandUniversitéParisXNanterreasaneconomistandholdsaPhDfromÉcoledesHautesÉtudesenSciencesSociales(Paris).IraIrinaDorbandisaneconomistattheWorldBank.Herresearchappliesquantitativeandqualitativemethodsfrommacroeconomicmodelingtoexpertinterviewstoanalyzetheinterplaybetweenclimateanddevelopmentpolicies,focusingonequityandpoliticaleconomyaspects.Herworkfocusesondevelopingnovelglobalmodelsandappliedtoolstoprovidepolicysupportontheopportunitiesoflow-carbondevelopmentforindustries,workers,andconsumers.BeforejoiningtheWorldBankin2020,sheworkedinclimatepolicyresearchandconsultinginAfrica,Asia,andEurope.SheisaPhDcandidateattheMercatorResearchInstituteofGlobalCommons(MCCBerlin)andtheTechnicalUniversityofBerlin,andsheholdsamaster’sdegreefromDukeUniversityandtheFreeUniversityofBerlin.CatrinaGodinhoisapoliticaleconomistworkingontopicsrelatedtoclimateand­development.SheisafellowoftheEnergyforGrowthHubandanAgoraEnergiewendealumna,andwaspreviouslyaseniorresearchfellowattheOxfordInstituteofEnergyStudies.Herresearchinterestsincludethepoliticaleconomyofstructuralandpolicyreforms;sustainabledevelopment;climatepolicy,action,andtracking;justtransitions;andenergydevelopmentandgovernance.Sheisanauthorofseveralarticles,workingpapers,reports,andbookchapters.Sheholdsamaster’sdegreeinsocialsciencefromtheUniversityofCapeTown,SouthAfrica.StéphaneHallegatteisaseniorclimatechangeadviserattheWorldBank.HejoinedtheWorldBankin2012after10yearsofacademicresearchineconomicsandclimatescience.Hisresearchinterestsincludedevelopmentandpovertyeconomics;theeconomicsofnaturaldisasters,riskmanagement,andclimatechangeadaptation;urbanpolicyandeconomics;andlow-carbondevelopmentandgreengrowth.StéphanewasaleadauthoroftheFifthAssessmentReportoftheIntergovernmentalPanelonClimateChange.Heisanauthorofdozensofarticlespublishedininternationaljournalsinmultipledisciplinesandofseveralbooks,includingShockWaves(2016),Unbreakable(2017),andLifelinesxvxviWithinReach(2019).Hehasanamaster’sdegreeinmeteorologyandclimatologyfromUniversitéPaulSabatier(Toulouse)andaPhDineconomicsfromÉcoledesHautesÉtudesenSciencesSociales(Paris).CamillaKnudsenisaneconomistattheWorldBank,wheresheworkstointegrateclimatechangeanddevelopmentconsiderations.Mostrecently,herworkfocusesonthedistribu-tionalimpactsofclimatepoliciesintermsofemploymentoutcomesforworkers.BeforejoiningtheWorldBankin2021,shecompletedaPhDinenvironmentaleconomicsattheUniversityofManchester,UnitedKingdom.Herresearchfocusedonnonmarketvaluationandecosystemservices.JanaLemkejoinedtheWorldBankin2022undertheGermanCarloSchmidProgram.SheworksasaconsultantintheClimateChangeUnit,lookingatthelinksamongclimatechange,environmentaldegradation,andmarginalization.BeforejoiningtheWorldBank,shesupportedtheprojectmanagementofclimatechangeadaptationandmitigation,aswellasecosystemprotectionprojectsinCentralAfricaandSoutheastAsia.Sheholdsamaster’sdegreeininternationaldevelopmentstudiesfromthePhilipps-UniversityofMarburg,Germany.PennyMealyisasenioreconomistattheWorldBank,aresearchassociateattheInstituteforNewEconomicThinkingandtheOxfordSmithSchoolofEnterpriseandtheEnvironment,anadjunctseniorresearchfellowatSoDaLabsattheMonashBusinessSchool,andanexternalappliedcomplexityfellowattheSantaFeInstitute.Herworkappliesvariousmethodsfromcomplexsystemsanddatasciencetoanalyzetheinterrelatedchallengesofclimatechangeandeconomicdevelopment.Herresearchhasdevelopednovel,data-drivenapproachesforanalyzingstructuralchange,occupationalmobilityandthefutureofwork,andthetransitiontothegreeneconomy.ShehasheldvariousresearchfellowrolesattheOxfordMartinSchool;theOxfordSmithSchoolofEnterpriseandtheEnvironment;theBennettInstituteforPublicPolicyatCambridgeUniversity;andSoDaLabs,MonashUniversity.Shehasalsofrequentlyadvisedinterna-tionalorganizations,governments,andbusinessesongreengrowthanddevelopmentstrategies.ShecompletedaPhDattheInstituteforNewEconomicThinkingatOxfordUniversity.JunRentschlerisasenioreconomistattheWorldBank,workingattheintersectionofclimatechangeandsustainableresilientdevelopment.BeforejoiningtheWorldBankin2012,heservedasaneconomicadviserattheGermanForeignMinistry.HealsospenttwoyearsattheEuropeanBankforReconstructionandDevelopmentworkingonprivatesec-torinvestmentprojectsinresourceefficiencyandclimatechange.Beforethat,heworkedonprojectswithGrameenMicrofinanceBankinBangladeshandUSAID’sPartnersforFinancialStabilityPrograminPoland.HeisavisitingfellowatthePayneInstituteforPublicPolicy,followingpreviousaffiliationswiththeOxfordInstituteforEnergyStudiesandtheGraduateInstituteforPolicyStudiesinTokyo.HeholdsaPhDineconomicsfromUniversityCollegeLondon,specializingindevelopment,climate,andenergy.MainMessagesByadoptingtheParisAgreementin2015,195governmentsagreedtoholdglobalwarmingatwellbelow2°Cabovepreindustriallevelsandpursueeffortstolimititto1.5°C.Despitemultiplepledgesandcommitments,therapidprogressinkeytechnologies,andthemanypoliciesintroducedtodate,theworldisnotontracktomeetthisobjective.Moreover,despiterobustevidencethatcountrieshaveopportunitiestoreduceemissionsatnoorevennegativecosts,thefailuretoseizetheseopportunitiessuggeststhatthemainobstacleisneithereconomicnortechnological.Rather,thepoliticaleconomyisprovingtobethekeybarriertoprogress.Thisobstacleisnotimpassable:therearemanyexamplesofsuccessfullyimplementedclimatepolicies.Forexample,in2014,defyingpoliticalandeconomicchallenges,theArabRepublicofEgypt’sEnergySubsidyReformeasedfiscalpressuresandencouragedgreaterprivateinvestmentincleanenergy,withsolarandwindgenerationgrowingalmostthreefoldinthefollowingfiveyears.InCanada,theprovinceofBritishColumbiaintroducedacarbontaxafterthefinancialcrisisin2008,covering70percentofgreen-housegasemissions.Thatreformhasreducedemissionsandinequality,hasraisedgrowthandemployment,andnowhasthesupportofamajorityofcitizens.Kenyareformeditspowersector,asensitiveandimportantsourceofrevenuesandinfluence,thusimprovingefficiency,increasingcostrecovery,andmobilizingprivatesectorinvest-mentsintorenewableenergy.Thelessonfromthesecasestudiesisclear—climateactionwithanimpactispossibleintherealworld.Thisbooksetsoutwhyclimatepoliciesaresuccessfullyadoptedinsomecasesbutmeetsubstantialoppositioninothers.Guidedbythe4iFramework—coveringfourkeycomponentsofthepoliticaleconomy:institutions,interests,ideas,andinfluence—itoffersaframeworktohelppolicymakersreplicatetheseachievementsandeffectivelymaneuverthroughamultitudeofpoliticaleconomybarriers.Climatechangepresentsauniquechallengeinthatpolicymakersneedtobalancethespeedandscalerequiredtoachieveglobalclimateobjectiveswiththetimerequiredtoensurepoliticalacceptabilityandsocialsustainability.Toimplementsustainableandtransformativeclimatepolicies,policymakerscanapproachthedesignoftheirclimatestrategyandpoliciesalongfourdimensions.1.Climategovernance:strategicallyadapttheinstitutionalarchitectureandembedclimateobjectivesintoapositivedevelopmentnarrative.Institutionsframetherelationshipbetweenactorsandshapetheirinfluence,ideas,andinterests.Policymak-erscanstartbystrategicallyusingandadaptingtheinstitutionalcontextfortheclimatetransition,forinstance,throughclimatechangelegislation,long-termstrategies,orjusttransitionframeworks.Ifclimatechangemitigationobjectivesarealreadywidelyrecognizedinpublicdebatesandpolarizationonclimatepolicyislow,policymakerscanbuildstrategiccli-mateinstitutionstohelpmediateinterestgroupsandbuildconsensus,facilitatexviixviiiWithinReachandinformstakeholderengagementandalignment,fostersupportivecoalitions,andimprovetheoverallinstitutionalcontext.AsdemonstratedbytheEuropeanUnion’sFit-for-55plan,thesekindsofinstitutionscancreatestabilityandpredictability,reducethelikelihoodofpolicyreversal,andhelpmaintainaconsistentandcost-efficientstrategy,evenifthepoliticalcontextchanges.Ifclimatechangemitigationobjectivesarelessconsensual,governmentscanlayerclimategovernancefunctionsintoexistinginstitutionalstructuresandpolicyobjectives.Forexample,proactiveclimate-orientedentitieshaveemergedwithinvariousIndiangovernmentministries,achievingtangibleoutcomesbyincorporatingaclimate­perspectiveintoexistingorganizationalframeworksandaligningitwithestablished­priorities.Between2014and2022,India’srenewablepowergenerationcapacitymorethandoubled,whileenergyefficiencyimproved,enhancingenergysecurity.2.Policysequencing:balanceshort-termfeasibilityandlong-termambition.Becausethepoliticaleconomyandinstitutionalcontextsarenotstatic,policymakersneedtofollowadynamicapproachindesigningandimplementingreforms.Policypri-oritizationcanbebasednotonlyontechnicalandpoliticalfeasibilitybutalsoontheabilitytoactivelybuildpoliticalsupport,increasecapacity,andreducethecostsoffutureclimateaction.Forexample,policiesthatcreateinterestgroupsthatbenefitfromandsupportclimateactioncanfacilitateandenablefurtheraction,suchasinChina,whereindustrialpoliciesinthemid-2000ssupportedrenewableenergyindustries,therebypavingthewayforthesuccessfullaunchofanemissionstradingschemein2017.Becauseclimatepolicyadoptionispath-dependent,itismucheasiertointroducepoliciesthatbuildonexistinginstitutionalcapacityandknow-how.WiththehelpoftheClimatePolicyFeasibilityFrontier—atooltoinformpolicychoicesbyconsideringexist-ingandexpectedpolicy-makingcapacity—analysisfindsthat,forTürkiye,alegallybind-ingclimatestrategyorbindingemissionsreductiontargetandanemissionstradingschemeoracarbontaxwouldbefeasibleandmostlikelytobuildmomentumtowardfurtheraction.Targetingtippingpoints—thatis,rapidchangesinsocial,technological,andpoliticaldomains—throughshiftsinsocietalvaluesandbehavior,technologymaturityandacces-sibility,orsupportforandimplementationofpoliciescanalsohelpgovernmentsincen-tivizerapidandsystematicchange.Thankstothesetippingpoints,awell-sequencedapproachdoesnotneedtobeslow,makingitpossibletocombinepoliticalfeasibilitywithambitionandspeed.3.Policydesign:focusonpeopleandmanagethedistributionaleffectsofclimate­policies.Policymakersalsoneedtominimize,manage,and,ifnecessary,compensateforthedistributionalimpactsofpoliciesonthepoorandvulnerableaswellasoninterestgroups,sectors,andregions.Newanalysisforthisbookfindshighlyheterogenousimpactsofclimatepoliciesacrosshouseholds,withalargervariancewithinthanacrossincomegroups.Theseimpactsdependnotonlyonconsumptionpatternsbutalsoonfactorslikeaccesstoelectricityorpublictransit.Poorpeoplewhodonotconsumemuchfossilfuelandcannotaccessmoderntransportationmaynotexperienceheavydirectimpactsfromclimatepolicies,butill-designedpoliciescanmakeitharderforthemtotransitionawayfrombiomassortoaccessbetter-payingjobs.Near-poorandlower-middle-classhouseholds,whoconsumemoreenergyandarehighlyvulnerabletopricechanges,experiencelargerandmorevisibleimmediateimpactsfrompolicyreform.NewanalysesinCapeTown,Kinshasa,andRiodeJaneiroshowthathigherMainMessagesxixtransportationfuelcostshaveparticularlylargeimpactsonlower-middle-classhouse-holds.Whileprotectingthepoorestandmostvulnerablepeopleisanimperative,politi-caloppositionismorelikelytooriginatefromimpactsonwell-organizedorpowerfulinterestgroups,orfromimpactsthatareconcentratedonsectorsorplacesthatlacktheresourcesorsubstitutionoptionstoadjust.Possibleandaffordabletoolsforprotectingpoorandvulnerablepopulationsincluderevenueredistributionandcompensation,butitisimportanttoconsiderpractical­challenges—suchaslackofsocialprotectioninfrastructureandofhouseholddata—toenableeffectivetargetinganddelivery.Activelaborpolicies,reskillingprograms,socialprotectionsystems,place-basedpolicies,andgreenindustrialpoliciesformpartofthetoolboxpolicymakerscanusetoreduceconcentratedimpacts,facilitatethetransition,andmakepoliciesmoreacceptableandsustainableovertime.4.Policyprocess:usepublicengagementandcommunicationtoimprovepoliciesandtheirlegitimacy.Supportfor,oroppositionto,apolicyderivesnotonlyfrom­people’sinterestsbutalsofromtheirperceptionsofreformeffectsandthelegitimacyofdecision-making.Civicengagementcanimproveapolicy’sdesign,enhancelegitimacy,fostercompromise,andhelpidentifyunintendedconsequencesearly.Effectivecommu-nicationcanmakereformsmoreaccessibletothepublicandincreasesupport.In2011,ElSalvador’sgassubsidyreformwasmetwithopposition—particularlyfromlower-­incomehouseholds,althoughtheywereexpectedtobenefitthemost—drivenbymisin-formationandmistrustinthegovernment.Ashouseholdsstartedtobenefitfromthereform,however,theirperceptionsimproved,andthereformeventuallygainedbroadsupport.ExperiencefromIndonesiaalsoshowsthatoppositiontofossilfuelsubsidyreformisdirectlylinkedtolocalperceptionsofcorruption.Whencorruptionislow,poorhouseholdsaremorethantwo-and-a-halftimesmorelikelytosupportthantoopposefuelsubsidyreform.Withoutpublictrust,evenwell-designed,well-intentionedpromisesofcompensationandredistributioncanlackcredibility.Forareformtobe­perceivedaslegitimate,itmustinvolvetransparentandparticipatorypolicyprocesses,andhaveoutcomesthataredesirableandacceptableforthepublic.Thisbookshowshowappropriategovernanceframeworks,stronginstitutionalcapacity,well-designedpolicieswithadequatecompensationmeasures,andearlyengagementwithallstakeholdersareessentialstrategicelementstobuildconsensusandmomentumfortransformativepolicies.Bydeployingthesetools,policymakerscannavigatetheurgencyofclimateactionanditspoliticaleconomychallengestoachievetheirlong-termclimategoalsandsecurealivableplanet.AbbreviationsCCIAClimateChangeInstitutionalAssessmentCO2carbondioxideCPFFClimatePolicyFeasibilityFrontierETSemissionstradingsystemGHGgreenhousegasLGCCGeneralLawonClimateChange(LeyGeneraldeCambioClimático)LTSlong-termstrategyMtCO2emilliontonnesofcarbondioxideequivalentNDCNationallyDeterminedContributiontCO2etonnesofcarbondioxideequivalentxxiOverviewNavigatingpolitics:AkeyobstacletourgentclimateactionGoodintentions,yetinsufficientprogressIn2015,throughtheParisAgreement,195governmentsagreedtoholdglobalwarmingatwellbelow2°Cabovepreindustriallevelsandpursueeffortstolimititto1.5°C.Thesubse-quent2021GlasgowPactaffirmstheneedtoreduceglobalcarbondioxide(CO2)emissionstonetzerobymidcenturytolimitwarmingto1.5°C.Netzeromeansreducingemissionsasclosetozeroaspossibleandcompensatingfortheremainderwithcarbonremovalsthroughnaturalcarbonsinksandtechnologicalsolutions.Countryclimatecommitmentssignalawillingnesstoactandmeetthesegoals.AsofMarch2023,172countrieshadsubmittedaneworupdatednationallydeterminedcontribution(NDC)inlinewiththeParisAgreement’sratchetingmechanism.Inaddition,over70countries—covering76percentofglobalemissions—havepledgedtoreachnetzero.AccordingtoClimateActionTracker(NewClimateInstitute2022),currentNDCtargetsandlong-termpledgeswouldleadtowarmingof2°Cin2100,closetotheParisAgreement’sobjective.Nevertheless,ambitiousgoalsandaspirationalcommitmentshavenottranslatedintotherequirednationalactions,asillustratedbytherecentsynthesisreportoftheUnitedNationsFrameworkConventiononClimateChange’sglobalstocktaketechnicaldialogue(UNFCCC2023).Promisesaside,ifcountriesimplementonlytheircurrentclimatepoli-cies,warmingwillexceed2°Candcouldbeashighas3.4°Cby2100,withdevastatingimpacts(NewClimateInstitute2022).Adoptionandimplementationofclimatepolicieshavetakenplacemuchmoreslowlythanclimategoalswoulddictate,creatingagapbetweencommitmentsandactionandraisingconcernsaboutthefeasibilityofpoliciesneededtoachieveclimategoals.Whatisholdingusback?Today,thesinglebiggestbarriertourgentclimateactionisneitherthelackofaffordablecarbon-freetechnologiesnorthelackofresources.Continuoustechnologicalinnovationisprovidinguswithmodernzero-carbonsolutionsintransportation,energy,andagriculture,withrapidlydecliningcosts.Manycleantechnologiesarealreadycheaperthancarbon-­intensiveones,evenwithoutfactoringinlocalexternalitiesandcosts,suchasairpollutionanddependencyonandcostsofenergyimports.Vastvolumesspentonharmfulsubsidiesinenergy,water,andagricultureillustratethatgovernmentshaveresourcesthattheycouldusebetterforresilient,low-carbondevelopment(Damaniaetal.2023).Andthe12WithinReachWorldBank’sCountryClimateandDevelopmentReportsidentifymanyopportunitiesforsynergiesbetweendevelopmentandclimateobjectives(WorldBankGroup2022).Whydogovernmentsnotseizetheseopportunities?Governmentscertainlyfacechal-lengesrelatedtoalackoffinancingoraccesstotechnologies.Butonekeybarrieristhedifficultyofdesigningandenactingstructuralchangeinacomplexpoliticalenvironmentthatisdefinedbyawiderangeofpoliticalinterestgroupsofvaryingdegreesofpowerandinfluence;inconduciveinstitutionalarchitecture;limitedgovernmentcapacity;anddivergingpreferences,views,andbeliefsacrosspeople,sectors,andgroups(Pengetal.2021).Thiscomplexcontextineachcountry—knownasthepoliticaleconomy—ultimatelyenablesorconstrainseffectiveresponsestothethreatofclimatechange.ThereisnotimetoloseTheconventionalapproachinsuchcontextsistopatientlyworkwithandaroundthesepoliticaleconomyconstraints.Thisapproachmeansgraduallyreforminginstitutions,care-fullymonitoringpublicsupport,andcompromisingonthespeedandscaleofpolicyimple-mentationinfavorofmaximizingconsensusbuildingandminimizingdisruption.Butclimatechangeisuniqueinthatitrequiresurgenttransformativeactionthatcanbedelayednolonger.Achievingthistransformationiseasiersaidthandone.Notechnologicalinnovationcanmagicallysolvethemanypoliticaleconomybarrierstoenactingclimatepolicy,andnosingleapproachcansuccessfullyovercomethesebarriersinallcountriesandcon-texts.Policymakerswillhavetofindtherightcompromisebetweenurgentactionandtakingthetimeneededtoensurepoliticalandsocialacceptabilityandsustainability.Thepoliticaleconomycanbemanaged,andchangecanhappenfastCountrieshavenotbeenidle:theyhaveimplementedclimatepoliciesthatarecurbingemissionsgrowth.High-visibilityfailuresandunrest,asrecentlyseeninEcuadorandFrance,hidealargenumberofclimatepoliciesthatarebeingsuccessfullyimplemented.AccordingtotheClimatePolicyDatabase,countrieshaveannouncedmorethan4,500cli-matepoliciesoverthelastthreedecades.1Thisbook’scompanionreport,RealityCheck:Lessonsfrom25PoliciesAdvancingaLow-CarbonFuture,providesexamplesofsuccessfulimplementationofclimatepolicies,evenindifficultpoliticaleconomycontexts(WorldBank2023).Manyoftheexamplesareneitherfirst-bestpoliciesnorbestpractice.Facedwithinstitutionalcapacityconstraintsandtheneedtomanagetrade-offswithotherpolicyobjectives,governmentshaveoftenhadtocompromise.Buttheseinterventionshaveman-agedtodrawenoughsupporttobesuccessfullyimplemented,andtocreatemomentumtowardmoreclimateaction.•CostaRica’sNationalDecarbonizationPlan,oneofthemostambitiousglobalstrategiesforlow-carbondevelopmentforamiddle-incomecountry,helpedalignstakeholders’expectationsandmobilizeatleastUS$2.4billionininternationalconcessionalfinance.•TheArabRepublicofEgypt’sEnergySubsidyReformoffersanexampleofsuccessfulfossilfuelsubsidyreform—anotoriouslychallengingpolicytoimplement.Ithaseasedfiscalpressuresandhasencouragedgreaterprivateinvestmentincleanenergy,withsolarandwindgenerationgrowingalmostthreefoldbetween2014and2019.•ThecarbontaxintheCanadianprovinceofBritishColumbia,introducedin2008rightaftertheglobalfinancialcrisisandcovering70percentofgreenhousegasemissions,Overview3hasreducedemissionsandinequality,raisedgrowthandemployment,andnowreceivesmajoritysupportfromcitizens.•Climate-smartagricultureinAfrica’sSahelregion,thankstotargetedinterventions,hasbeenadoptedbyfarmersintheformoflow-cost,efficienttraditionalpractices.Forexample,inNiger,farmer-managednaturalregenerationincreasedyieldsby16–30percentbetween2003and2008andaddednearly5millionhectaresoftreecover.•WiththehelpofColombia’smandatorygreenbuildingcodeenactedin2015,11.5millionsquaremetersofspacebuiltorunderconstructiongotcertifiedasgreenundertheInternationalFinanceCorporation’sEDGEprogrambytheendof2022,and27per-centofnewbuildingswerecertifiedbetween2021and2022.•India’snationalsolarmissionhasmadethecountryoneoftheworld’smostrapidlygrowingsolarmarkets,withsolargrowingfrom4percentto13percentofpowergen-erationbetween2014and2022.Theprivatesectorhasbeenheavilyinvolved,invest-ingUS$130billionsince2004.•Kenya’spowersectorreformshavemadeitoneofthemostsuccessfulcountriesinattractingprivatefinancingforcleanpowerassetsandAfrica’slargestdeveloperofgeothermalpower.Since2000,theCO2intensityofpowergenerationhasfallenfour-fold.Aswellasreducinggreenhousegasemissions,thesereformshavemadeelectric-itysupplymorereliableandincreasedpeople’saccesstoenergy.Thisbookaimstounderstandwhythesemeasuresweresuccessfullyimplemented,whereassimilarmeasureshavetriggeredstrongoppositionelsewhere.Itprovidesaframeworktohelppolicymakersreproducethesesuccessesinothercontextsand­successfullynavigatepoliticaleconomyconstraints(seeboxO.1forwhatthisbookdoesnotaddress).BOXO.1WhatthisbookdoesnotcoverAnimportantcaveatisthatthisbookhasalimitedscope.Inparticular,itdoesnotdiscusshowinternationalagreementscancreateincentivesforpolicymakersandcountriestoreducegreenhousegasemissionsorthedynamicsthroughwhichtheyfacilitateandenablenationalaction.TheParisAgreementdoesnotincludeamechanismtosolvethefreeriderproblemandlacksanenforcementmechanism(KeohaneandOppenheimer2016),butitdoessupport“catalyticcooperation,”withearlymoversreducingcostsforothersandenablingthemtocommittoincreasinglyambitioustargetsovertime(Hale2020).Thisbookdoesnotdiscusshowtomanagehistoricalresponsibilityforfutureclimatechange,theunequalcarbonbudgetavailabletolower-incomecountries,ortheneedforquickeremissionreductionsfromhigh-incomecountries.ItdoesnotcovertheweaknessesoftheParisAgreementregardingtheso-calledmeansofimplementation,orthefinancialandtechnologicalsupportprovidedbyhigher-incomecountriestohelplower-incomecountriesadapttoandmitigateclimatechange,includingtheirfailuretodeliverontheirowncommitmentto“mobilizeUS$100billionperyearfortheneedsofdevelopingcountriesinthecontextofmeaningfulmitigationaction”(UNFCCC2023).Althoughthesequestionsarerelatedtodomesticpoliticaleconomychallenges,becausepoliticalfeasibilityatthecountryleveldependsonthefairnessofglobalprocessesandthefaircontributionofallcountries,wedonotfocusontheseinternationalchallengeshere.Instead,wefocusonpoliticaleconomicbarrierstodomesticpoliciesandinterventionsthatcontributetodecarbonization.Acknowledgingthatpolicymakershavediverseinterests—influencedbytheirresponsibilities,relationstootherstakeholders,exposuretolobbying,andotherfactors(Perssonand(Continued)4WithinReachBOXO.1Whatthisbookdoesnotcover(continued)Tabellini2002)—thisbookfocusesonhowgovernmentswithagenuinecommitmenttotheirstateddecarbonizationgoalscanachievethemandcaptureidentifiedopportunitiesforsynergiesbetweendevelopmentandclimateobjectives,whilejugglingotherobjectivesandmanagingacomplexpoliticaleconomycontext.Thisbookdoesnotdiscussthepoliticaleconomychallengesfacedbyadaptationandresiliencegoals,eventhoughtheyareasimportantandconnectedtotherestoftheclimatechallenge.TheWorldBankisdevelopingabroaderworkprogramonthepoliticaleconomyofclimateaction,ofwhichthisbookisonlyonecontribution.Includingfurtheranalyticworkongovernance,institutions,andpoliticaleconomyaspectsthatmatterforclimatechangemitigationandadaptation,thisprogramwillsupportanincreasingrangeofcountryengagementsonvariousgovernanceaspectsofclimatechangetocontributetoandsupporteffectivepolicyactionsandenablepublicandprivateinvestmentstosecurealivableplanet.Awayforward:AdynamicapproachtothepoliticaleconomyThepoliticaleconomyisnotsetinstone:althoughpolicymakersmustconsideritwhendesigninginstitutionsandpolicies,theycanalsochangeitovertime.Thisdynamiclensleadstothefollowingfourkeymessages.First,governmentsshouldaimtomovefromopportunisticorunstabletoenduringandstrategicclimateinstitutionsandtoembedclimateobjectivesintoapositivedevelop-mentnarrative.Country-levelpoliticaleconomydynamics—­specificallyclimatepolicynarrativesandpoliticalpolarization—determinethebestapproachtoc­limateinstitutionsindifferentcountries.Butclimateinstitutionsthatarea“goodfit”forthepoliticalecon-omytodaycanpavethewayformorestrategicclimateinstitutionstomorrow.Climatechangeframeworklaws,long-termstrategies,andjusttransitionframeworksarethreekeystrategicclimateinstitutionsthatcanfundamentallyalterthepoliticaleconomyofclimatepolicies,andtheyhavebeenimplementedincountriesasdiverseasCostaRica,SouthAfrica,andtheUnitedKingdom.Second,governmentscanprioritizepoliciesthatarefeasibleinagivenpoliticalecon-omycontext,butthatalsotransformthepoliticaleconomybybuildinggreaterpoliticalsupportandreducingthecostsofclimateactionovertime.Thisbookofferstoolsforcountriestostrategicallyselectandsequencepoliciesthatbuildinstitutionalcapacity,createwinnerswhowillsupportfurtherpolicyaction,orofferfirmsandpeopleafford-ableoptionstosubstituteforfossilfuels.Governmentscanalsoleveragereinforcingpol-icyfeedbackprocessesandtargettippingpointsinthebroadersocio-technical-politicalsystem.Theytriggeredsuchatippingpointbymakingsolarpowerthecheapestoptiontogenerateelectricity,andtheycannowdothesamewithelectricvehiclesorheatpumpsbymakingthemthedefault(andaffordable)optionforconsumers.Thankstosuchtip-pingpoints,strategicallyselectingandsequencingfeasiblepoliciesdoesnotmeancli-mateprogresswillbeslow.Third,thedesignandimplementationofpoliciesneedtoconsiderthepoliticalecon-omy,includingconcentrateddistributionalimpactsandtheneedforpolicylegitimacy.Climatepolicieshaveheterogenousdistributionimplicationsacrosssocietalgroups,incomeclasses,sectors,occupations,orspace,andimpactsvarymorewithinthanacrossincomegroups.Itispossibleandaffordabletoprotectpoorandvulnerablepopulationsthroughcompensation;however,thepoliticaleconomyinvolvesmorethandistributionalOverview5impacts,andprotectingpoorhouseholdsisnotenoughtoensureacceptability.Oppositiontoapolicyreformisoftentriggeredbyconcentratedimpactsonwell-organizedorwell-­connectedgroups—suchaspowerfulinterestgroups,organizedworkersinkeysectors,theurbanlower-middleclass,carbon-intensiveregions,orothersocietalgroups—makingcomplementarypoliciesandcompensationmorechallengingtodesignandimplement.Fourth,oppositionalsooftenoriginatesfromaperceivedlackoflegitimacyof(oragencyin)thepolicyprocess.Civicengagementandcommunicationcanhelpdesign­betterpoliciesandidentifyunintendedconsequencesassoonaspossible.Theyalsohelpbuild­legitimacyanddevelopworkingcompromisesandnecessarysupportbymediatingdistributionalconflict,differencesinpreferencesandpriorities,andunequalpowerdynamics.ThedefiningfeaturesofeverypoliticaleconomysettingAtfirstglance,thepoliticaleconomybarriersthatimpedeclimatechangepoliciesmayappearsowideandvariedthattheydefyanysystematicdefinition,letalonestrategy.Governmentsmanagemanycompetingdemandswithconstrainedresources,andfutureclimatechangeimpactsarelessvisibleandsalientthanimmediatetransitioncosts.Shortpoliticalmandatescanundermineactiononlong-termobjectives;misinformationandlob-byingcandistortpublicdiscourseandopinions;high-levelclimateambitionsarenotalwaysintunewiththeday-to-dayprioritiesofpoliticalleadersandcommunities;andrepeatedcrisescanchangeshort-termprioritiesovernight.Therecanalsobeconsiderableinstitu-tionalandpoliticalbarriers,sometimeslinkedtolowinstitutionalcapacityandpoorgover-nance,andsometimeserectedbyvestedinterestgroups.Andpolitical,cultural,orideologicalbeliefscanreinforceoppositiontoaction.The4i’s:Institutions,interests,ideas,andinfluenceNevertheless,governmentshavealonghistoryofoperatingwithinthisrealityofpoliticaleconomybarriers.Basedondecadesofexperiencerangingfromeducationpolicyto­macrofiscalmanagement,extensiveevidencedocumentsthedriversofpoliticaleconomybarriersandsolutions.Drawingonavastrangeofpoliticaleconomytheories,concepts,casestudies,definitions,andanalysistools,thisbookhighlightshowitispossibletoana-lyzeandunderstandseeminglyinsurmountablepoliticalcomplexityandturnitintoaguid-ingframeworkfordevisingeffectivepolicystrategies.Althoughdistributionalimpactshaveoftenattractedthemostattention,asystematicapproachcanhelpdissectpoliticaleconomyissuesintofourkeycomponents,whichmakeupthe4iFramework(Godinho,Hallegatte,andRentschler,forthcoming,andfigureO.1):1.Institutions:theformalandinformalrules,norms,andorganizationsthatprovideincen-tivesandconstraintsforeconomic,political,andsocialbehaviorinsociety2.Interests:heterogenousdistributionalimpacts,aswellasdifferencesinprioritiesandpreferences,thatshapeallactors’behavior3.Ideas:thebeliefs,values,andworldviewsthatshapeactors’preferences4.Influence:thepower,authority,andleveragethatactorscanusetoadvancetheirinter-estsandideas,andtheirinteractionswitheachotherandinstitutions.Thesecomponentsaretheresultofalongprocessofhistorical,political,social,cul-tural,andeconomicdevelopment,makingthemhighlyspecifictoplaceandtime.Somefactorsaredeterminedbycenturiesofsociopoliticalhistory,suchastheformationof6WithinReachFIGUREO.1.The4iFrameworkandaniterativeapproachtoclimatepolicySocietaloutcomes:development,povertyreduction,Widercontext:1Adapttheinstitutionaljobcreation,sustainability,etc.geography,technology,economicconditions,etc.architecturetoaddresstheClimategovernanceclimatechallengeInstitutionsClimateinstitutionsandFormalandinformalrules,norms,andorganizationsframeworksDynamicfeedback:2policychange,actions,effects,shocks,etc.Institutionsshapeactors'Actors’influence,PolicysequencingHarnessfeedbackeffectstoinfluence,interests,interests,andideasshapePolicychoiceandmix,expandtheclimatepolicyandideassequence,andtippingspaceandbuildmomentuminstitutionspointsActorarenas:3legislativeprocesses,media,civilsociety,etc.PolicydesignMinimizedistributionalInfluencePolicyproposalsandimpactsofclimatepoliciesLeverage,authority,bypolicydesignanddesigncomplementaryactionsandpower4InterestsIdeasPolicyprocessMaximizeacceptabilityandObjectives,wants,Worldviews,beliefs,CommunicationandlegitimacyofpoliciesbypublicengagementenhancedpolicyprocessesandneedsandvaluesSource:BasedonGodinho,Hallegatte,andRentschler,forthcoming.laws,values,andnorms.Othersaremoretransient,determinedbyanongoingcrisisorlobbyingbycertaininterestgroups.Yettheyallacttogethertogiverisetocountries’institutionalstructures,whichultimatelyconstitutethepolicy-makingenvironmentforallpoliticalandeconomicdevelopment,includingclimatechangemitigation.Thisalsomeansthatinstitutions,interests,ideas,andinfluencecanactasenablersfor,orbarriersto,goodclimatepolicies.Successfullynavigatingthepoliticaleconomyforclimatepoliciesmeansrecognizingandleveragingtheenablingfactors—whilealsoavoidingorpurposefullychangingthebarriers.Despitetheattentionpaidtodistributionalimpacts,theyareonlyonedimen-sionofthepoliticaleconomy,especiallywhenwinnersofthepoliciesfeellikelosers(Calvo-Gonzalez,Cunha,andTrezzi2015).Asillustratedbymanyexamplesdiscussedinthisbook,suchasthereformofgassubsidiesinElSalvadorin2011,perceptionsandideasalsomatter.Afour-prongediterativeapproachforurgentclimateactioninacomplexpoliticaleconomyInpractice,policymakerscanapproachthedesignoftheirclimatestrategyandpoliciesalongfourdimensions(seefigureO.1),whichcorrespondtochaptersofthisbook:1.Climategovernance:strategicallyadapttheinstitutionalarchitectureandembedclimateobjectivesintoapositivedevelopmentnarrative(chapter2).BecauseinstitutionsframeOverview7therelationshipbetweenactors—andtheirinfluence,ideas,andinterest—policymakerscanstartbystrategicallyusingandadaptingtheinstitutionalcontextfortheclimatetransition,buildingonexistingstructuresandsocietalgoals.2.Policysequencing:balancefeasibilityandlong-termambition(chapter3).Thepoliticaleconomyandinstitutionalcontextaredynamicandcanbeinfluencedbypolicies.Hence,policymakerscanselecttheirpriorities,notonlytomakepolicyimplementationfeasiblebutalsotoactivelybuildcapacityandchangethepoliticaleconomyandinstitutionalcon-text,buildingmomentumtowardthelong-termobjectiveandtransformation.3.Policydesign:focusonpeopleandmanagethedistributionaleffectsofclimatepolicies(chapter4).Afterselectingpolicypriorities,policymakersneedtominimizeandmanagethedistributionalimpactsofpolicies,includingimpactsnotonlyonthepoorandvulner-ablebutalsoonwell-organizedinterestgroups,sectors,orregions.4.Policyprocess:usepublicengagementandcommunicationtoimprovepoliciesandtheirlegitimacy(chapter5).Civicengagementcanimproveapolicy’sdesign,enhancelegiti-macy,fostercompromises,andhelpidentifyunintendedconsequencesearly.Effectivecommunicationcanmakereformsmoreaccessibletothepublic,increasingsupportandsustainability.Climategovernance:StrategicallyadapttheinstitutionalarchitectureandembedclimateobjectivesintoapositivedevelopmentnarrativeTotacklecomplexdevelopmentchallenges,includingclimatechange,governmentsneedtoorganizetheirinstitutionalarchitectureinlinewithnationalpriorities,throughlegalandregulatoryframeworks,institutionswithenforcementcapacity,andministrieswithwell-definedrolesandresponsibilities.Inthecontextofmitigatingclimatechange,thewaycountriesorganizethemselves—knownasclimategovernance—definestheiravailable­policy-makingoptions.Formalclimategovernanceinstitutionsprovidetherules,norms,andproceduresthatguidetargetsetting,policymaking,andimplementation.Tochangethepoliticaleconomy,climategovernanceinstitutionsmustfirstfitinRealworldexamplesofeffortstobuildclimateinstitutionsdemonstratehowthepoliticaleconomycanshapetheformandfunctionalityoftheseinstitutions(Dubashetal.2021).Climate-relatedpoliticalnarrativesfallbetweentwoextremes:mitigation-centricnarra-tivesemergewhereclimatechangemitigationisalreadyawell-established,high-prioritypublicgoalthatallowsforexplicitemissionsreductionframing;embeddedclimatenarra-tivesarelikelywhenclimateislowerontheagenda,anditiseasiertosubsumeclimategoalsunderotherobjectives,suchasgreengrowth,energysecurity,orjobcreation(tableO.1).Atthesametime,countrieshavedifferentlevelsofpolarizationrelatedtocli-matechange,andthatpolarizationinfluencesthestabilityofinstitutionsandpolicies.Inplaceswithaconsensusonclimateactionandlowlevelsofpolarizationonclimatepolicy,governmentscanbuildstrategicclimateinstitutionstohelpmediateinterestgroupsandbuildconsensus,facilitateandinformstakeholderengagementandalign-ment,fostersupportivecoalitions,andimprovetheoverallinstitutionalcontext.Forexample,theEuropeanUnion’sFit-for-55initiativesupportsthealignmentofmembercountries’policiesandlegislationswiththeEUclimateobjectiveofreducingitsemis-sionsbyatleast55percentby2030,therebyenablingtheprovisionofacoherentand8WithinReachTABLEO.1.TypesofclimategovernanceInterestsIdeasDominantnarrativeonclimatepoliciesEmbeddedMitigation-centricExtentofpoliticalLowUnder-the-radarclimatepoliticsClimateconsensuspoliticspolarizationofOpportunisticclimateinstitutionsStrategicclimateinstitutionsclimatepolicyHigh“Contestedsector”politicsIn-the-crossfirepoliticsUnstablesectoralinstitutionsUnstableclimateinstitutionsSource:BasedonDubashetal.2021.balancedframeworkforclimateaction.Suchinstitutionscancreatestabilityand­predictability,makepolicyreversallesslikely(thoughnotimpossible),andhelpmaintainaconsistentandcost-efficientstrategyovertime,evenifthepoliticalcontextchanges.Climateinstitutionsprematurelyestablishedincontextswithoutclimateconsensusandwhereclimatepoliticsarecontestedcantriggernegativefeedbackeffects,increasingpolarizationandoppositiontotheinstitutionitselfandtoclimateactionmorebroadly.Inthiscontext,governmentscaninsteadstartwithembeddedinstitutionsbylayeringcli-mategovernancefunctionsintoexistinginstitutionalstructures,embeddingclimateintootherpoliticalprioritieswithafocuson“win-wins”orsynergies.InIndia,activebutopportunisticclimateinstitutionshaveemergedacrossmultipleministriesthroughthelayeringofaclimatelensintoexistingbodies.Buildingonexistingpriorities—includingincreasingenergysupplyandsecurity,andcontrollingairpollution—theseinstitutionshavedeveloped,crucially,withoutstrongnationalmitigation-centricstrategicinstitu-tions,suchasaclimatechangeframeworklaw,whichcouldhavetriggeredbacklash(PillaiandDubash2021).Andtheyhavedeliveredresults:Between2014and2022,India’srenewablepowergenerationcapacity,includinghydropower,morethandoubled,withsolarpowergrowingfrom3to63gigawatts,andenergyefficiencyimprovementspre-venting12percentofadditionalannualenergyuseby2018.Climategovernanceframeworksthatreflectsocietalgoalscanbridgetoday’spoliticaleconomywiththefutureClimatelaws,greengrowthstrategies,justtransition,andotherclimategovernanceframe-workscanhelpbridgetoday’spoliticaleconomywithanetzerofuturebyreflectingsocietalgoals,priorities,andimperativesandlinkingthemtoclimateactionandoutcomes.Countrieshaveimplementedthefollowingthreekeytools:1.Climatechangeframeworklegislationcanhelpcountriesdesigntheirowneffectiveandcomprehensivestrategy,settingtargetsandcreatinginstitutionstoengageandcoordi-natestakeholders.Establishedlegalframeworksalsohelpcitizensholdtheirgovern-mentstoaccountfortheiractionsandinactionsandserveasabindingregulatorystructureattimesofchangeinpoliticaladministrationsandpriorities.In2012,Mexicobecamethefirstlargeoil-producingemergingeconomytoadoptclimatelegislationwhenitsparliamentpassedtheGeneralLawonClimateChange,orLeyGeneraldeCambioClimatico.Thislawestablishedanaspirationalgoalofreducingemissionsby50percentby2050.Overview92.Long-termstrategies(LTSs)areacomplementaryapproachtodevelopingaclimate­governanceframework.AsofOctober2023,68countrieshadanLTSundertheUnitedNationsFrameworkConventiononClimateChange,providingarealisticpathwaytowardlong-termobjectivesandidentifyingusefulmilestonesforshorter-termstrate-giesandplans.LTSshavemultiplerolesandfunctionsinclimategovernance,startingwithinformingpoliticaldebatesandchoices.CostaRica’sLTS,thePlanNacionaldeDescarbonización,usesawhole-of-economypathwaywithtargetsandtimelinesforallemittingsectorstocoordinateactionandidentifybarriers(WorldBank2023).WhenanLTSreceiveswidespreadsupportorisembeddedinlaw,itcanbeapowerfulinstrumentformaintainingmomentum,coordinatingactionacrosssectors,andofferingabench-marktomeasureprogressovertime.3.Governmentscaneitherdevelopjusttransitionframeworks,likeinSouthAfrica,orintegratejusttransitionprinciplesintootherinstitutions,suchasclimatestrategiesandframeworklaws.Justtransitionswillvary,dependingonlocalcontextandasdefinedthroughlocalprocesses,theyhavefourcommonguidingprinciples:distributionaljustice(thefairdistributionofcostsandbenefits);proceduraljustice(transparentandinclusiveprocesses);recognitionjustice(recognition,respect,value,andrighttoself-­determinationforallactors);andstructuraljustice(addressingandredressinginstitutionalstructuresthatproduceorperpetuateinjustice).Policysequencing:Balancefeasibilityandlong-termambitionPolicymakersfacehardchoicesbetweenfocusingonlow-hangingfruitorinvestinginmorechallenging—butmoretransformational—strategiesandpolicies.Althoughfocus-ingonlyoneasypoliciesmayensureaction,itisunlikelytotriggerthesystemicchangesneededtoreduceemissionstozero,atleastinatimeframeconsistentwithglobalobjec-tives.Bycontrast,focusingsolelyontransformationalpoliciescanleadtoinactionifpoliticalforcesorlackofcapacitymakesenactment,implementation,orenforcementofclimatepoliciesimpossible.Ideally,governmentsshouldbalancepolicies’short-termpoliticalfeasibilitywiththeircontributiontolong-termobjectives,includingthroughatransformationofthepoliticaleconomycontext.Theycandosobyselectingpoliciesthatarefeasiblebutthatalsobuildgreaterpoliticalsupportandreducethecostsofclimateactionovertime,leveragingreinforcingpolicyfeedbackprocesses,creatinginterestgroupsthatsupportclimateaction,andtargetingtippingpointstoacceleratetransforma-tionalchangetowardnetzero.Becausepolicyandpoliticalprocessesarenotstatic,policypackagesneedtoevolveovertimeinadynamicallyefficientway.Asgovernmentsintroducenewclimatepolicies,theycreateeffectsthatalterthebroaderpoliticaleconomy.Fromapoliticaleconomyperspective,thelowest-costoptionatonepointmayleadtopoliticalbacklashandcreatehighercostsinthefuture,whereasamoreexpensivepolicytodaymightshiftthepoliticaleconomytomakemoreefficientpolicieseasiertoimplementlater.Forinstance,taxingpollutinggasolinecarsmaybeanefficientpolicy,butthemeasureislikelytobackfireifpeoplelackaccesstoalternatives.Investinginpublictransit,subsidizingchargingsta-tions,andincentivizingtheproductionofaffordableandefficientelectricvehicleswillrequirehigherinvestmentspertonofavoidedcarbonemissionsovertheshortterm,butaremorelikelytotriggervirtuousmechanicsofchangeandhelpachievelong-term­climateobjectives.10WithinReachCountriescanprioritizepoliciesthatareeasiertointroduceandbuildfuturepolicy-makingcapacityClimatepolicyadoptionispath-dependentandthereforepartlypredictable.Anewanaly-sisofpastpoliciesusingtheClimatePolicyDatabaseshowsthatpoliciesaremucheasiertointroduceiftheybuildonpriorrelatedinstitutionalcapacityandknow-how(Mealyetal.,forthcoming).Acountrywouldhavedifficultyeffectivelyimplementingvehicleorindus-trialairpollutionstandardswithoutfirsthavingthecapabilitiestomonitorandaudit­vehicleorindustrialperformance.Governmentsneedtoconsidersuchpathdependencyinpolicymakingwhenthinkingaboutpolicypackagedesign,becausechoicestodaywillinfluencepolicyoptionstomorrow.TheClimatePolicySpaceprovidesavisualrepresentationtobetterunderstandhowpoliciesandmeasurescanbuildoneachother(figureO.2).TheClimatePolicySpaceisanetworkinwhichnodesrepresentclimatepolicyinstrumentslinkedaccordingtohowoftentheyarepresenttogetherinacountry.InpanelaoffigureO.2,policiesarecoloredandsizedaccordingtotheirprevalenceacrosscountries(darkerpolicieshavebeenmorecommonlyintroduced);inpanelb,theyarecoloredbykeypolicycluster,fromhighlyprevalentnonbindingtargetsandclimatestrategiesthatarefairlyeasytointro-ducetopolicyinstrumentsthatrelatemostlytotechnologicaldeploymentand­innovation.CountrieswithdifferentincomelevelsareconcentratedindifferentregionsoftheClimatePolicySpace.Panelcshowsthatlow-incomecountries,whichtypicallyhavelessdevelopedlevelsofinstitutionalcapacity,tendtohaveintroducedmostlynonbindingtar-getsorstrategies.Lower-middle-andupper-middle-incomecountriesshowabroaderrangeofpolicies,suggestingthatexpandingpolicy-makingcapacityintobindingtargets,institutionalcreation,andregulatoryandmarket-basedinstrumentsmaygohandinhandwithrisinglevelsofeconomicdevelopment.High-incomecountriesspanavastrangeintheClimatePolicySpacenetwork,withanotablepresenceintechnology-centricpolicies,arguablytheactionsthatrequirethemostcapacity.Combinedwiththeusualanalysisoftheefficacy,costs,andbenefitsofpolicies,theClimatePolicyFeasibilityFrontier(CPFF)canhelpinformpolicychoicesthatrealisti-callyworkwithcountries’policy-makingcapacityandgraduallybuildgreatercapacitytointroducemoreambitioustypesofpolicy.TheCPFFhastwokeydimensions:1.Relativelikelihoodofintroducingapolicyinthenextfiveyears.Basedonhowrelatedanewpolicyistoacountry’sexistingsetofpolicies,thismetricisexpressedinrelativeterms,comparingpolicieswithoutmeasuringtheirabsolutelikelihood.Itmeasurestheeaseofimplementingagivenpolicy,basedonacountry’spriorpolicyexperienceandinferredpolicy-makingcapacities.2.Capacity-buildingpotential.Reflectingtheextenttowhichanewpolicywillincreasethelikelihoodofimplementingfurtherpoliciesinthefuture,thismetricaimstocapturethelearningandcapacitydevelopmentpotentialassociatedwithintroducinganewpolicyandmeasureshowintroducingagivenpolicyisexpectedtochangeacountry’s­policy-makingcapacity,makingiteasiertoimplementotherclimatepolicies.TheCPFFidentifiespoliciesthatmaybeeasiertoimplement,aswellasstep-by-steppathwaystowardadesiredpolicy.FigureO.3mapsTürkiye’sandVietNam’spositionsintheClimatePolicySpace(panelsaandc)andtheirCPFFs(panelsbandd).EachdotintheCPFFsdenotesanewpolicythecountrieshavenotintroducedbeforeandOverview11FIGUREO.2.Theclimatepolicyspacea.TheClimatePolicySpaceRemovaloffossilUserchargesfuelsubsidiesClimatepolicyProcurementUnilateralprevalenceTechnologydeploymentrulescommitmentsHighanddiusion(privatesector)PublicLowDemonstrationprojectvoluntaryschemesTechnologydevelopmentAdviceoraidinFundstosubnationalinplementationgovernmentsVehicleairInformationGreenRetirementpollutionprovisioncertificatespremiumstandardsSectoralR&DGHGemissionreductionstandardsfundingcreditingandosetmechanismIndustrialairGHGemissionallowancespollutionCO2taxesb.KeypolicyclustersstandardsGrantsandsubsidiesMonitoringInfrastructureinvestmentsNetmeteringAuditingCoordinatingbodyLoansforclimatestrategyBuildingcodesandstandardsFeed-intarisEnergyandothertaxesMostlytechnology,innovation,andGridaccessandpriorityTaxreliefmiscellaneousforrenewablesObligationschemesrarepoliciesInstitutionalcreationFormalandlegallybindingGHGreductiontargetStrategicplanningMostlyregulatory,PoliticalandFormalandlegallybindingmarket-basednonbindingrenewableenergytargetinstrumentsandrenewableenablingpoliciesenergytargetPoliticalFormalandNonbindingtargetsandBindingtargetsPoliticalandandlegallyFormalandlegallyandinstitutionalnonbindingbindingenergystrategyGHGreductionnonbindingbindingeciencytargetcreationNonbindingGHGtargetclimateclimatereductiontargetstrategystrategyc.ClimatepolicyprevalenceforcountriesatdierentincomelevelsClimatepolicyprevalenceHighLowLow-incomeLower-middle-incomeUpper-middle-incomeHigh-incomecountriescountriescountriescountriesSource:Mealyetal.,forthcoming.Note:CO2=carbondioxide;GHG=greenhousegas;R&D=researchanddevelopment.12FIGUREO.3.Currentandfeasibleclimatepolicies,TürkiyeandVietNama.Policiestodate,Türkiyeb.CPFF,TürkiyeUserchargesRemovaloffossilProcurementUnilateralfuelsubsidiesrulescommitments(privatesector)TechnologydeploymentPublicanddiusionvoluntaryschemesDemonstrationproject0.011TechnologicalTechnologydevelopment0.010developmentCO2taxes0.009AdviceoraidinFundstosubnational0.008Technologicalinplementationgovernments0.007deploymentanddiusionInformationGreenPolicycapacity-buildingpotentialEmissionstradingprovisioncertificatesGreateremissionsreductionpotentialVehicleairRetirementschemeBindingGHGpollutionR&DpremiumstandardsfundingSectoralGHGemissionreductionreductiontargetstandardscreditingandosetmechanismIndustrialairGHGemissionallowancesBindingclimatepollutionstrategyCO2taxesstandardsGrantsandsubsidies0.006MonitoringInfrastructureinvestmentsNetmeteringAuditingCoordinatingbodyLoans0.005RetirementforclimatestrategyBuildingcodesandstandards0.004premiums0.003Feed-intarisEnergyandothertaxesMorefeasiblepoliciesGridaccessandpriorityTaxrelief051015202530forrenewablesObligationschemesRelativelikelihoodofintroducingpolicyInstitutionalcreationFormalandlegallybindinginnext5years(%)GHGreductiontargetStrategicplanningFormalandlegallybindingrenewableenergytargetPoliticalandnonbindingStatisticallysignificantemissionreductionpotentialrenewableenergytargetNotsignificantornotenoughdatatodetermineemissionreductionpotentialPoliticalandPoliticalFormalandnonbindingGHGreductionandlegallyFormalandlegallybindingenergytargetnonbindingbindingeciencytargetWithinReachclimateclimatestrategystrategyAtleastonepolicyNopolicyPoliciesthatmaybeeasiesttoimplementfortherespectivecountry(Continued)FIGUREO.3.Currentandfeasibleclimatepolicies,TürkiyeandVietNam(continued)d.CPFF,VietNamOverviewc.Policiestodate,VietNamRemovaloffossilUserchargesfuelsubsidiesProcurementUnilateralTechnologydeploymentrulescommitmentsanddiusion(privatesector)PublicDemonstrationprojectvoluntaryschemesCO2taxesTechnologydevelopment0.0120.011AdviceoraidinFundstosubnational0.010Policycapacity-buildingpotentialinplementationgovernments0.009Greateremissionsreductionpotential0.008VehicleairInformationGreenRetirement0.007InfrastructureInstitutionalpollutionprovisioncertificatespremium0.006investmentscreationstandards0.005SectoralR&DGHGemissionreduction0.004standardsfundingcreditingandosetmechanismIndustrialairGHGemissionallowancespollutionCO2taxesstandardsGrantsandsubsidiesBindingGHGMonitoringreductiontargetNetmeteringInfrastructureinvestmentsLoansAuditingBuildingcodesandstandardsCoordinatingbodyEnergyandothertaxesforclimatestrategyTaxreliefFeed-intarisObligationschemesGridaccessandpriorityFormalandlegallybindingforrenewablesGHGreductiontargetInstitutionalcreationStrategicMorefeasiblepoliciesplanning0510152025303540PoliticalandFormalandlegallybindingnonbindingrenewableenergytargetRelativelikelihoodofintroducingpolicyrenewableinnext5years(%)energytargetStatisticallysignificantemissionreductionpotentialPoliticalandPoliticalFormalandNotsignificantornotenoughdatatodeterminenonbindingemissionreductionpotentialGHGreductionandlegallyFormalandlegallybindingenergytargetnonbindingbindingeciencytargetclimateclimatestrategystrategyAtleastonepolicyNopolicyPoliciesthatmaybeeasiesttoimplementfortherespectivecountrySource:Mealyetal.,forthcoming.Note:CO2=carbondioxide;CPFF=ClimatePolicyFeasibilityFrontier;GHG=greenhousegas;R&D=researchanddevelopment.1314WithinReachcorrespondstopoliciescoloredingrayintheclimatepolicyspace.ForTürkiye,policiesthatappeartheeasiesttointroduceinthenextfiveyearsincludealegallybindingclimatestrategyandabindingemissionsreductiontarget,whichwouldhavetobeincludedinalaw,suchasaclimatechangeframeworklaw.2ItsCPFFalsoidentifiesanemissionstrad-ingschemeandacarbontaxaspotentialnextsteps.Thegovernmenthasrecentlyannounceditsintentiontodeveloptheformer,confirmingitasahighlyfeasibleinterven-tionforthecountry.TheCPFFemphasizestheimportanceofcountrycontextandidentifiesdifferentrec-ommendationsacrosscountries.ForVietNam,whichhasadifferentsetofinstitutionalcapabilitiesfromthatinTürkiye,themostfeasibleandlikelypoliciesincludeinstitu-tionalcreationandbindinggreenhousegasreductiontargets.Policiestoboostclimate-­relatedinfrastructureinvestmentscouldhelpVietNambuildfurthercapacity;althoughCO2taxesarelikelytobelessfeasibleintheshortterm,otherpoliciescanhelppavethewaytowardthisgoal.GovernmentscanleveragereinforcingpolicyfeedbackprocessesandtargettippingpointsStrategicallyselectingandsequencingfeasiblepoliciestobuildgreaterinstitutional­capacityandpoliticalsupportdoesnotmeanclimateprogresswillbeslow.Bytakingadvantageofthedynamismofsocio-technical-politicalsystems,governmentscanbuildmomentumtoacceleratetransformationalclimateaction.Introducingspecificpoliciescantransformtheassociatedpolitics,whichinturnshapesthefuturespaceofpolicypossibilities.Policyfeedbackrelatestotheeffectsthatpoliciescanhaveineitherreinforcingorunderminingthedirectionorpaceoffuturepolicymaking.Theadage“newpolicycreatesnewpolitics”capturesthewayeachclimatepolicyorinterventionaffectsthepoliticaleconomy­landscape,creatingnewincentives,spreadingnewideas,supportingnewcoalitions,andreforminginstitutions.Somepoliciescandrivepositive,reinforcingfeedbackeffects,leadingtofasterclimateprogressandmoreambitiousaction.Forexample,China’snationalsustainableenergypolicywassequencedtoreduceresistancefromexistinginstitutionsandincreasesup-portbyfosteringwinningcoalitions,whilegraduallyincreasingpolicystringencyandreducingcosts(LiandTaeihagh2020).First,thegovernmentprovidedsupportforrenewableenergy,buildinginterestgroupsinthesetechnologies,beforegraduallyratch-etinguppolicystringency.Oncerenewableenergybecamecost-competitive,thegovern-mentstartedreducingfeed-intariffsandothersubsidies.Governmentscanalsoaimtostrategicallytargettippingpointsinsocial,technological,andpoliticaldomains,whichcandriverapidandsystemicchange.Atippingpointreferstononlinearchangeinacomplexsystem,intermsofthespeedornatureofchange.Theprimarydriverofatippingpointisthedominanceofpositiveovernegativefeedbackeffects,whichreinforcechange.Severaltypesoftippingpointarerelevantforaccelerat-ingprogresstowardnetzero:•Socialtippingpoints:Rapidself-reinforcingshiftsinattitudes,beliefs,behavior,andvaluesinsociety•Technologicaltippingpoints:Significantshiftsintechnologymaturity,performance,costs,oraccessibility•Policytippingpoints:Rapidshiftsinsupportforandimplementationofaparticularpolicyorsetofpolicies.Overview15SharpeandLenton(2021)explorerelativetechnologycosttippingpoints,whenlow-carbontechnology(renewableenergyinthepowersector;electricvehiclesinthetransportationsector)becomescheaperthanhigh-emittingtechnology(coalandgasinthepowersector;internalcombustionenginesinthetransportationsector),firstwith—andthenwithout—policysupport.Theyshowhowthesetippingpointsleadtochangesnotonlyintechnologysharesbutalsoinclimatepolitics,enablingmoreambitiousandfasterpolicychange.Triggeringonetippingpointcanincreasethelikelihoodoftrigger-inganother,leadingtoavirtuouscycleofincreasinglyrapidprogressondecarbonization.Policydesign:FocusonpeopleandmanagethedistributionaleffectsofclimatepoliciesWhobenefits,wholoses,andwhopaysarenottheonlydriversofpoliticaleconomychal-lenges,buttheyremainkey.Distributionalconflicthastwoaspects.Peoplemightmobilizeagainstapolicyiftheythinkitmaynegativelyaffectthem(thisincludespowerfulincum-bentsorgroups)oriftheythinkthepolicyhasunfairorunjustimpacts,forthemorforsocietyatlarge.Toreducetheriskofdistributionalconflict,policymakerscandothefollowing:•Reducedistributionaleffectswithpoliciesthatremainasneutralaspossibleandavoiddisproportionalimpactsonsomecategories.Ifaclimatepolicycreatesincentivestoreduceemissions,however,itishardtoavoidconcentratedimpactsoncarbon-­intensivesectorsoractivities,suchascoalmining.•Compensatepeopleorgroupsthatarenegativelyaffected,eitherdirectlyorindirectly.Forexample,Indonesiaincreaseditssocialprotectiontransferstopoorhouseholdsduringitsfossilfuelsubsidyreform.Countriessometimestargettransferstowardpowerfulgroupsthatarenegativelyaffected,evenwithoutanethicaljustificationtodoso,becausethesegroupshavedefactovetopower.•Improvepolicylegitimacybyadoptinginclusive,transparentprocesses.Peoplewillmoreeasilyacceptpolicieswithsignificantimpactswhentheybelievetheprocessthatledtothedesignandimplementationofthosepoliciesislegitimateandjust(Barronetal.2023).Climatepoliciesaffectdifferentgroupsthroughmultiple,intersectingchannels;anddistributionalimpactsarecomplexandheterogenous,crossingincomegroups,sectors,occupations,locations,genders,ethnicities,orothercharacteristics.Analyzingconsump-tionbyincomeclassesdoesnotcapturealldistributionalissues,somultidimensionalanalysesareimportantfordesigningfairpolicies.Theseanalysesarealsoimportantformanagingthepoliticaleconomy,becauseorganizedoppositiontoapolicyismorelikelybyeconomicsector,geographicalarea,orethnicgroupthanbyincomeclass.ConsumptioneffectsBecauseofdifferentconsumptionpatterns,theimpactsofcarbonpricingonconsumptionvaryacrossincomelevels,butdifferenceswithinincomegroupsarelargerthanthoseacrossincomegroups(Dorbandetal.2019;Dorbandetal.2022;Douenne2020;Feindtetal.2021;Missbach,Steckel,andVogt-Schilb2022).Incountrieswherepoorerhouseholdshavelim-itedaccesstoenergy-consumingassetsandservices—suchascars,airconditioning,orgasforheatingandcooking—thesehouseholdsarelessexposedthanricherhouseholdstoan16WithinReachincreaseinfossilfuelprices.Thus,carbonpricingtendstohavealowerandneutralimpactinlow-incomecountriesandalargerandprogressiveeffectinlower-middle-incomecoun-trieswherepoorhouseholdshavelower-than-averageenergyexpenditure(figureO.4).Amongupper-middle-incomecountries,theevidenceismoremixedandvarieswithlevelsofaccesstopublictransportationandelectricityandotherlower-carbonalternatives.However,thenear-poorandlower-middleclasses,whohaveenoughresourcestoconsumefossilfuelsbutarevulnerabletosmallpricechanges,appearparticularlyvulnerable.Thesefindingsmay,however,underestimatethevulnerabilityofpoorpeople.Becausepoorpeopletendtospendalargefractionoftheirincomeonfood,theycanbeheavilyaffectedbyclimatepoliciesthattranslateintohigherfoodprices.And,althoughcarbonpricingsystemsrarelycoveremissionsfromnonenergysources,ill-designedclimatepol-iciesthatnegativelyaffectagricultureandfoodsystems—forexample,byreducingaccesstokeyinputs—couldhavelargeimpactsonfoodprices,andthereforeonpoverty.Itisalsoimportanttotakeadynamicview:evenwherehigherenergypricesdonotaffectpoorpeoplenow,suchpoliciescouldslowdownprogresstowarduniversalaccesstomodernenergy,cleancooking,andfoodsecurity.Forexample,anincreaseinfossilfuelpricesmaynotdirectlyaffecthouseholdsthatcookwithbiomass,butthechangeinpricemaydelaytheabilityofthesehouseholdstoshifttomoderncookingtechniquesiftheydonothaveaccesstoaffordableelectricityandelectriccookstoves(GreveandLay2023).FIGUREO.4.Illustrationoftheconsumptionimpactsofa(noncompensated)increaseinfuelprices,inasubsetofcountries,byincomelevel0Medianconsumptionincidence(%consumption)−0.5−1.0−1.5−2.0−2.512345678910123456789101234567891012345678910Low-incomeLower-middle-Upper-middle-High-incomecountriesincomecountriesincomecountriescountriesIncomedecileSource:Dorband,forthcoming,usingtheClimatePolicyAssessmentTooldevelopedbytheInternationalMonetaryFundandtheWorldBanktoestimatetheimpactofcarbonpricing(https://www.worldbank.org/en/topic​/climatechange/brief/climate-policy-assessment-tool).Note:Theseillustrativesimulations,performedin74countriesforthisbook,assumetheintroductionofataxofUS$60pertonofcarbondioxideandtheremovalofenergyandfossilfuelsubsidies,withnorecyclingoftherevenuesorsavings.Theseassumptionsarenotmeanttoberealisticpolicypackagesbuttoillustratethevulnerabilityofhouseholdstochangesinfuelprices.Thefigureshowsmedianimpactperdecileandthenpercountry;becausesomehouseholdsareveryheavilyaffected,averageimpactsarelargerthanmedianimpacts.Overview17EmploymenteffectsAmpleevidencedemonstratesthatwell-designedclimatepoliciescanbenetjobcreators(Godinho2022;MetcalfandStock2020;WorldBankGroup2022).Butsuchpositiveemploymentoutcomesarenotautomatic;rather,theydependonthedesignofclimateandothersocioeconomicpolicies.Jobcreationcanbedrivenbypolicydesign,say,when­governmentsrecyclerevenuesfromacarbonpricingschemeintotheeconomythroughinfrastructureinvestmentsortaxbreaks.Itisalsolinkedtothetransitionitself—forexam-ple,whenclimate-smartagriculturepracticesorrenewableenergysolutionsaremorejob-­intensivethanexistingpracticesandtechnologies.Andjobcreationinsunrisesectors,3suchasrenewablepowerorelectricvehicleglobalvaluechains,willdependontheinvest-mentclimate,availableinfrastructure,atrainedlaborforce,andappropriatetax­policiesandtraderegulations.Tounderstandtheeffectofclimateanddevelopmentpoliciesonlaborandskills,anewanalysisforthisbookexplorestheimplicationsofanillustrativeclimatepolicypackagecombiningcarbonpricingwithcashtransfersandinvestmentsininfrastructureand­publicgoods(Dorband,forthcoming).Despitemostlypositiveneteffects,sectoralreallo-cationsandpolicy-inducedstructuralchangescanbesizeable,particularlyinmore­carbon-intensiveeconomies.Jobstendtobereallocatedratherthanlost,butoveralljoblossesmaybeaslargeas1–2percentandgainsamountto3–4percentoftotalbaselineemployment.And,althoughcarbon-intensiveeconomiesmaynotexperiencelargerneteffects,theydoundergolargerstructuralchange,withmorereshufflingofjobs.SpatialeffectsDistributionaleffectscanemerge,evenwithinurbanareas.Climatepoliciesthatincreasethepriceofcertaintransportationoptionscaninducechangesintransportationbehavioranddecisionsaboutwherepeopleliveandwork.Newevidenceforthisbookshowsalargeheterogeneityinthefinalimpacts,withabigroleforadjustmentsthroughhousingandlabormarkets.Forexample,fuelpriceincreasesdonothaveregressiveimpactsinKinshasa,DemocraticRepublicofCongo(mapO.1),becausethepoorestpeoplearealreadypricedoutof—andexcludedfrom—energy-intensiveservicesorhavelimitedaccesstoareaswithahighconcentrationofjobs(Nelletal.2023).Asaresult,increasedfuelpricesaffectpoorerhouseholdslessthanslightlyricherhouseholds,whicharemorelikelytoloseaccesstoservicesorareas.Combinedwiththelowervoiceandinfluenceofthepooresthouseholds,thishighervulnerabilityofnear-poorhouseholdsmayexplainwhyprotectingthepoorestalonehasfailedtoensureacceptabilityofclimateorenergypolicies,ashappenedinEcuador.OtherdimensionsofexclusionandinjusticeThemostvulnerablemembersofsocietytendtobethosewhoexperiencesocialexclusionandstructuralinjusticebasedonethnicity,gender,age,religion,andotherfactors.Exanteassessmentsofconsumption,employment,income,andspatialdistributionaleffectsarelessabletopredicttheseoutcomes,whichlargelydependonpoliticaleconomyfactors,suchasinstitutionaldiscrimination,culture,ideology,andunequalpowerdynamics(Pengetal.2021).Expostassessmentsofthesocialeffectsofclimatepoliciesthereforerepresentanimportantareaofanalysisthatcanhelppolicymakersbettermanagetheintersectionofdistributionaleffectsandsocialinequality(seeboxO.2forgenderimplicationsofclimatepoliciesintheagriculturesector).18WithinReachMAPO.1.LossesinaccessibilityofjobsinKinshasa,DemocraticRepublicofCongo,inascenariowitha100percentfuelpriceincrease,byareaandincomedecileKeytransitroutes0Lossinaverageaccessibility(%ofjobs)–1Lossinaverageaccessibility(%ofjobs)–2–3–4–5–6–71Binza6Kusenso11MontNgafula10km2Bombala7Limete12Mpasa3BonMarché8Masina13Ndjili4Gombe9Matete14Selembao5Kasa-Vubu10Mikala15Socimat0–1–2–3–4–5–6–712345678910IncomedecileSource:Nelletal.2023.Overview19BOXO.2GenderandclimatemitigationpoliciesinagricultureDespitewomen’simportantcontributiontoagriculture,persistinggenderinequalitiesmeantheytendtohavelessaccesstoresources,includingland,inputs,financialservices,education,anddecentemploymentopportunities(Ermanetal.2021).Genderrolesinagricultureandstructuraldifferenceshaveimplicationsnotonlyforhowclimatemitigationpoliciesaffectsocialequityoutcomesbutalsoforhowdifferentgroupsadoptthesepoliciesandwhetherthepoliciesfacilitateajusttransitionforall.Mitigationpoliciesandinstrumentsthatdonotrecognizegenderdynamicsandrelatedtransitionalchallengescouldexacerbateexistinginequalities.Forexample,astudyinIndiashowsthatshiftingriceproductionfromconventionaltodirect-seededormachine-transplantedmethodscouldaffectwomenmorethanmen(Gartaulaetal.2020).Makingmitigationpoliciesgender-responsivealsoposesachallengebecausethosewhocanbenefitoftenlackpoliticalvoice.Evidenceshowsthislackofpower,voice,andrecognitionexistsfromhouseholdandlocallevels(Larsonetal.2015)tonationalandinternationaldecision-makingandgovernanceframeworks(Gautametal.2022).Recognizingwomen’sknowledgeofandroleinsustainablepracticesandcreatingmeaningfulopportunitiesforthemindecision-makingcanincreasemitigationeffectivenessandreducegendergaps.Undertakinggenderanalysisinmitigationpoliciesandprograms—includingfinancingmechanismsandtechnologicaldevelopment—canhelpensuredistributiveandproceduraljustice.Source:Kabir,DeVriesRobbe,andGodinho,forthcoming.GovernmentscanusecomplementarypoliciestoreducedistributionaleffectsComplementarypoliciescanensurethatclimatepoliciesareaffordableanddonothaveanegativeeffectonpoorandvulnerablepopulations.Forexample,recyclingjustafractionofcarbonpricingrevenuesorrepurposingsubsidiesthroughdirecttransfercanusuallymakereformspro-poor.OnestudyofLatinAmericancountries,forexample,estimatesthatrecy-clingabout20percentofsavingsfromsubsidyreformswouldfullyalleviateconsumptionimpactsonthebottom40percentoftheincomedistribution(Fengetal.2018).Butcompensatingpeopleishard:itrequiresappropriatesystemsanddeliverymecha-nisms,includingbroad,strong,andflexiblesocialprotectionsystems.Theheterogeneityofimpactsmakesitdifficulttotargettransferstosupportthemostaffectedandvulnera-blehouseholds.InChile,Colombia,Ecuador,andUruguay,anestimated3to4percentofallhouseholdsarenotcoveredbysocialtransfers,eventhoughtheyarebothamongthepoorest20percentandamongthe20percentmostaffectedbyafuelpricechange(Missbach,Steckel,andVogt-Schilb2022).Spatialeffectsandincomeandemploymenttransitionsareevenhardertomanageandrequireactivelabormarketpoliciesandpro-activesectoralandregionaltransitionstrategiesandsupport.Importantly,lossofemploy-mentgoesbeyondasimplelossofincomeandcanaffectpeople’sstatus,culture,andfamilyorcommunitylife.Aswellasfosteringwinners,greenindustrialpolicycanhelpreduceimpactsforpotentialpolicylosersandsmooththetransition(CullenwardandVictor2020;Hallegatte,Fay,andVogt-Schilb2013).Whenbehaviorsareweaklyresponsivetoprices,whenfirmsandhouseholdslacksubstitutionoptionstoadjusttoachangeinfossilfuelprices,orwhenpricescannotbechangedforpoliticalreasons,implementinggreenindustrialpol-iciesfirstcantransformthecapitalstockorcreatesubstitutionoptionswhileminimizing20WithinReachshort-termsocialcosts(Rozenberg,Vogt-Schilb,andHallegatte2020).Ratherthanasubstituteforotherpolicies,suchascarbonpricing,greenindustrialpoliciescanthere-foreappearasacomplementary,orpreparatorystep.And,whenthemainpoliticalecon-omyobstacleisthepoliticaleconomyofconcentratedimpacts,governmentscanusegreenindustrialpoliciestosupportsunsetindustriestofacilitatetheirdownscalingoradjustment.Toreapthefullbenefitsofgreenindustrialpolicies,however,countriesneedtocarefullymanagesomepoliticaleconomyrisks,includingcorruption,policycapture,anddistributionalconflicts.Somecommunitiesorregionsspecializeheavilyinactivitieswithhighcarbonintensity,suchascoalmining,andneedaplace-basedapproachtoensureajustandacceptabletransition.TheexperiencesofEuropeancoalregions,whichlosttheircoal-relatedrevenuesandemploymentdecadesago,illustrateshowwell-managedcoaltransitionscanminimizelong-termnegativeeffects.Butmanagingsuchmajoreconomictransitionstakestime,andgovernmentsneedtoconsidereffectsonlabor;social,human,andeconomicdevelopment;localownership,participation,andmobi-lization;stakeholderinclusion;andinclusiveness.Ratherthanadoptingsimplecom-pensationmechanismsthatfocusonlyonemploymentimpacts,successfultransitionshavetargetedsocial,human,andeconomicdevelopmentinterventionsandhavehadstronglocalownershipandengagement.TheDutch10-yearcoalphase-out,whichincludedsubstantialsupportforworkerswholosttheirjobsandwassupportedbythetradeunion,showsthatawell-plannedtransitionneednothaveseverelong-termadverseimpacts.Widelyusedtosupportthetransitionofdistressedcommunities,place-basedpoliciescanincludearangeofmeasures,fromtaxincentivesandexpenditurestomanufacturingextensionandtrainingprograms.Althoughitisgenerallypreferabletoinvestinpeopleratherthanplaces(WorldBank2009),governmentscanjustifyplace-basedinterven-tionsthatreducebarriersto—orthecostsof—migration,increasespatialequity,orhelpaffectedregionsfulfilltheireconomicpotential(Bartik2020).Theresearchonthecostsandbenefitsofplace-basedpoliciessuggeststhatresultsdependonscaleanddesign(Grover,Lall,andMaloney2022).Butexperienceshowsthattheseinterventionsneedtoincludemultipleinstruments,suchastransportationinvestmentstoimproveconnec-tions,fiscalincentivesanddirectserviceprovisions,andapackageofmeasurestofosterskills,enterprisedevelopment,andinnovation.Considerableevidencedemonstratesthattaxincentivesalonearenotenoughforapolicytosucceed:onestudyacross77countriesfindsthatinfrastructureandtradefacilitationhaveasignificantpositiveimpactandthattaxandotherfinancialincentivesarelessimportant(Farole2011).Policyprocess:UsepublicengagementandcommunicationtoimprovepoliciesandtheirlegitimacyEngagementhelpspolicymakersdesigngoodpoliciesandlevelstheinfluenceplayingfield,preventingcapturebythemostinfluentialinterestgroups.Differentgroupscanvoicetheirprioritiesandvaluesthroughcivicengagementprocesses,givingpolicymakerscrucialinformationrelatedtoobjectivesetting,instrumentchoice,andframing.Civicengagementcanbringdifferentcommunities’concernstothesurface,allowingpolicymakerstoiden-tifywherecomplementarymeasuresareneeded.Includingawiderarrayofactorsinpolicyprocessescanalsospurpolicyinnovation,allowgovernmentstotestreactionstopolicyoptionsaheadofimplementation,andboostprocesslegitimacy(boxO.3).Overview21BOXO.3ProcesslegitimacydependsonhowdecisionsaremadeProcesslegitimacy—oneoffourcriticaldimensionsofsocialsustainabilityalongsidesocialcohesion,inclusion,andresilience—isabouthowpolicymakingandimplementationhappen,howconsistenttheyarewithagivencontext,andhowlegitimatemostactorsperceivethemtobe.Specifically,ithastodowiththeextenttowhichactorsinsocietyacceptwhohasauthority,whatgoalsareformulated,andhowdecisionsaremadeandimplemented.Processlegitimacyisstrongwhenactorsbelievethatdecisionsaremadebycredibleauthoritiesinwaysthatalignwiththeirvaluesandreflectacceptedrulesandnormsrelatingtodecision-making,includingmeasuresthatsupportconflictresolutionandcompromises.Transparentandparticipatoryprocesses,anddesirableoracceptableoutcomes,canenhanceprocesslegitimacy.Includingandengagingpotentialpolicylosersisparticularlyimportantwhenpoliciesmightincurcosts.Source:Barronetal.2023.FIGUREO.5.Shareofpopulationthatreportedbeing“satisfied”or“verysatisfied”withElSalvador’s2011subsidyreform,2011–13706560Percent555045403530May2011Aug2011May2012Aug2012Sep2013Jan2011Source:Calvo-Gonzalez,Cunha,andTrezzi2015.Publicperceptioncanbeanimportantdriverofoppositiontoclimatepolicies,evenwhenpoliciesfollowasoundandprogressivedesign.Thisisbecause,withoutpublictrust,evenwell-designed,well-intentionedpromisesofcompensationandredistributioncanlackcredibility.AlthoughElSalvador’s2011gassubsidyreformbenefitedhouseholdsinallbutthetoptwodecilesoftheincomedistribution,itwasunpopular,especiallyamongthelower-incomegroupsthatwouldbenefitmost,inlargepartbecauseofmisin-formationandmistrustofthegovernment’sabilitytoimplementthepolicy.Perceptionsimprovedgradually—andsignificantly—withtheshareofpeopleexpressingsupportforthepolicyincreasingfrom30percentto60percentoverayearandahalf(figureO.5).Similarly,empiricalevidencefromIndonesiashowsadirectlinkbetweenoppositiontofossilfuelsubsidyreformandlocalperceptionsofcorruption(Kyle2018).Whencorrup-tionlevelsareperceivedtobelow,poorhouseholdsaremorethantwo-and-a-halftimesmorelikelytosupportthantoopposefuelsubsidyreform.22WithinReachImportanttoolsincludepolicycommunicationandawarenessraising,whichequipdifferentactorswiththeinformationneededtoadvocatefororappropriatelyrespondtopolicymeasures.Transparencyhelpspreventandallayconcernsaboutpolicycapture,andsuchtrustisessentialforprocesslegitimacy.Forexample,whenNigeriareformedfossilfuelsubsidiesin2012,itsfailuretoexplaintheintendeduseofabouthalfofthesubsidysavingsraisedsuspicionsofcorruption,furtherfuelingantigovernmentprotests(AlleyneandHussain2013).Indonesia’ssuccessful2005subsidyreform,bycontrast,includedawide-scale,well-preparedcommunicationcampaignthathighlightedhowsavingswouldberecycledthroughacashtransfertocompensatefortheimpactsofreforms.Awayforward:EnactingclimateactionForpolicymakers,introducingthepoliciesneededtoachieveclimateobjectiveswillbechallengingandwillrequiretime,resources,andpoliticalcapital.Unsurprisingly,govern-mentstendtorelymoreonclimatepoliciesthatuse“pull”(subsidiesandincentives)andnonmarketinstrumentsbecausetheytendtofacelessoppositionthan“push”(taxesandfines)andmarketinstruments(DrewsandvandenBergh2016).The2022USInflationReductionAct,theworld’slargestfiscalpackageforclimatemitigationtodate,comprisesonly“pull”instruments,suchaspublicinvestmentandtaxcreditsforcleanenergy,fuelandvehicles,conservation,andreducingairpollution.Butnotallclimatereformswillbepopularoreasy.Achievinglong-termgoalswillmeanchangingandnavigatingthepoliticaleconomy.Moredisruptiveortransformativepolicies—whichcanoftenalsoimproveefficiency,capacity,andproductivityanddeliverbenefitsfordevelopment—requiregovernmentsandpolicymakerstotriggershiftsinactors’ideas,interests,orinfluencetogenerateenoughsupport.Thiscouldmeanestablishingtherightgovernanceframework,includingcivicengagementplatforms,toprovideinformationthathelpsactors(re)formideasaboutclimatechangeand(re)considertheirinterests,andallowsthemtoinfluencetheclimatepolicyagenda.Atthestrategiclevel,italsomeansselectingpoliciesthatnotonlyarebasedoneconomiccostsandbenefitsbutalsoinfluencethepoliticaleconomyandbuildconsensusandmomentumtowardsharedobjectives.Atthepolicylevel,itmeanstryingtomakemoredifficultpolicyinstrumentsacceptableorevenattractiveforkeystakeholdersbyengagingwiththosestakeholdersearlyon,reflectingtheirinterestsinpolicydesign,andclearlycommunicatingwiththem.Theurgencyoftheclimatechangechallengemeansthatwecannotaffordtowaitfortherightgovernanceandpoliticaleconomycontextbeforestartingtoimplementcli-matepolicies.Instead,institutionalchangesandcapacitybuildingwillhavetohappeninparallelwiththeimplementationofthebestpolicies,chosenamongthosethatarefeasibleandcancreatemomentumandfacilitatefurtheractioninthefuture.Thispro-cesswillhavetobesupportedbyacombinationofcomplementaryp­olicies—toprotectthemostvulnerableandtopreventorcompensateforconcentratedimpactsonsectorsorregions—andstrongcommunicationandengagementprocessestomakesurepolicydesignisinformedbystakeholdersandthatstakeholdersunderstandandacceptpolicychoices.Onlysuchanapproach,builtforandinformedbythepoliticaleconomy,canunlockclimatepolicyprogressandcreatepathwaystomorerapidtransformativechange.Overview23Notes1.NewClimateInstitute,ClimatePolicyDatabase,https://climatepolicydatabase.org.2.Targetsorstrategiesareconsidered“binding”whenindividualsandinstitutionsinthepublicandprivatesectorsmustcomplywiththem,forinstance,becausethetargetsorstrategiesarepartofnationallegislation.3.Sunrisesectorsorindustriesareexpectedtogrowinproductivityandcompetitivenessovertimeandbenefitfromclimateandindustrialpolicies;sunsetsectorsorindustriesarethoseindecline.ReferencesAlleyne,T.S.C.,andM.Hussain.2013.EnergySubsidyReforminSub-SaharanAfrica:ExperiencesandLessons.DepartmentalPaperNo.2013/002.Washington,DC: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,S.Atmadja,I.A.P.Resosudarmo,P.Cronkleton,M.Cromberg,W.Sunderlin,A.Awono,andG.Selaya.2015.“TheRoleofWomeninEarlyREDD+Implementation:LessonsforFutureEngagement.”InternationalForestryReview17(1):43–65.Li,L.,andA.Taeihagh.2020.“AnIn-DepthAnalysisoftheEvolutionofthePolicyMixfortheSustainableEnergyTransitioninChinafrom1981to2020.”AppliedEnergy263:114611.Mealy,P.,M.Ganslmeier,C.Godhino,andS.Hallegatte.Forthcoming.“ClimatePolicyFeasibilityFrontiers:AToolforRealisticandStrategicClimatePolicyMaking.”Backgroundpaperforthisreport.Metcalf,G.E.,andJ.H.Stock.2020.“MeasuringtheMacroeconomicImpactofCarbonTaxes.”AEAPapersandProceedings110:101–106.https://doi.org/10.1257/pandp.20201081.Missbach,L.,J.C.Steckel,andA.Vogt-Schilb.2022.“CashTransfersintheContextofCarbonPricingReformsinLatinAmericaandtheCaribbean.”IDBWorkingPaperSeries,Inter-AmericanDevelopmentBank,Washington,DC.http://dx.doi.org/10.18235/0004568.Nell,A.,D.Herszenhut,C.Knudsen,S.Nakamura,M.Saraiva,andP.Avner.2023.“CarbonPricingandTransitAccessibilitytoJobs:ImpactsonInequalityinRiodeJaneiroandKinshasa.”PolicyResearchWorkingPaper10341,WorldBank,Washington,DC.https://doi.org/10.1596​/1813-9450-10341.NewClimateInstitute.2022.ClimateActionTracker:WarmingProjectionsGlobalUpdate(November).Cologne:NewClimateInstitute.https://climateactiontracker.org/documents/1094/CAT_2022-11-10​_GlobalUpdate_COP27.pdf.Peng,W.,G.Iyer,V.Bosetti,V.Chaturvedi,J.Edmonds,A.A.Fawcett,S.Hallegatte,D.G.Victor,D.vanVuuren,andJ.Weyant.2021.“ClimatePolicyModelsNeedtoGetRealaboutPeople—Here’sHow.”Nature594:174–76.https://doi.org/10.1038/d41586-021-01500-2.Overview25Persson,T.,andG.Tabellini.2002.“PoliticalEconomicsandPublicFinance.”InHandbookofPublicEconomics,”Volume3,editedbyA.J.AuerbachandM.Feldstein,1549–659.Elsevier.https://doi​.org/10.1016/S1573-4420(02)80028-3.Pillai,V.A.,andN.K.Dubash.2021.“TheLimitsofOpportunism:TheUnevenEmergenceofClimateInstitutionsinIndia.”EnvironmentalPolitics30(sup1):93–117.https://doi.org/10.1080/09644016​.2021.1933800.Rozenberg,J.,A.Vogt-Schilb,andS.Hallegatte.2020.“InstrumentChoiceandStrandedAssetsintheTransitiontoCleanCapital.”JournalofEnvironmentalEconomicsandManagement100(2020):102183.Sharpe,S.,andT.M.Lenton.2021.“Upward-ScalingTippingCascadestoMeetClimateGoals:PlausibleGroundsforHope.”ClimatePolicy21(4):421–33.https://doi.org/10.1080/14693062​.2020.1870097.UNFCCC(UnitedNationsFrameworkConventiononClimateChange).2023.“TechnicalDialogueoftheFirstGlobalStocktake.SynthesisReportbytheCo-facilitatorsontheTechnicalDialogue.”ReportpreparedfortheUNClimateChangeConference,UnitedArabEmiratesNovember/December2023.https://unfccc.int/documents/631600.WorldBank.2009.WorldDevelopmentReport2009:ReshapingEconomicGeography.Washington,DC:WorldBank.https://openknowledge.worldbank.org/entities/publication/58557d74-baf0-5f97​-a255-00482909810a.WorldBank.2023.RealityCheck:Lessonsfrom25PoliciesAdvancingaLow-CarbonFuture.ClimateChangeandDevelopmentSeries.Washington,DC:WorldBank.http://hdl.handle.net/10986/40262.WorldBankGroup.2022.ClimateandDevelopment:AnAgendaforAction—EmergingInsightsfromWorldBankGroup2021–22CountryClimateandDevelopmentReports.Washington,DC:WorldBank.http://hdl.handle.net/10986/38220.1PoliticalEconomyAMajorBarriertoAligningClimatePolicieswithCommitmentsIn2015,195governmentsagreedtostrengthentheglobalresponsetotheurgentthreatofclimatechangebysettingclearclimategoalsinthelandmarkParisAgreement.Theyagreedtoholdglobalwarmingatwellbelow2°Cabovepreindustriallevelsandpursueeffortstolimititto1.5°C.Thesubsequent2021GlasgowPactaffirmstheneedtoreduceglobalcarbondioxide(CO2)emissionstonetzerobymidcenturytolimitwarmingto1.5°C.Netzeromeansreducingemissionsasclosetozeroaspossibleandcompensatingfortheremainderwithcarbonremovalsthroughnaturalcarbonsinksandtechnologicalsolutions.Stayingwithintheselimitsshouldstabilizetheclimateandkeepadaptationneedswithinmanageablebounds,safeguardingsustainabledevelopmentandpovertyeradicationefforts.AsofMarch2023,172countrieshadsubmittedaneworupdatednationallydeter-minedcontributioninlinewiththeParisAgreement’sratchetingmechanismtobetteraligncountrycommitmentswithglobalgoals(seebox1.1laterinthischapter).Inaddi-tion,morethan70countriescovering76percentofglobalemissionshavepledgedtoreachnetzero,includingmostmajorpolluters,suchasChina,theEuropeanUnion,andtheUnitedStates.Onthewhole,countries’emissionsreductioncommitmentsareconvergingonParisAgreementtargets.AccordingtotheClimateActionTracker,anemissionspath-waybasedonnationallydeterminedcontributiontargetsalonewouldlikelyleadtowarmingof2.4°Cin2100;whenfactoringincountries’pledges,projectionsdecreasetotheParisAgreement’supperglobalwarminglimitof2°C(NewClimateInstitute2022).Althoughtheywillneedtoratchettheiremissionsreductioncommitmentsfurthertoalignthemwiththe1.5°Climit,commitmentsareslowlyconvergingtowardglobalgoals,whichisamajorsuccessfortheParisAgreementanditsbottom-upapproach.TheurgentneedtoalignpolicieswithpledgesandcommitmentsDespiteincreasinglyambitioushigh-levelcommitments,mostcountriesarenotontracktoachievetheirowntargetsortocontributetheirfairsharetoreducingglobalemissions.2728WithinReachInfact,followingdecadesofgrowth,CO2emissionssurpassedprepandemiclevelsin2022,reachinganall-timehighofmorethandoubletheemissionlevelsof50yearsago(UNFCCC2023).Toaligncommitmentswithaction,allcountriesurgentlyneedtoimplementpoli-ciesthatwillrapidlydecarbonizetheireconomiesanddevelopmentpaths.Todoso,theywillneedtodevelopandimplementpoliciestodecarbonizetheelectricitysup-ply;deployefficiencymeasures,fuelsubstitution,andelectrificationtoreduceemis-sionsfromtransportation,buildings,andindustry;advancelow-carbonagriculturalpractices;protectandexpandforestsandothernaturalcarbonsinks;andaddressemissionsrelatedtolifestyle,behavior,andconsumptionwithdemand-sidemeasures(Fayetal.2015).ThepoliticaleconomyasamajorbarriertomoreambitiousclimatepolicyDespitelong-harboredconcernsabouttheireconomicimpacts,theseclimatepoliciescanworkfortheeconomy.Ifwelldesignedandimplemented,theycandeliverbenefitsandcontributetoeconomicdevelopmentgoals.TheIntergovernmentalPanelonClimateChangeandmuchoftheliteraturesuggestthatlimitingglobalwarmingto2°Corlesswouldhaveasmall,andpossiblynegative,aggregateeconomiccost(IPCC2023).TheWorldBankGroup’sCountryClimateandDevelopmentReportsshowthat,withearly,well-designedactions,itispossibletoreducegreenhousegas(GHG)emissionsby70per-centby2050withoutcompromisingeconomicgrowth.Countriescouldalsoseeimmedi-ateeconomic,productivity,andhealthbenefitsbecauseefficiency,electrification,andtheshifttorenewableenergywillimproveairquality,reducecongestion,andreducefuelspendingandimports.Theseanalysesraisethefollowingkeyquestion:Whyaretheopportunitiestocapturesynergiesbetweendevelopment,growth,povertyreduction,andclimateobjectivesnotexploredmoresystematically?Thisbookclaimsthatakeyreasonisthatsuchpoliciesdonotalwaysworkforpolitics:powerfulvestedinterests,winnersandlosers,ideologicalbattles,andinstitutionalinertiaarejustsomeofthepoliticaleconomyissuesthatmakeitdifficulttocapturesynergiesbetweendevelopmentandclimateobjectives.Unequaldis-tributionalimpactsareundeniablypartofthepoliticaleconomychallenge,butpoliticaleconomychallengesgobeyonddistributionalimpacts.Inrecentyears,severalambitiousclimate-relatedpolicieshavetriggeredintensepublicbacklashandbecomehighlypolit-icalissues,withmanyfactorsaffectingpublicandpoliticalacceptability.Therearealsogovernanceandinstitutionalchallengestoconsider.Itisthesepoliticaleconomycon-straints,ratherthantechnicallimits,thatposethemainbarriertomore,andmorestrin-gent,climatepolicies.WidespreadprogressinspiteofpoliticaleconomybarriersThesepoliticaleconomybarriersarenotunmovable,andcountrieshavenotbeenidle:theyhaveimplementedclimatepoliciesthatarelimitingemissionsgrowth.Thenumberandcoverageofclimatepolicieshaveexpandedconsiderablyoverthepastthreedecades,andevidenceshowsthattheyhavecurbedandcontinuedtocurbemissionsgrowth(EskanderandFankhauser2020;IPCC2022).AccordingtotheNewClimateInstitute’sClimatePolicyDatabase,countrieshaveannouncedmorethan4,500climatepoliciesoverthelastthreePoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments29decades(figure1.1).1Keyeconomywidepolicies,suchasendingfossilfuelsubsidiesandcarbonpricing,areprogressingbutremainlessfrequentthansectoralpolicies.Long-termtargetsandplanninghelpcountriescoordinateacrosssectors,withshort-termmilestonesinformingsector-levelpolicesandactionsandprovidingpredictabilityandsignalstostakeholders.Thecompanionreporttothisbook,RealityCheck:Lessonsfrom25PoliciesAdvancingaLow-CarbonFuture(WorldBank2023a),providesexamplesofsuccessfulimplementa-tionofclimatepolicies,evenindifficultpoliticaleconomycontexts.High-visibilityfail-ures,orunrestasrecentlyseeninEcuadorandFrance,hidethelargeandgrowingnumberofclimatepoliciesthatarebeingsuccessfullyimplemented.TheRealityCheckreportfindsthatpublicandpoliticalsupport,stronginstitutions,cross-partybacking,broadengagement,andflexibilityindesignhaveplayedkeyrolesinthesesuccesses.Collaborationamongdiversestakeholders,includinggovernment,privatesector,civilsociety,andacademics,isvital.Capacitybuildingaidspolicydesignandexecution,withcontextualadaptationsnecessaryforsuccess.Manyoftheexamplesarenotfirst-bestpoliciesorevenbestpractice:toachievesuc-cessfulimplementation,governmentsoftenhadtocompromise.Theyfacedinstitutionalcapacityconstraintsandhadtomanagetrade-offswithotherpolicyobjectives.Someinterventionswerejustthefirststep,andmostcountriesareadjustingpolicydesignastheydrawlessonsfromreal-worldimplementation.Buttheseinterventionsmanagedtodrawenoughsupporttobeimplemented,andtocreatemomentumtowardmoreclimateaction.Examplesincludethefollowing:FIGURE1.1.Climatepoliciesannouncedglobally,1980–2020COP15COP21(Copenhagen)(ParisAgreement)5,0003004,000250Totalnumberofclimatepoliciesannouncedeachyear2003,000Cumulativenumberofclimatepoliciesannouncedovertime1502,0001001,0005001985199019952000200520102015019802020Climatepolicieseachyear(leftaxis)Cumulativeclimatepolicies(rightaxis)Source:WorldBank2023a,basedondatafromNewClimateInstitute,ClimatePolicyDatabase(https://climatepolicydatabase.org/).Note:COP15=15thsessionoftheConferenceofthePartiestothe1992UnitedNationsFrameworkConventiononClimateChange(2009);COP21=21stsessionoftheConferenceofthePartiestothe1992UnitedNationsFrameworkConventiononClimateChange(2015).30WithinReach•CostaRica’sNationalDecarbonizationPlan.Thegovernmentmadeaconcertedefforttoconvincediversestakeholdersoftheneedforboldaction,someofwhomdidnotorigi-nallysharethatambition.TheNationalDecarbonizationPlanisoneofthemostambi-tiousglobalstrategiesforlow-carbondevelopmentforamiddle-incomecountry.NetbenefitsofimplementingthenewplanareestimatedatUS$41billionthrough2050,whichhelpedCostaRicamobilizeatleastUS$2.4billionininternationalconcessionalfinance.•TheArabRepublicofEgypt’senergysubsidyreform.Egyptoffersanexampleofsuccessfulfossilfuelsubsidyreform—anotoriouslychallengingpolicytoimplement.Energysubsidyreformhaseasedfiscalpressures,withthebudgetdeficitfallingfrom12.9percentto8.1percentofgrossdomesticproductbetween2013and2019.Ithasalsoencouragedgreaterprivateinvestmentincleanenergy,withsolarandwindgenerationgrowingalmostthreefoldbetween2014and2019.Proactivecommunicationsandaboostinsocialprotectionmechanismsplayedstrongrolesinfacilitatingthereforms.•BritishColumbia’scarbontax.IntroducedbytheCanadianprovincein2008,thetaxcovers70percentofGHGemissions.Strongcommunicationeffortsfacilitatedimple-mentation,withextensiveempiricalevidencefindingthatthetaxreducedemissionsandinequalityandraisedgrowthandemployment.Thereformnowreceivesmajoritysupportfromcitizens.•Climate-smartagricultureinAfrica’sSahelregion.Thankstotargetedinterventions,farmershaveadoptedlow-cost,efficienttraditionalpractices,suchasagroforestryandconventionalrainwaterharvestingtechniques,tocapturerainfall,reducerunoff,restoresoils,andimproveagriculturalproductivity.InNiger,farmer-managednaturalregenerationincreasedyieldsby16–30percentbetween2003and2008,whileaddingnearly5millionhectaresoftreecover.•Colombia’smandatorygreenbuildingcode.Alongwiththiscode,enactedin2015,thegovernmentintroducedtaxincentivesfortechnicalsolutionssuchasinsulationandenergy-efficientairconditioningsystems.Bytheendof2022,11.5millionsquaremetersofgreenspacehadbeenbuiltorwereunderconstruction(WorldBank2023c).Between2021and2022,27percentofnewbuildingswerecertifiedasgreenundertheInternationalFinanceCorporation’sEDGEprogram.•India’snationalsolarmission.Thesupportoffederal,state,andlocalpoliciesandregulationshascontributedtothecountry’ssolarsuccess.Oneoftheworld’smostrapidlygrowingsolarmarkets,Indiasawsolargofrom4percentto13percentofpowergenerationbetween2014and2022.TheprivatesectorhasbeenheavilyinvolvedincreatingIndia’srenewableenergymarket,investingUS$130billionsince2004.Thecountryisbecomingadomesticmanufacturinghubforsolarpanels,whichhascreatednewgreenjobs.•PowersectorreformsinKenya.ThesereformshavemadeKenyaoneofthemostsuc-cessfulcountriesinattractingprivatefinancingforcleanpowerassets,andaninvest-mentdestinationforindependentpowerproducers.Becauseofsuccessfulenergysectorreforms,asmuchas70percentofnewpowergenerationcapacityinthecountryisrenewableenergy,includinggeothermal,solar,andwind.Since2000,theCO2inten-sityofpowergenerationhasfallenfourfold.AswellasreducingGHGs,thesereformshavehadsubstantialdevelopmentbenefits,makingelectricitysupplymorereliableandincreasingpeople’saccesstoenergy.PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments31ThescopeofthisbookThisbookaimstounderstandwhyclimatepolicieshavebeensuccessfullyimplementedinsomeplacesbuthavetriggeredstrongoppositionelsewhere,andtoprovideaframeworktohelppolicymakersreproducethesesuccessesandnavigatepoliticaleconomyconstraints.Themanypoliticaleconomyanalysistoolsalreadydeveloped,insideandoutsideoftheWorldBank(Fritz,Levy,andOrt2014;HudsonandLeftwich2014;WorldBank2017),donotprovideadiscussionofclimatechangechallenges.Thisbookcontributestothislineofworkbyfocusingonlow-carbondevelopmentandcountries’emissionsreductionobjec-tives.Itdoesnot,however,coverthewholerangeofissuesrelevantforthepoliticalecon-omyofclimatechange.First,thisbookfocusesonlow-carbondevelopmentandcommitmentsrelatedtoGHGemissionsbutdoesnotcoversimilarpoliticaleconomychallengesfacedbyadaptationandresiliencegoals.AsdiscussedinWorldDevelopmentReport2014:RiskandOpportunity—ManagingRiskforDevelopment(WorldBank2013),therearesimilarlystrongpoliticaleconomybarrierstoimplementingresilienceandadaptationpolicies(forexample,whenfloodmanagementhasanimpactonlandvaluesandthereforetheredistributionofwealth).Strongvestedinterestsandpoliticalconflictswillalsoaffectthefeasibilityandviabilityofpoliciesrelatedtosharingresources,suchaswateracrossusers,includingforagricultureandirrigation,hydropowergeneration,healthandwell-being,andmaintenanceofhealthyecosystems.Althoughtheseissuesareimportant,theyarenotthetopicofthisbook.Second,thisbookfocusesonnational-levelpoliticaleconomychallenges,withoutgoingdeeplyintotheimportantinternationaldimensions.Forexample,wedonotdis-cusshowtomanagehistoricalresponsibilityfortoday’sGHGconcentrationsandtheunequaluseofthecarbonbudgetavailableforkeepingglobalwarmingwellbelow2°C.HistoricalresponsibilityandtheconceptofCommonbutDifferentiatedResponsibilitiesoftheUnitedNationsFrameworkConventiononClimateChangeandtheParisAgreementareessentialdimensionsofthediscussionregardingtherequiredambitionofcountries’targetsandpolicies,theneedsforconcessionalandnonconcessionalfinanc-ing,andhowtohelppoorercountriesandpeoplemanagetheunavoidable“lossanddam-age”causedbyclimatechange.Thesequestionsarerelated,becausepoliticalfeasibilityatthecountryleveldependsonthefairnessofglobalprocessesandthefaircontributionofallcountries;however,thisbookdoesnotfocusonsuchinternationalchallenges.Third,thisbookfocusesonhowgovernmentswithagenuinecommitmenttotheirstatedclimategoalscanachievethosegoals,despitefacingarangeofotherobjectivesandacomplexpoliticaleconomycontext.Governmentshavedifferentincentivesandprioritieswhenitcomestoclimateaction.Theseareaffectedandconstrainedbythedomesticcontext,asdiscussedlaterinthisbook,andbytheinternationalarchitecture,includingtheParisAgreement(box1.1)andotheragreementsandrelationships.Althoughagapexistsbetweentheobjectivesstatedintheinternationalarenaandtheprioritiesdiscussedinthedomesticcontext,WorldBank(2023a)providesampleevidencethatcountriesareworkingtowardtheirstatedgoals.Thisbookfocusesonthebarrierstoincreasinglyrapidactions—barrierscreatedbythepoliticaleconomycontext.Thisbookispartofabroaderworkprogram.Furtherworkonclimategovernance,insti-tutions,andpoliticaleconomyisunderwayattheWorldBanktosupportanincreasingrangeofcountryanalytics,engagements,andlendingoperations.Thatworkaimstocontrib-utetoandsupporteffectivepolicyactions,aswellasenablepublicandprivateinvestments.32WithinReachBOX1.1TheParisAgreementratchetingmechanismThe2015ParisAgreementisthesecondoperationalagreementreachedundertheUnitedNationsFrameworkConventiononClimateChange.Thefirst,the1997KyotoProtocol,setemissionsreductiontargetsforindustrializedcountries.Attemptstobuildconsensusonafollow-upagreementtoestablishlegallybindingtargetsforallmajoreconomiesfailedatthe15thConferenceofthePartiestotheUnitedNationsFrameworkConventiononClimateChange(COP15)in2009.Countriestookanalternativeapproach,builtaroundvoluntary,nationallydeterminedcontributions,orNDCs(whicharenotlegallybinding).Insteadoftop-downtargetsorenforcementmechanisms,theresultingParisAgreementreliesonan“ambitionratcheting”mechanism,wherebycountriesregularlytakestockofprogressandincreasethestringencyoftheirNDCsaccordingly(figureB1.1.1).SomeauthorsquestiontheParisAgreement’sabilitytoachieveitsglobalobjectivesbecauseitlacksmechanismstosolvethefreeriderproblemandtoenforcetheagreement(Bang,Hovi,andSkodvin2016;BarrettandDannenberg2016;KeohaneandOppenheimer2016;Nordhaus2021;Sachs2019).Hale(2020),however,makesthecasethatfreeridingisnotthemainobstacletoclimateaction.Thisisbecausethefreeriding(orprisoners’dilemma)framingneithercapturesthefullcomplexityofthedecarbonizationchallengenorprovidesconsistentexplanationforthepoliticalbehaviorandoutcomesobservedinthepast25years(AklinandMildenberger2020).Haleidentifiesthreeessentialcharacteristicsoftheclimatechangemitigationchallengethatatraditional(repeated)prisoners’dilemmadoesnotcapture:1.Development-climatesynergies(orjointproducts).Contributionstoglobalpublicgoodsalsoyield“pri-vate”benefits,intheformofhigherproductivityandefficiency,reducedairpollutionorcongestion,andreducedenergycostsandimports,asillustratedintheCountryClimateandDevelopmentReports(seeWorldBankGroup2022).2.Heterogeneity.Countriesfacedifferentcostsandbarrierstoreducinggreenhousegasemissions,withsomebenefitingfromhigherrenewableenergypotentialandotherslosingoutbecauseofreducedfossilfuelexports.Preferencesalsovary,withsomecountriesexhibitinghigherwillingnesstopaytoprotecttheglobalclimate.FIGUREB1.1.1.ParisAgreement:MechanismstoratchetambitionandmonitorprogressAmbitionmechanismintheParisAgreementGlobalstocktakeSecretary-Global20302050Netzerogeneral’sstocktake2028emissionsclimate2025andclimatesummit2023resilienceTalanoa2020dialogueCommunicateCommunicate2019neworupdatedneworupdatedNDCsNDCs2018CommunicateneworupdatedNDCsAdoptionoftheParisRulebookSource:Fransenetal.2017.Note:NDC=nationallydeterminedcontribution.(Continued)PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments33BOX1.1TheParisAgreementratchetingmechanism(continued)3.Increasingreturns.Emissionsreductioncostsarenotconstantovertime,andtheydependonpoliciesandinvestments,asillustratedbythedeclinesinthecostofrenewableenergy,electricitystorage,orelectricmobility.Thesecharacteristicsmeanthatagroupofearlymovers—thosewithloweremissionsreductioncosts,highersynergieswithdevelopment,andmorewillingnesstoact—canhaveatransformationalglobalimpactbyreducingcostsforothers.Thus,cooperativeactionbecomesprogressivelyself-reinforcingovertimeandhelpsovercomethecurrent“lock-in”tocarbon-intensepatternsthroughinnovationandscale(BernsteinandHoffmann2018;Farmeretal.2019;seealsochapter3ofthisbook).Inthiscontext,Hale(2020)claimsthattheParisAgreement’smaincontributionisitssupportfor“catalyticcooperation.”Ithelpsbuildactionovertimebychangingpreferencesandloweringthecostofreducingemissionsthroughtechnologicalchangeandsharedexperienceonwhatworks.Thekeyweaknessofa“pledgeandreview”approachisthatitcapturesonlywhatcountrieswillcommitto.Ina“one-off”commitmentsystem,thisweaknesswouldpreventtheagreement’ssuccess.But,withevolvingtechnologies,changingpreferences,andincreasingreturns,countriesmaybewillingtoincreasetheirownambitionovertime.ThroughtheNDCupdateseveryfiveyears,theParisAgreementaimstocreateadynamicfeedbackloop,capturingtheimpactofchangedcostsandpreferencesandtranslatingthemintoenhancedambitioninthewayahead.Itiswellknownthatcooperationiseasierwhencommitmentsarerepeatedcontinuously(Macy1991),andmostinternationalinstitutionsbuildonsuchanapproach—forexample,intraderegulationsandtariffs,orcommonssuchastheozonelayer.Otherauthorshaveemphasizedtheimpactofthereviewprocesstoidentifygoodpractices,betteranticipatecostsandbenefits,andincreasethewillingnesstoact(Abbott2017;Aldy2018;ChayesandChayes1995;SabelandVictor2017;Victor,Raustiala,andSkolnikoff1998).TheParisAgreementincludesseveralmechanismsthroughwhichexchangeacrosscountriescanaccelerateaction—theNDCimplementationreview(article13),theglobalstocktake(article14),andthemechanismto“facilitateimplementationofandpromotecompliancewiththeprovisionoftheParisAgreement”(ina“nonpunitive”manner)(article15)—whichareexpectedtofacilitatecountries’actionsandreducerisksandcostsovertime.Policymakersfacedifferentincentivesintheinternationalanddomesticarenas,andpledgestotheinternationalcommunitymaydifferfromtheirdomesticdiscoursesandcommitments(seebox1.3).Somescholarssuggestthatcountriesoftenachievetheirinternationalobjectivesonlybecausethoseobjectivesrequirecountriestodolittlemorethantheywouldintheabsenceofaninternationalagreement(Downs,Rocke,andBarsoom1996),andsomehighlyvisiblecasesofnoncompliancesuggestthatinternationalcommitmentscanbeemptypromises,disconnectedfromdomesticobjectives.Otherevidence,however,showsthatgoalsettingcancreatedomesticincentivesandpolicies—forexample,throughbenchmarking,internationalcomparison,and“namingandshaming”(Biermann,Kanie,andKim2017;Kanieetal.2017;Kelley2017).AlthoughtheParisAgreementdoesnotincludeanassessmentofNDCsortheirimplementation,itstransparencyframeworkenablesthirdpartiestocomparecountries’commitmentsandpolicies(NewClimateInstituteandClimateAnalytics2019;vanAsselt2016).Internationalagreementalsoinfluencesdomesticpoliticaleconomy,affectingpreferencesandcreatingnewconstituencies.Internationalclimategovernancehasbuiltauniquenetworkofstakeholdersandparticipantsthatgoesbeyondnationalgovernmentstoincludenongovernmentalorganizationsandcommunityrepresentatives,theacademicworldandthinktanks,subnationalactorssuchascitiesandregions,andprivatesectoractors,includingindustryassociationsandinstitutionalinvestors(Betsilletal.2015).Theinfluenceofthisbroadersetofactorsmakesitmorelikelythatgovernmentswillfindasupportiveconstituencyforstrongclimatepolicies(Bromley-Trujilloetal.2016;CaoandWard2017;Stokes2020;Urpelainen2009).TheParisAgreementisonlyoneoftheinternationalagreementsrelevantforclimateaction.Thebroaderinternationalagenda—whichincludestheSustainableDevelopmentGoalsandtheAddisAbabaAction(Continued)34WithinReachBOX1.1TheParisAgreementratchetingmechanism(continued)FIGUREB1.1.2.NetGHGemissionspercapita,bycountryincomegroup,population,andGDPpercapita,2019a.GHGemissionspercapitaandpopulation,b.GHGemissionspercapita,bycountryincomegroupbyGDPpercapita12Averagenetemissionspercapita(tCO2eperpersonperyear)1010Averagenetemissionspercapita8(tCO2eperpersonperyear)65420001234567010203040Population(billions)GDPpercapita(US$,thousands)High-incomecountriesHigh-incomecountriesUpper-middle-incomecountriesUpper-middle-incomecountriesLower-middle-incomecountriesLower-middle-incomecountriesLow-incomecountriesLow-incomecountriesSources:WorldBankstaffcalculationsbasedondatafromClimateWatch(https://www.climatewatchdata.org)fornetGHGemissionsdataandtheWorldBankDataBankforGDPandpopulationdata.Note:GDP=grossdomesticproduct;GHG=greenhousegas;tCO2e=tonnesofcarbondioxideequivalent.Agenda—isalsocloselyconnected.Asclimateactionbecomesbettermainstreamedandclimatepoliciesincreasinglyaffectotherdomains,otheragendasalsobecomeimportant.Forexample,theEUCarbonBorderAdjustmentMechanism,theInflationReductionActanditslocalcontentrequirements,andthedevelopmentofglobalgreenvaluechainsallillustratehowclimatepoliciesincreasinglyconnecttoglobal,multilateral,andunilateraltradeagreements.Theseparallelnegotiationarenascreatenewincentivesforcountriestoactonclimatechange—forexample,tobenefitfromeasieraccesstoglobalconsumermarkets.Buildingontheseopportunitiescouldcreateadditionalincentivesforaction—forexample,throughclimateclubsthatwouldprovidebenefitformembersthatachievecertainlevelsofambitionorimplementcertainpolicies(Nordhaus2021).Nevertheless,theParisAgreementfacesdifficultchallenges,includingonequityacrosscountries.High-incomecountrieshavemuchhigheremissionspercapitathantherestoftheworld,andthesecountrieshaveconsumedadisproportionalshareofthecarbonbudgetavailabletokeepglobalwarmingwellbelow2°C(figureB1.1.2).And,despitedecliningemissions,theirpoliciesarestillconsideredinconsistentwiththeirownstatedclimateobjectives(IPCC2023;UNFCCC2023).Regardlessofwhethertheinternationalcommunityandnetworkofinternationalagreementscreateappropriateincentivesandpreventfreeriding,thereisaconsensusthattheydonotprovideappropriateresourcesforlower-incomecountriestotackleclimatechange.Thediscussiononthe“meansofimplementation”remainsextremelycontroversial.Mostvisibleishigh-incomecountries’failuretodeliverontheircommitment—madeinCopenhagenin2009andincludedintheParisAgreementin2015—toacollectivegoalto“mobilizeUS$100billionperyearfortheneedsofdevelopingcountriesinthecontextofmeaningfulmitigationaction”(UNFCCC2023).Understandably,manylow-andmiddle-incomecountrygovernmentshaveaskedforacceleratedactionin,andincreasedfinancialandtechnologicalsupportfrom,high-incomecountriesbeforetheyimplementmoreambitiouspolicies.PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments35Buildingonthisbookandpreviousworkfocusingonpublicfinancial­managementandcli-matechange,futureworkwillfocusonthefullrangeofinstitutionalcapabilitiesthatcoun-triesneedtoaddressclimatechangechallenges,inkeysectorssuchasenergy,agriculture,andforestry,andfordisasterriskmanagement.OutlineofthisbookChapter2discussesclimategovernance,andhowcountriescanadapttheirinstitutionalarchitecturetoenableclimatepolicies.Itbeginswithanoverviewofclimategovernance,itsforms,anditsfunctions,andconsidershowcountriescanuseittoenablemoretransfor-mativeactionbyreducingpoliticaleconomybarriersandincreasingsupportovertime.Thechapterthenfocusesonnationalclimatelegislation,long-termstrategies,andjusttransi-tionframeworks—allofwhichcanplayacrucialroleinbuildingapublicmandateforactionandtheinstitutionalarchitecturetoachieveit.Chapter3exploreshowtoprioritizeandsequenceclimatepoliciestocreateambitiouspolicypathways.Theobjectiveistoconsiderpolicychoicesandprioritizationnotonlyinastaticframeworkbutalsointermsofongoingfeedbackdynamicsbetweenpoliciesandpoliticaleconomyconstraints.Thechapterdiscusseshowtoselectpoliciesthatalignwithacountry’scurrentcapacityandinstitutionalcontext,buildfuturecapacity,andinfluencethepoliticaleconomyoverthelongterm.ItthenusestheClimatePolicyDatabasetodeveloptheClimatePolicyFeasibilityFrontier,atooltohelpidentify—inagivencountrycontext—themostrealisticpoliciesthatcanbuildmomentumtowardlong-termobjectivesandtransformation.Chapter4focusesonpolicydesign,orhowtonavigatepoliticaleconomyconstraintsandminimizenegativedistributionalimpacts.Distributionalimpactscauseoppositiontoclimatepoliciesfromthosewhoexpecttoexperiencenegativeimpactsaswellasfromthoseconcernedaboutthefairnessofpolicyoutcomes.Thechapterexploresdistribu-tionalimpactsalongmultipledimensions,includingincomegroups,sectors,regions,smallerspatialareas,andotherpreexistingdimensionsofexclusion.Itsuggestsapproachesandprocessesfordesigningpoliciesandtheircomplementaryactionsinwaysthatimprovedesign,monitorresults,identifyunintendedconsequencesearly,andbuildtheneededlegitimacyofclimateaction.Finally,chapter5discussespublicengagementandcommunicationastoolsinthepol-icyprocesstomaximizeacceptabilityandlegitimacyofreforms.Itlooksatdifferentapproachestopublicengagementthatcanbeappliedthroughoutthepolicydevelopmentandimplementationprocesstohelppolicymakersnavigateissuesoffairnessandequity,aswellaslimitundueinfluenceandcapturebyvestedinterests.Acknowledgingthefactthatevenwell-designedreformsdonotnecessarilyspurpublicsupport,thechapterdis-cusseshowwell-targetedcommunicationstrategiescanincreasesocietalacceptance.The4iFrameworkforunderstandingpoliticaleconomybarriersAtfirstglance,thepoliticaleconomybarriersthatimpedeclimatechangepoliciescanappearsowideandvariedthattheydefyanysystematicassessment,letalonestrategy.Governmentsmanagemanycompetingdemandswithconstrainedresources,andfutureclimatechangeimpactsarelessvisibleandsalientthanimmediatetransitioncosts.Short-termpoliticalmandatescanundermineactiononlong-termobjectives;vestedinterests,misinformation,andlobbyingcandistortthepolicydiscourseandpublicopinion;36WithinReachhigh-levelclimateambitionsarenotalwaysintunewiththeday-to-dayprioritiesofpoliti-calleadersandcommunities;lowinstitutionalcapacityandpoorgovernancecanhamperprogress;andrepeatedcrisescanchangeshort-termprioritiesovernight.Politicaleconomyhasbecomeabuzzwordinclimatediscussions,especiallywhenitcomestoexplainingclimatepolicyfailures.Thefollowingeconomyanalysistoolscanhelpgovernmentsbuildacomprehensivemapofthepoliticaleconomytoinformtheirgovernanceandpolicystrategies(WorldBank2017):•Institutionalanalysisexaminestheformalandinformalrules,norms,andpracticesthatgoverneconomicandpoliticalbehavior,suchaspropertyrights,regulatoryframe-works,andcorruption.TheWorldBank’sClimateChangeInstitutionalAssessmentisanapplicationofthisapproachtoclimatechange(seechapter2).•Stakeholderanalysisidentifiesandexploresthepreferencesandpowerofdifferentactors,suchasgovernmentofficials,privatesectoractors,civilsocietygroups,andinternationalorganizations.•Poweranalysisanalyzesthedistributionandsourcesofpoweramongactorsinsociety,includinghowtheyexerciseandcontestit.•Narrativeanalysismapsoutpredominantnarratives,themes,anddiscoursestounder-standhowactorsconstructmeaningandunderstandpoliticalandeconomicprocesses,decisions,andoutcomes.Abackgroundpaperforthisbookproposesapoliticaleconomyframework—the4iFramework—toprovideacommonandunifyinggroundfromwhichtoaddressthechallenge(Godinho,Hallegatte,andRentschler,forthcoming).Asshownintable1.1andfigure1.2,the4iFrameworkdepictsthepoliticaleconomyasasystemmadeupofmutuallyconstitutive,interdependent,anddynamicrelationshipsbetweenthecoreelements—institutions,interests,ideasandinfluence—orthefouri’s(Jackson2009).InstitutionsmatterGovernanceandpoliticalinstitutionsinfluencegovernments’abilitytodesignandimplementclimatepolicies.Thenatureoftheinstitutionsinfluencestheirabilitytoimplementthesepolicies,butthislinkiscomplexanddependsonmanyotherfactors.TABLE1.1.Thefouri’sofpoliticaleconomyFouri’sDefinitionExamplesInstitutionsTheformalandinformalrules,norms,andLegislationandpolicy,legalsystems,governmentorganizationsthatprovideincentivesandconstraintsagencies,tradition,norms,trust,andculturalforeconomic,political,andsocialbehaviorinsocietypracticesInterestsThewants,needs,andobjectivesthatshapetheIncomeorprofit(material);voting,representation,orpreferencesandbehaviorofactorspoliticaloffice(political);andbelongingorstatus(social)IdeasThebeliefs,values,andworldviewsthatshapetheIdeologies,identity,morals,culturalnarratives,andpreferencesandbehaviorofactorsscientificparadigmsInfluenceThepower,authority,andleveragethatactorsusetoVoting,civicorganization,protest,mediaandadvancetheirinterestsandideasandtheirinteractioncommunication,politicallobbying,andbriberywitheachotherandwithinstitutionsSource:Godinho,Hallegatte,andRentschler,forthcoming.PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments37FIGURE1.2.The4iFrameworkandfour-prongedapproachforclimatepolicySocietaloutcomes:development,povertyreduction,Widercontext:1Adapttheinstitutionaljobcreation,sustainability,etc.geography,technology,economicconditions,etc.architecturetoaddresstheClimategovernanceclimatechallengeInstitutionsClimateinstitutionsandFormalandinformalrules,norms,andorganizationsframeworksDynamicfeedback:2policychange,actions,effects,shocks,etc.Institutionsshapeactors'Actors’influence,PolicysequencingHarnessfeedbackseffectstoinfluence,interests,interests,andideasshapePolicychoiceandmix,expandtheclimatepolicyandideassequence,andtippingspaceandbuildmomentuminstitutionspointsActorarenas:3legislativeprocesses,media,civilsociety,etc.PolicydesignMinimizedistributionalInfluencePolicyproposalsandimpactsofclimatepoliciesLeverage,authority,bypolicydesignanddesigncomplementaryactionsandpower4InterestsIdeasPolicyprocessMaximizeacceptabilityandObjectives,wants,Worldviews,beliefs,CommunicationandlegitimacyofpoliciesbypublicengagementenhancedpolicyprocessesandneedsandvaluesSource:BasedonGodinho,Hallegatte,andRentschler,forthcoming.Despiteimportantexceptions,onaverage,parliamentarydemocraciesaremorelikelytoimplementclimatepoliciesandgenerallyhaveloweremissionsgrowth(LachapelleandPaterson2013;LambandMinx2020).Proportionalelectoralsystemsseemtoreducethepoliticalcostsoflong-termclimatepolicies,allowinggovernmentstoimposeshort-termcostsonvoters(Finnegan2022).Countrieswithlongerexperienceofdemocracyalsoappeartohavemoreclimatepolicies(FredrikssonandNeumayer2013),possiblyincentiv-izedbydemocraticculturalnormssuchasaccountability,afreepress,andastrongercivilsociety.However,democraciesarelesslikelytopassclimatelegislationaheadofelections(LambandMinx2020),andhavingmultiplevetopointscanmakepassingnewlawsorpoliciesmoredifficult(vonStein2022).Lessdemocraticgovernmentswithstrongstatecapacityandlowerexposuretocorruptionmaybeabletoimplementswifter,morewide-ranging,andlesspopularclimatepolicies(Beeson2016;Michaelowa2021).Politicalcultureandpublicacceptabilityremainimportantinallcontexts.Chapter2ofthisbookfocusesonhowthepoliticaleconomyshapestheemergenceofclimateinstitutionsandhowgovernmentscanestablishmorestrategicandsustainableclimategovernance.Thedegreeof(de)centralizationinacountrycanalsoaffectadministrativecapacityandeffectiveness.Ontheonehand,environmentalfederalistshavelongarguedthatmorecen-tralizedgovernanceisneededforacoherentresponsetonationwideorglobalproblems,suchasclimatechange(Shobe2020).Proponentsofdecentralizedresponses,ontheotherhand,arguethatdecentralizationhastwomajorpoliticaleconomybenefits.First,itallowsformoreambitioussubnational-levelactionintheabsenceofcentralgovernment38WithinReachleadership(SteurerandClar2015).Second,itmaymakeiteasierforpolicydesignandimplementationtoreflectlocalideasandinterests,increasingsupportforsuchpolicies.LookingathowIndia’sfiscalfederalismcanbeadjustedtoaccountforclimatechange,Martinez-VazquezandZahir(2023)identifymanychallengesrelatedtotheattributionofrolesandresponsibilities,revenueassignment,andfiscaltransfersandborrowing.Theperceptionthatinstitutionslacktransparency,fairness,andgoodgovernancecanunderminepeople’sconfidenceingovernmentpoliciesandtriggeropposition.Sectorsthatarecentraltomitigationefforts—suchasenergy,extractives,landuse,andforestry—arealsocommonsitesofcorruption(OECD2016;Sovacool2021;TacconiandWilliams2020).Thereisalsoevidenceofcorruptioninrenewableenergytechnologies,suchashydropower(Pavlakovičetal.2022;Scudder2008),windpower(GennaioliandTavoni2016),andsolarpower(Dvořáketal.2017).Corruptionunderminestrustinandsupportofgovernmentandincreasesinefficiencyandcosts,whichcanexacerbatecitizens’con-cerns(KulinandJohanssonSevä2021).Researchshowsthatexposuretocorruptionisalimitingfactorforclimatepolicyandisassociatedwithhigheremissions(LambandMinx2020).People’ssupportforpoliciesisshapedbytheirperceptionofagovernment’strackrecord,andcitizensofcountrieswithpoorgovernanceandwidespreadcorruptionarelesstrustingofpublicpolicypromisesandinstitutions’capacitytodeliverinthepub-licinterest.EmpiricalevidencefromIndonesia,forexample,showsthatoppositiontofossilfuelsubsidyreformisdirectlylinkedtolocalperceptionsofcorruption(Kyle2018).Administrativecapacity,civicconsultationandresponsiveness,andsectorgovernancenormsarekeydeterminantsoftheeffectivenessofclimatepolicyandinfluencepolicyinstrumentchoice(Lo2015,2021a,2021b;MacaspacHernandez2021).Forexample,countrieswithstronginstitutionalcapacitytendtofavorregulatoryoverfiscalclimatepolicies(HughesandUrpelainen2015).Countrieswithweakinstitutionsarelesslikelytobeabletointroducecomplexinstrumentsandpolicies,suchasemissiontradingsys-tems,technology-focusedresearchanddevelopment,orsophisticatedtargetingsystemstoprotectvulnerablepopulations.Chapter3ofthisbookfocusesonhowthesequenceofclimatepoliciesshouldnotonlyconsidercapacityconstraintsbutalsobedesignedtobuildthiscapacityovertime.InterestsdivergeEvenwhenclimatepolicieshavepositiveeconomicimpactsintheaggregate,theymaystillhavelargedistributionalimpacts.Thisisthekeyfocusofchapter4.Ingeneral,oppositioncanbeexpectedfromthosewhobenefitfromexistinginstitutionsandpolicies,andwhothereforehaveavestedinterestinmaintainingthestatusquo.Similarly,supportcanbeexpectedfromthosewhostandtobenefitfrompolicychange.Thereality,however,isoftenmorecomplexbecauseactorscanhavemultiple,sometimesconflicting,interests.Unevendistributionalimpacts,suchasconsumptionimpacts,sectoraleffectsonskillsandlabor,ortheirspatialdimension,canleadnegativelyaffectedactorstoprioritizeeconomicoverotherinterests.Actorsinvolvedinorbenefitingfromfossilfuelextractionandproduction,energy-­intensiveindustries,ordeforestationtendtoopposeclimatepolicy.Fossilfuelsubsidiesandotherincentivesservetoentrenchsuchinterests,sometimesindirectly(box1.2),especiallyintheenergysector(SkovgaardandvanAsselt2018).Studiesshowthatwhenthecoal,gas,oroilindustryplaysadisproportionateroleinthepowersector,localeconomy,orexports,oppositionfromtheseindustriesandthespatialeffectsofclimatePoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments39BOX1.2Thechallengeofindirectcarbonpricing:HiddenincentivesandinterestsGovernmentsuseavarietyofinstrumentstopricecarbon.TheWorldBank’sannualStateandTrendsofCarbonPricingreportsonprogressinthisdomain(WorldBank2023b).Thechoiceofinstrumentandpolicydesigndependsonthepolicyobjectivesandnationalcircumstances,includingthepoliticaleconomy.Forexample,emissionstradingsystems(ETSs)haveoftenseemedpoliticallyeasiertointroducethancarbontaxes,especiallywhenfreepermitallocationhasprotectedbigemittersagainstalargeincreaseincosts(WorldBank,forthcoming).ButdirectpricingofemissionsthroughcarbontaxesorETSsdoesnotpaintacompletepictureofthepriceincentivesfacingactors.Forexample,afuelexcisetaxprovidesacarbonpricesignal,eventhoughitisnotnecessarilyproportionaltoaproduct’srelativeemissions.Suchindirectcarbonpricingpoliciesareprimarilyimplementedforpurposesotherthanclimatemitigation,suchasraisingrevenue.Fossilfuelsubsidies—prevalentacrosscountries—effectivelyconstituteanegativeindirectcarbonprice,counteractingthepositivepricesignalfromdirectandindirectcarbonpricinginstruments.Themagnitudeofindirectcarbonpricingpoliciesdwarfthoseofdirectcarbonpricing.In2022,governmentscollectedalmostUS$100billioninrevenuefromETSsandcarbontaxes,butfossilfuelexcisetaxesandsubsidieswereworthoverUS$1trillion.AnOrganisationforEconomicCo-operationandDevelopmentreportestimatingneteffectivecarbonratesacross71countriesfindsthatimplicitorindirectcarbonpricessetbyfueltaxesaregenerallymuchhigherthanthosesetbycarbontaxesorETSs(OECD2022a).aWithaweightedaverageindirectcarbonpriceappliedbyfossilfueltaxesin2021threetimestheaveragecarbonpricesetbycarbontaxesandETSs,fuelexcisetaxesaccountforaboutthree-quartersofthetotalpositivecarbonprice.Failuretoaccountfortheimpactofindirectcarbonprices(particularlyfossilfuelsubsidies)canbemisleadingandobscurepriceincentives(Pryoretal.2023).Forexample,manycountries,includingFranceandUruguay,haveintroducedexplicitcarbontaxeswhilealsoreducingotherenergytaxestosmooththeshockontotalenergypricesandmaketheintroductionofanewtaxmorepoliticallyacceptable.Source:J.Pryor,basedonWorldBank2023b.a.Theneteffectivecarbonrateincludesthecarbonpriceappliedbydirectcarbonpricinginstruments(ETSsandcarbontaxes)andfuelexcisetaxesminusfossilfuelsubsidiesacross71countries.changeactioncancreatechallengesforclimatepolicymaking(Fankhauser,Gennaioli,andCollins2015;LachapelleandPaterson2013;LambandMinx2020).Similarly,dominantagricultureandforestryinterestscanobstructorundermineclimatemitigationefforts(Angelsenetal.2012;Hochstetler2020).Inaddition,policymakershavetheirownintereststhatareshapedbythingssuchastheirspecificresponsibilities,theirrelationstootherstakeholders,orlobbying(box1.3).Environmentalorganizationsandlow-carbonindustries,incontrast,haveaninterestin—andarethereforemorelikelytosupport—climatepolicies.Thus,policysequencing(exploredindetailinchapter3)canhelpgovernmentsfostersupportiveinterestgroups.Forexample,greeninnovationandindustrialpoliciescanhelpgrowpoliticalsupportcoalitionsandreducethecostoflow-carbontechnologies,increasingthesupportbaseforbroaderclimatepolicies.Actors’interestsarecontingentonpolicychoiceanddesign.Forexample,laborunionshaveaninterestinprotectingjobs.Ifgovernmentsadoptajusttransitionapproachbyinclud-ingactivelabormarketpoliciesandcompensationschemesintheirclimatereforms,laborunionsaremorelikelytosupportthem.Similarly,civicinterestgroupsandthegeneralpublicmayopposeorsupportclimatepolicy,dependingoncost-of-livingordistributionaloutcomes(Dorbandetal.2019;Sovacool2017).Forthisreason,thepublicoftenfavors“pull”(subsidies40WithinReachBOX1.3PolicymakershavetheirowninterestsDecision-makersinthepoliticalsphereexhibitdiverseinterests,influencedbyfactorsliketheirspecificresponsibilities,relationstootherstakeholders,orexposuretolobbying(Jakobetal.2020).Thesefactorscanleadtosituationsinwhichthebestinterestsofthepublicmaynotalignwiththeindividualincentivesandrationalself-interestthatshapethebehaviorofpolicymakers(PerssonandTabellini2002).Policymakershaveintereststhataffectwhethertheysupportoropposeclimatepolicies,notably(re)electiontopublicoffice.Althoughitisgenerallyexpectedthatpoliticaldecision-makerswillrespondpositivelytoanincreasedprominenceof,andpublicdemandfor,climateaction(Schaffer,Oehl,andBernauer2022),theymayavoidordelayactionwhenpoliciescouldcostthematthepollsorthreatenpoliticalfundingchannels(Furceri,Ganslmeir,andOstry2021).Agroup’spoliticalpoweristhereforeadecisiveaspectinshapingapolicymaker’sinterest,whichbecomeskeyinclimatepolitics:themainbeneficiariesofstrengthenedmitigationeffortsarenotbornyetandthereforecannotinfluencepolicymakers’interestsandcurrentdecision-making(PerssonandTabellini2002).InEurope,greenpoliticalpartieshaveplayedanimportantroleindrivingtheclimateagendaandhavereapedthebenefitsatthepollsaspublicdemandforclimateactionincreases(McBride2022).However,examplesfromGermany,theNetherlands,andRomania,whereapprovalratingsforright-wingpopulistpartiesareontherise,partlyinresponsetogovernmentclimateaction,showthatitcanworktheotherway,too.Lobbyingeffortsandthepowerdynamicsofinterestgroupscanalsoaffectpolicymakers’interestsandswaypolicydecisions.Thesuccessoftheselobbyingeffortspredominantlydependsonthepoliticalpowerofinvolvedgroups,determinedbyaspectssuchasrepresentation,resources,ornetworks.Forexample,highlyinstitutionalizedgroupslikefarmersoftenhavegreaterinfluenceonthepoliticalprocessthandoesthegeneralpublic,whichislessorganizedandmaythereforebeunabletoeffectivelycommunicateitsinterests(PerssonandTabellini2002).Asaresult,therelationshipbetweenpolicydecisionsandpublicopinionisnotalwaysstraightforward.Forexample,Finlandcollectedpublicopinionon99energyandclimatepolicymeasuresthroughanonlinesurveytoinformitsNationalEnergyandClimateStrategyfor2030,yettheresultingpolicyoutcomesdidnotreflectthesurveyresults(Kinnunen2021).Therationalself-interestofpolicymakerscanbeanotherdriverofdecision-makinginthepoliticalprocess.Intheabsenceofacoherentclimategovernancestrategyandenablinginstitutionalarchitectureandcapacity,conflictinginterestsamongpolicymakerscanbedifficulttoovercome,especiallywhentheirinterestsextendbeyondtheirpoliticaloffice.The“revolvingdoors”phenomenon—wherebyindividualsmovefrompublicofficetoprivatecompaniesandviceversa—isoftenidentifiedasariskfactor.Thoseadvisingdecision-makers,includingscientistsandeconomists,alsohaveinterestsoftheirown,suchasmaintaininginfluenceinpolicymaking,whichcanmakethemvulnerabletopressuretolegitimizepoliticalpolicypreferences(Geden2015).Forexample,somesuggestthatmodelsthatrelyheavilyonnegativeemissionstechnologiesdespitehighcosts,lowco-benefits,anduncertainfeasibilityofferabackstoptopoliticalintereststhatwanttodelayaction(BeckandMahony2018;HoneggerandReiner2018;KeyßerandLenzen2021;Ottoetal.2021).andincentives)over“push”(taxesandfines)policies(DrewsandvandenBergh2016)—seefigure1.3.Policydesigncanbetailoredtotheinterestsofdifferentactorstoincreasesupportoracceptability(Wicki,Fesenfeld,andBernauer2019).IdeasareabattlegroundActorsdonotactonlyintheirownpoliticaloreconomicinterests;theyalsopursueandrespondtoideas,makingthepolicyprocessandcommunicationakeypartofthechallenge.Stakeholderandpublicknowledge,opinions,andperceptionsarekeydriversofclimatepolicydecisions,especiallyincompetitiveelectoraldemocracies(DrewsandvandenBergh2016).PublicknowledgeabouttheeffectsofapolicyiskeybecauserefusalcanoftenbePoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments41FIGURE1.3.Shareofrespondentswhosupporteddifferentclimatechangepoliciesacross28countriesin2022AsiaPacificAustraliaChinaIndiaIndonesiaJapanMalaysiaPhilippinesSingaporeKorea,Rep.ThailandVietNamAmericasArgentinaBrazilCanadaColombiaMexicoUnitedStatesMiddleEastEgypt,ArabRep.SaudiArabiaEuropeFranceGermanyItalyTheNetherlandsNorwayPolandSpainTürkiyeUnitedKingdom52556746395868586060744162505358444346442945403229445641CarbonpricingSubsidiestolow-carbon65656662456673686169715665626969535557585465555060656162technologies/renewablesRegulationlimiting52506444315360485256644850505456433541443540383433434844emissionsSource:WorldBankstaffcalculations,basedondatafromDabla-Norrisetal.2023.Note:Eachrowinthisfigureshowstheshareoffavorableresponsesineachcountrytothefollowingquestions:“Thinkingaboutalloftheimpactsofacarbonpricingpolicy,towhatextentdoyousupportoropposesuchapolicyinyourcountry?”;“Thinkingaboutalltheimpactsofasubsidytorenewableenergy,towhatextentdoyousupportoropposethispolicyinyourcountry?”;and“Thinkingaboutalloftheimpactsofregulation,towhatextentdoyousupportoropposethispolicyinyourcountry?,”respectively.tracedbacktoissuesofcomplexityandalackofunderstandingratherthantointerest-basedrejection.Forexample,studiesfromGermanyshowthat62percentofrespondentsfeelratherorverypoorlyinformedaboutthecarbonpricingschemeandlargelyoverestimateitsnegativefinancialeffects(Eßleretal.2023).Theinterplaybetweentheideasandinter-estsofthepublic,decision-makers,influentialstakeholders,andpoliticalleadersisastand-outissue.Politicalleadersandinfluentialstakeholderscanhaveparticularimpact,asseeninBrazil,Mexico,thePhilippines,andtheUnitedStates(LachapelleandPaterson2013;Marquardt,Oliveira,andLederer2022).However,publicideasarealsoimportant,espe-ciallywhentheyleadtomobilizationfororagainstpolicies,asdemonstratedbytheGiletsJaunesprotestsinFranceandtheglobalFridaysforFuturemovement.Ideologiesandworldviewstendtoovershadowsubjectiveclimatechangeknowledge,educationlevel,anddemographics(Hornseyetal.2016;McCright,Dunlap,andMarquart-Pyatt2016).Surveydatashowthatconcernsaboutclimatechangearehighandthatthepublicgenerallysupportsclimateaction,albeitwithlargevariationinsupportfordiffer-entclimatepolicies(Ipsos2022;OECD2022b)andacrossnationalities,socioeconomicgroups,andeducationalattainmentlevels(ISEAS–YusofIshakInstitute2022).Whencomparingpublicconcernaboutclimatechangeacrosscountries,commitmenttodemo-craticvaluesisanimportantpredictor(Lewis,Palm,andFeng2019).Althoughideationalfactorscancoalesceorcontributetomakingclimatechangeacceptanceordenialanintergroupidentityissue,polarizingpublicopinion,theireffectsdifferacrosscontexts.Forexample,educationhaspositiveeffectsonpro-climatebeliefsatlowandmiddlelev-elsofdevelopment(Czarnek,Kossowska,andSzwed2021).Athigherlevels,however,thiseffectdeclines.Socialconsensusontherealityofclimatechangeandtheneedforactioncanalsomediateidentity-andideology-baseddenialism(Goldbergetal.2020).Trust—ingovernment,science,andpeers—isanotherimportantmediatorthatcaninflu-encesupportforclimatepolicies(DrewsandvandenBergh2016;Jagers,Löfgren,andStripple2010;Kittetal.2021;KulinandJohanssonSevä2021;LambandMinx2020).42WithinReachAswithpublicopinion,ideologyandinformationalsoshapepolicymakers’climatebeliefs,ideas,andinterests(Elgin2014).Policymakingcanbeespeciallydifficultwhenideologicalpolarizationexistsamongdecision-makers(Rietig2019).Policymakersarealsooftentargetedbynetworksofthinktanksandexpertsfundedby—andproducingresearchtothebenefitof—vestedinterests(Franta2021;Plehwe2014).Thistargetingisconcerning,becausepolicymakersoftenrelyonscientificoreconomicideastolegiti-mizeorchangetheirpolicychoices(Satoh,Nagel,andSchneider2022).Tosupport­evidence-basedpolicymakingandpreventundueinfluencebyvestedinterests,increasedtransparencyinpolicyresearchisvital.Scientificandotherresearchbodies,especiallythosewithapublicmandateandtransparentfunding,canplayanimportantroleininformingpolicyandholdingpolicymakerstoaccount.Forexample,theUnitedKingdom’sCommitteeonClimateChangehasbeeninstrumentalinshapingclimatepol-icy(Averchenkova,Fankhauser,andFinnegan2021).Internationalscientificbodies,agencies,andnongovernmentalorganizations—suchastheIntergovernmentalPanelonClimateChangeandtheInternationalEnergyAgency—canalsoinformpolicymakingbyprovidingresearchandpolicyadvice.Althoughbeliefinclimatechangeisanimportantdeterminantofsupportforcli-mateactioningeneral,publicacceptabilityofspecificpoliciesdependsmoreondesignandcommunication(Hornseyetal.2016).Peopleoftenlackthenecessaryknowledgeandfirsthandexperiencetomakeinformeddecisions.Moreover,becausetheyhavelimitedtimeandresourcestoweighthecostsandbenefitsofcomplexpol-icyissues,theyrelyontrustedactorstomakedecisionsforthem(Kittetal.2021;Terweletal.2010).Thepublicoftenbasesitstrustinpolicymakersandgovernmentofficialsontheirperceivedcompetenceandintegrity,aswellasontheextenttowhichtheirvaluesalign(Kittetal.2021).Researchinpsychologyhasshownthatpeoplearemorelikelytoacceptinformationwhenitcomesfromacommunicatorwhomtheyperceivetobeanexpertandtohavenoadditionalmotivesforcommuni-catingtheinformation(KelmanandHovland1953).Policydesign,framing,andcom-municationthataddresspublicconcernsandbuildtrustcanhelpincreasepublicsupportforclimateaction.Asshowninfigure1.4,perceptionsoffairnessandeffec-tivenessarethestrongestdeterminantsofpublicsupportforclimatepolicies(Bergquistetal.2022).Researchshowsthatfocusingpolicycommunicationonco-benefitsandappealingtovaluessuchascommunityandfairnesscanbuildsup-portforclimatepolicyandcircumventideologicalobstacles(Bainetal.2016).Chapter5ofthisbookexploreshowpublicengagement,policyprocesses,andcom-municationcanfacilitateacceptanceofandsupportforclimatepolicies.InfluencehasmanyavenuesActors’abilityandmeanstoinfluencepolicymakingultimatelydeterminewhoseinterestsandideasarereflectedinpolicies(box1.4).Powerstrugglestakeplaceinarangeofarenas—fromnewsmediatobehind-doorslobbying—andatallstagesofthepolicy-making­process—fromframingissuesandsolutions,todesigningpoliciesandinstitutions,tointerpretingandimplementingpolicies(Morrisonetal.2019).Powerdynamicsskewedtowardincumbentswithaninterestinmaintainingthestatusquocanderailordelayclimatepolicy.Understandingthebalance,source,andmodeofinfluencebetweenactorshelpsaddresspowerimbalancesandmakespolicyprocessesandoutcomesmoreinclusiveandrepresentative(chapter4addressesthistopic).PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments43FIGURE1.4.Relationshipbetweendeterminantsandpublicopinionaboutclimatechangetaxesandlaws0.8Policy-specificbeliefsClimatechangeevaluation0.6Eectsizer0.4PsychologicalfactorsDemographics0.20–0.2FairnessClimatechangeknowledgeSelf-enhancementvaluesAgeEectivenessClimatechangebeliefIdeologyGenderClimatechangeseriousnessTrustIncomeClimatechangeriskperceptionSelf-transcendentvaluesEducationClimatechangeconcernSource:Bergquistetal.2022.Note:Thisfigureshowstheresultofameta-analysisbasedon51articlesincorporating89datasetsfrom33countrieswithatotalof119,465participants.They-axismeasurestheimportanceofafactor(forexample,perceptionoffairness)onameasureofpublicopinionaboutclimatechangetaxesandlaws(forexample,opinionregardingareformthatwouldincreasegasolinepricesandreducepublictransportationprices).BOX1.4Mappingoutactors’interests,ideas,andinfluenceAcommonstakeholderanalysisapproachusesamatrixtool,sometimescalledapower-interestmatrix,tomapoutactors’powerandpreferences.Withinthe4iFramework,powerreferstoactors’relativeinfluence;theirpreferencesdependontheirinterestsandideas(figureB1.4.1).•Keyactors(upperrightinthefigure)havethemostinfluenceandhavestrongpreferencesrelatedtoaspecificpolicyissueorreform.Understandingtheinterestsandideasunderlyingtheirpreferencesandsourcesofinfluenceisessential.•Latentactors(upperleft)haveinfluencebuthavenostrongpreferencerelatingtothepolicyissue.Theymightbecontextsetters—includinginstitutionalbodies,suchasregulators—thatarenotactivelyinvolvedbutwhoseimplicitsupportisrequiredtopassorimplementthepolicy.•Marginalizedactors(lowerright)havestrongpreferences,ormaybesignificantlyaffectedbythepolicyreform,buthavelimitedinfluenceoverotheractorsorinpolicyprocesses.Theycanquicklymoveintotheupperrightquadrantwhenmobilized—forexample,duringmassprotestsorstrikes.•Apatheticactors(lowerleft)havelimitedinfluenceandweakpreferencesrelatedtothepolicyissueoraredisengaged.(Continued)44WithinReachBOX1.4Mappingoutactors’interests,ideas,andinfluence(continued)FIGUREB1.4.1.Power-interestmatrixStrongLatentactorsKeyactorsMeasureofpowerApatheticactorsMarginalizedactorsWeakWeakStrengthofpreferencesStrongSource:Originalfigurepreparedforthisreport.Economicandpoliticalincumbentsuseaccess,resources,andpositiontoinfluencepolicydecisions.Lobbyingplaysabigrole,andincumbentindustryhasanadvantageintermsoforganization,resources,andaccesstodecision-makers.IntheUnitedStates,fossilfuelandtransportationcompanies,utilities,andaffiliatedtradeunionsspentatleastUS$2billiononclimatelobbyingbetween2010and2016(Brulle2018;Culhane,Hall,andRoberts2021;MengandRode2019).InFinland,lobbieshavesuccessfullyshapedclimatepolicybydirectly(anddiscreetly)lobbyingpoliticiansandparticipatinginpolicyprocesses(Vesa,Gronow,andYlä-Anttila2020).Incumbentindustriescaneffectivelyoppose,orsometimesignore,climatepolicies.Theycanopposepoliciesthroughnoncompliance,particularlywhenenforcementiscostly,informationasymmetriesexist,andregulationisweak.Theycanalsosecurefor-malorinformalexemptions,asattestedbythelargenumbersevadingairpollution,gasflaring,andfuelstandardregulationsinvariouscountries(Caoetal.2021;Gupta,Saksena,andBaris2019;Korppoo2018;Ya’u,Saad,andMas’ud2021).Quashingimplementationthroughinsufficientbudgetsupportisalsocommon,highlightingchallengesfordesign-ingenforceablepoliciesthatareresilienttochangeorfracturewithingovernment.Forexample,Mexico’sGeneralLawonClimateChange,LeyGeneraldeCambioClimático,hailedasoneoftheworld’sstrongestclimatelawswhenitwaspassedin2012,hasbeenweakenedbyitslackofconcreteandtimelyimplementationmechanisms,lowsupportamongelectedleaders,andlackofbudgetarysupportforclimateinstitutions(Averchenkova2020;Vance2012).Thosewithlessdirectinfluenceoverpolicymakingorpolicymakers—notablycivilsocietyandcivicgroups—haveusedalternativestrategies,suchasmassmobilizationandprotests.OutsiderswithfewresourcesorlittledirectaccesstopolicymakingcanusePoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments45severalmechanismstoinfluencepolicy.Swayingpublicknowledgeofanddemandforclimateactionisonewaytochangeincentivesfacingpolicymakersconcernedwithelec-toralsupport(Newell2021),andpublicmobilizationhaspromotedactionandurgency(CheonandUrpelainen2018;FisherandNasrin2021;Piggot2018).Indeed,internationalandlocalmovements,campaigns,andcoordination—suchasFridaysforFutureandExtinctionRebellion—havebecomeincreasinglyinfluential(GinanjarandMubarrok2020;Li,Trencher,andAsuka2022;Marquardt2020;Rayner2021).Litigationisanotherstrategythathasgainedinbothmomentumandimpact,espe-ciallyamongpeoplewhofacebarrierstodirectparticipationinorinfluenceoverpolicyprocesses(SetzerandVanhala2019).Thenumberofclimatechange-relatedcasestarget-inggovernments,privatesectoractors,andfinancialinstitutionshasmorethandoubledgloballysince2015(SetzerandHigham2022).Somecases—suchasthatbroughtbytheDutchUrgendaFoundation—haveusedacountry’sconstitutionorhumanrightslawtochallengetheadequacyofexistingclimatepolicytoincreasegovernmentambition(Wewerinke-SinghandMcCoach2021).Othershaveusedlitigationtochallengefossilfuelexplorationlicenses,environmentalimpactassessments,andthetransparencyofdecision-makingorinformation,forexample,onclimaterisks;stillothershavebroughtcorporateliabilityandfiduciarydutycasesagainstprivatesectoractors(SetzerandHigham2022).Forexample,projectsforathirdrunwayatLondon’sHeathrowAirportwereruledillegalbecausetheplansdidnotadequatelyconsidertheUKgovernment’sclimatecommitments(Carrington2020).Civicactors’influenceinclimatepolicymakingandimplementationdependson,andisoftenlimitedby,otherpoliticaleconomyfactors.Inparticular,therelativepowerandinfluenceofvestedinterestsalongsideincreasingstate-sanctionedintimidationandvio-lencelimitcivicengagement.Environmentaldefenderstendtofacehighpersonalandphysicalrisk,despiterelyingprimarilyonnonviolentmeansofaction.In2020,theglobalEnvironmentalJusticeAtlasidentified2,743casesofenvironmentalconflict.Amongactorstakingsomeformofcivicaction,includinglitigation,protest,ormobilization,18percenthadexperiencedphysicalviolence;13percenthadbeenassassinated;andabout20percentfacedcriminalizationofdissentthroughimprisonment,restrictedrights,orprosecutionwithoutclearcharges(Scheideletal.2020).Intimidationisnot,ofcourse,theonlyinfluence;misinformationcampaignsandstrategiccommunicationsbyvestedinterestsareespeciallypotentinlimitingorredirectingcivicengagement(SupranandOreskes2017).Aroundtheworld,spacesforcivicengagementandmediafreedom,ortheprotectionofthesespaces,arebeingclosed,withimplications(intentionalorother-wise)forenvironmentalcivicactionandthusonthedesignofclimatepolicies.Inanutshell:AdynamicstrategytoprogressivelyreduceconstraintsandbuildsupportforclimatepoliciesThisbookfindsthatthepoliticaleconomyisnotwritteninstoneandshouldbeconsideredachangingandmalleableconstraint.Whenprioritizingandsequencingclimatepolicies,andwhendesigningpolicyprocessesandclimatepoliciesthemselves,governmentscanapplyadynamicapproachtothepoliticaleconomychallengestoclimategovernance.Thisdynamiclensleadstothefollowingthreekeymessages.First,governmentsshouldaimtomovefromopportunisticorunstabletoenduringandstrategicclimateinstitutions.Country-levelpoliticaleconomydynamics—­specificallyclimatepolicynarrativesandpoliticalpolarization—determinethebestapproachto46WithinReachclimateinstitutionsindifferentcountries.Theclimateinstitutionsthatarea“goodfit”forthepoliticaleconomytodaycanpavethewayformorestrategicclimateinstitutionstomorrow.Climatechangeframeworklaws,long-termstrategies,andjusttransitionframeworksandprinciplesarekeystrategicclimateinstitutionsthatcanfundamentallyalterthepoliticaleconomyofclimatepolicies.Second,governmentsshouldselectandsequencepoliciesonthebasisofdynamicratherthanstaticefficiency,consideringhowtheyfeedbackonthepoliticaleconomyandbalancingshort-termfeasibilitywithlong-termobjectives.Thelowest-costoptionfromapurelyeconomicperspectivemaywellleadtopoliticalbacklashandcreatehighercostsinthefuture,whereaschoosingamoreexpensivepolicytodaymightbemoredynamicallyefficientifitshiftsthepoliticaleconomytomakeiteasiertoimplementmoreefficientpolicieslater.Bystrategicallyselectingandsequencingpolicies,govern-mentscanbuildinstitutionalcapacityandcreatepolicybeneficiarieswhowillsupportfurtherpolicyaction.Governmentscanalsoofferfirmsandpeopleaffordableoptionstosubstituteawayfromfossilfuels.Theycanalsoleveragereinforcingpolicyfeedbackpro-cessesandtargettippingpointsinthebroadersocio-technical-politicalsystemtoaccel-eratetransformationalchange.Thesetippingpoints,whichcanbetechnological,socialandbehavioral,orpolitical,arekeytoacceleratingdecarbonization.Strategicallyselect-ingandsequencingfeasiblepoliciesdoesnotmeanclimateprogresswillbeslow.Third,policyprocessanddesignneedtoconsiderthepoliticaleconomy,includingconcentrateddistributionalimpactsandtheneedforpolicylegitimacy.Climatepolicieshaveheterogenousdistributionimplicationsacrosssocietalgroups,incomeclasses,sec-tors,occupations,orspace;andthevarianceinimpactsislargerwithinincomegroupsthanacrossincomegroups.Compensationtoprotectpoorandvulnerablepopulationsispossibleandaffordable;however,thepoliticaleconomyinvolvesmorethandistributionalimpacts,andprotectingpoorhouseholdsisnotenoughtoensureacceptability.Oppositiontoapolicyreformisoftentriggeredbyconcentratedimpactsonwell-organizedorwell-connectedgroups,suchaspowerfulinterestgroups,organizedworkersinkeysec-tors,theurbanlower-middleclass,carbon-intensiveregions,orothersocietalgroups,makingcomplementarypoliciesandcompensationmorechallengingtodesignandimplement.Oppositionalsooftenoriginatesfromaperceivedlackoflegitimacyof(oragencyin)thepolicyprocess.Civicengagementandcommunicationcanhelpbuildlegitimacyanddevelopworkingcompromisesandnecessarysupportbymediatingdistri-butionalconflict,differencesinpreferencesandpriorities,andunequalpowerdynamics.Note1.NewClimateInstitute,ClimatePolicyDatabase,https://climatepolicydatabase.org.ReferencesAbbott,K.W.2017.“OrchestratingExperimentationinNon-stateEnvironmentalCommitments.”EnvironmentalPolitics26(4):738–63.Aklin,M.,andM.Mildenberger.2020.“PrisonersoftheWrongDilemma:WhyDistributiveConflict,NotCollectiveAction,CharacterizesthePoliticsofClimateChange.”GlobalEnvironmentalPolitics20(4):4–27.https://doi.org/10.1162/glep_a_00578.Aldy,J.E.2018.“PolicySurveillance:ItsRoleinMonitoring,Reporting,EvaluatingandLearning.”InGoverningClimateChange:PolycentricityinAction,editedbyA.Jordan,D.Huitema,H.vanAsselt,andJ.Forster.Cambridge:CambridgeUniversityPress.PoliticalEconomy:AMajorBarriertoAligningClimatePolicieswithCommitments47Angelsen,A.,M.Brockhaus,W.D.Sunderlin,andL.V.Verchot,eds.2012.AnalysingREDD+:ChallengesandChoices.JawaBarat,Indonesia:CenterforInternationalForestryResearch.Averchenkova,A.2020.“Mexico’sFrameworkLegislationonClimateChange:KeyFeatures,AchievementsandChallengesAhead.”InNationalClimateChangeActs:TheEmergence,FormandNatureofNationalFrameworkClimateLegislation,editedbyT.L.Muinzer,93–110.GlobalEnergyLawandPolicySeries.Oxford:HartPublishing.https://www.bloomsburycollections.com/monograph​-detail?docid​=b​-9781509941742&pdfid=9781509941742.ch-004.pdf&tocid=b-9781509941742-chapter4.Averchenkova,A.,S.Fankhauser,andJ.J.Finnegan.2021.“TheImpactofStrategicClimateLegislation:EvidencefromExpertInterviewsontheUKClimateChangeAct.”ClimatePolicy21(2):251–63.https://doi.org/10.1080/14693062.2020.1819190.Bain,P.G.,T.L.Milfont,Y.Kashima,M.Bilewica,G.Doron,R.B.Garðarsdóttir,V.V.Gouveia,etal.2016.“Co-BenefitsofAddressingClimateChangeCanMotivateActionaroundtheWorld.”NatureClimateChange6(2):154–57.https://doi.org/10.1038/nclimate2814.Bang,G,J.Hovi,andT.Skodvin.2016.“TheParisAgreement:Short-TermandLong-TermEffectiveness.”ClimateGovernanceandtheParisAgreement4(3).https://doi.org/10.17645/pag.v4i3.640.Barrett,S.,andA.Dannenberg.2016.“AnExperimentalInvestigationinto‘PledgeandReview’inClimateNegotiations.”ClimaticChange138:339–51.Beck,S.,andM.Mahony.2018.“ThePoliticsofAnticipation:TheIPCCandtheNegativeEmissionsTechnologiesExperience.”GlobalSustainability1.https://doi.org/10.1017/sus.2018.7.Beeson,M.2016.“EnvironmentalAuthoritarianismandChina.”InTheOxfordHandbookofEnvironmentalPoliticalTheory,editedbyT.Gabrielson,C.Hall,J.M.Meyer,andD.Schlosberg.Oxford:OxfordUniversityPress.https://doi.org/10.1093/oxfordhb/9780199685271.013.14.Bergquist,M.,A.Nilsson,N.Harring,andS.C.Jagers.2022.“Meta-AnalysesofFifteenDeterminantsofPublicOpinionaboutClimateChangeTaxesandLaws.”NatureClimateChange12(3):235–40.https://doi.org/10.1038/s41558-022-01297-6.Bernstein,S.,andM.Hoffmann.2018.“ThePoliticsofDecarbonizationandtheCatalyticImpactofSubnationalClimateExperiments.”PolicySciences51(2):189–211.Betsill,M.,N.K.Dubash,M.Paterson,H.vanAsselt,A.Vihma,andH.Winkler.2015.“BuildingProductiveLinksbetweentheUNFCCCandtheBroaderGlobalClimateGovernanceLandscape.”GlobalEnvironmentalPolitics15(2):1–10.Biermann,F.,N.Kanie,andR.E.Kim.2017.“GlobalGovernancebyGoal-Setting:TheNovelApproachoftheUNSustainableDevelopmentGoals.”CurrentOpinioninEnvironmentalSustainability26–27:26–31.Bromley-Trujillo,R.,J.S.Butler,J.Poe,andW.Davis.2016.“TheSpreadingofInnovation:Stat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rms,andactionsarestructured,sustained,regulated,andheldaccountable.Itistheprocessthroughwhichstateandnonstateactorsinteracttodesignandimplementpolicieswithinagivenset5556WithinReachofformalandinformalrulesthatshapeandareshapedbypower(WorldBank2017).Thisprocessisfrequentlyaffectedbycommonproblemssuchascapture,unbalancedresourceallocations,andlimitedstakeholderengagementind­ecision-​making(figure2.1).Publicinstitutionsarekeyinshapingthegovernanceprocessandexecutingprocessoutcomes.Publicinstitutionsincludegovernmentandpublicservicebodiesthatstruc-turepublicaffairs,deliverservices,andimplementregulations,andtherulesthatgovernthosebodies.Toenableclimatepolicies,institutionsneedtoperformthreekeyfunctions:enablingcrediblecommitment,inducingcoordination,andenhancingcooperation(WorldBank2017)—seetable2.1.Climateinstitutionscanhelpestablishformalrulesandorganizationsthatfacilitatethedesign,implementation,andenforcementofeffectiveclimatepolicies.Theyincludelaws,strategies,frameworks,andinstitutionalbodiesandorganizationsthatalterthewayclimatepoliciesaremadeandenacted(box2.1).Forexample,ChileenactedaClimateChangeFrameworkLawin2022imposinglegallybindingclimateneutralityby2050andestablishingprinciplessuchasscientificvalidity,cost-effectiveness,citizenparticipation,andequityandclimatejustice.Thecountryalsocreatednewclimategovernancebodies,suchastheCouncilofMinistersforSustainabilityandClimateChangeandtheScientificAdvisoryCommittee(GranthamResearchInstitute2022).Thesenewformalrulesandorganizationalbodieshavethepotentialtofundamentallyalterthewaythecountrymakesitsclimatepolicies.Governmentswillneedadditionalcapacitiesandresourcestofulfillclimategover-nancefunctionsacrossinstitutions.ThisincludesexpandingcapacitiesforplanningandFIGURE2.1.GovernancedimensionsandfrequentgovernanceproblemsDecision-making/FrequentcommitmentsgovernanceAccountabilityRegulation:problemsdevelopmentandGovernanceCapturedimensionsadoptionofspecificrulesUnevenenforcementandrightsAdjudicationImplementationandenforcementLimited/nostakeholder(capacity,resourcing,involvementinintentofequaldecision-makingenforcement)HighlyunfairorunbalancedresourceallocationsViolenceandinsecurityEconomicand/orpoliticalelitescapturingrentsSource:Originalfiguredevelopedforthisreport.ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition57TABLE2.1.Climategovernance:ThreecorefunctionsofinstitutionsGovernanceTasksExamplesfunctionMakecredibleclimatecommitmentsbysettingRegularNDCupdatesEnablinglong-termandintermediatetargets.credibleFrameworkclimatelegislationandlong-termcommitmentDevelopclearpolicyplansthatcapturescaling,pledgesortargetsacceleration,adjustment,andenforcementmechanisms.IntegratingclimateintonationaldevelopmentplansEstablishandcapacitategovernanceandfinancingLTSsandsectoraltargetsandplansmechanisms.RegularreviewsofpoliciesandregulationsEstablishandcapacitateaccountabilitymechanisms.Climateinstitutionsandbodiesresponsibleforgovernance,implementation,andmonitoringandevaluationInducingCoordinateactionsbetweenactors,acrosssectors,Cross-sectoralcoordinationmechanisms,suchascoordinationandbetweenlevelsbydevelopingandupdatinginterministerial,interregional,orparliamentarysystematicstrategiesandroadmaps.forumsLTSsandsectoraltransitionstrategiesCollectandmakeinformationavailabletoEmissionsreportingstakeholders.GreenbudgettaggingPrivate-publicforumsInstituteappropriatecoordinationmechanisms.EnhancingDevelopandadoptbindingrulesandregulations.Incentivestructureswithamixofregulationsandcooperationpricinginstrumentsforemissions,pollution,pricing,Introduceincentivesanddisincentivestopreventandsoonfreeridingandgeneratecompliance.Fiscalpolicies,includingtaxes,subsidies,andpublicImplementengagementandcommunicationinvestmentstrategiesthatinform,empower,andhelpsecurebuy-infromstakeholders,particularlythepublic.Communicationinstruments,suchaslabeling,publicengagement,educationandtraining,andDevelopandensurethenecessarycapacity,publicreportingresourcingforimplementation,andequalenforcement.Adjudicatewhennecessary.Source:Originaltabledevelopedforthisreport,basedonWorldBank2017.Note:LTS=long-termstrategy;NDC=nationallydeterminedcontribution.managingenergytransitionsorconductingclimate-informedpublicinvestmentapprais-alsanddevelopingnewfunctions,suchastechniquesformonitoringgreenhousegasemissions.Meetingthisneedwillrequireadditionalstaffandfinancialresourcestodelivernewmandates,fromintensifyingforestprotectioneffortstoenhancingagricul-turalextensionservicesandassessingprioritiesinpublicinvestmentmanagement.Althoughsomegovernmentswillfacechallengesinfinancingtheseneedsontopofotherdevelopmentimperatives,theywillfinditeasierwithsocialandpoliticalconsensusthataddressingclimatechangeadaptation,mitigation,andjusttransitionexpendituresarebothapriorityandintheinterestofeconomicdevelopment.Lessonsfromreal-worldclimateinstitutionsReal-worldexamplesofclimateinstitution-buildingeffortsdemonstratehowthepoliticaleconomycanshapetheformandfunctionalityoftheseinstitutions.Dubashetal.(2021)explorehowpoliticaleconomydynamics—specificallyclimatepolicynarrativesand58WithinReachBOX2.1TheWorldBank’sClimateChangeInstitutionalAssessmentTheClimateChangeInstitutionalAssessment(CCIA)isaframeworkthathelpscountriesassessthestrengthsandweaknessesoftheirinstitutionstoaddressclimatechange.Ithasbeenappliedinmorethan50countriesinallregions,atallstagesofdevelopment,andfacingthefullrangeofclimateimpacts.TheCCIAcoversfivepillars—organization,planning,publicfinances,subnationalgovernmentsandstate-ownedenterprises,andaccountability—and23topicsthataddressthepoliticaleconomychallengesofclimatechange(figureB2.1.1).TheCCIAfocusesoncrosscutting,center-of-governmentinstitutions,suchasplanning,finance,economy,andclimate-specificagencies,andonmechanismsforengagingwithnongovernmentstakeholders.Anumbrelladiagnostic,ithascomplementarytools—suchasPEFAClimate,awhichidentifiesthestrengthsandweaknessesofclimate-responsivepublicfinancialmanagement,andC-PIMA,bwhichassessescountries’capacitytomanageclimate-relatedinfrastructure—forin-depthanalysisofspecifictopics.Itcomplementsdiagnosticsthatfocusontheprivate,financial,andspecificsectors(energy,transportation,agriculture,andsoon).EachCCIAproducesasetofrecommendationsthathaveinformedthepreparationofnationallydeterminedcontributions,long-termsolutions,technicalassistance,andinvestments.FIGUREB2.1.1.ThefivepillarsoftheCCIAPILLAR1.PILLAR2.PILLAR3.PILLAR4.PILLAR5.OrganizationPlanningPublicFinancesSubnationalAccountabilityGovernmentand1.1Regulatory2.1Long-term3.1Publicfinancial5.1AccesstoframeworkstrategiesmanagementSOEsclimateinformation1.2Functional2.2Medium-term3.2Public4.1Functionalmandatesstrategyinvestmentallocation,5.2Stakeholdermanagementcoordination,engagement1.3Coordination2.3Riskandandcapacityvulnerability3.3Public5.3Independent1.4Technicalprocurement4.2Strategicexpertadvicecapacity2.4Developmentandland-useplanning3.4Climatefinanceplanning5.4Legislativereview2.5Monitoring,4.3Subnationalreporting,andclimate5.5Auditverificationfinance5.6Judicialreview4.4State-ownedenterprisesSource:Originalfiguredevelopedforthisreport,basedonWorldBank2021.Note:CCIA=ClimateChangeInstitutionalAssessment.a.FormoreaboutPEFAClimate(PublicExpenditureandFinancialAccountabilityClimateResponsivePublicFinancialManagementFramework),seehttps://www.pefa.org/resources/climate-responsive-public-financial-management-framework​-pefa-climate-piloting-phase.b.FormoreaboutC-PIMA(Climate–PublicInvestmentManagementAssessment),seehttps://infrastructuregovern.imf.org​/­content/PIMA/Home/PimaTool/C-PIMA.html.ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition59politicalpolarization—shapetheformandfunctioningofclimateinstitutionsindifferentcountries.Politicalnarrativesrevealdominantpolicyideas,whicharedividedintooppos-ingnarratives:•Mitigation-centricnarrativesemergewhereclimatechangemitigationisalreadyawell-establishedandhigh-prioritypublicgoalthatallowsforexplicitemissionsreduc-tionframing.•Embeddedclimatenarrativesarelikelywhenclimateislowerontheagenda,soitiseasiertouseframingthatsubsumesclimategoalsunderotherobjectives,suchasgreengrowth,energysecurity,orjobcreation.Moreover,theprevailinglevelsofpoliticalpolarizationarerelatedtothepro-oranti-climateinterestsofinfluentialactors:•Highlevelsofpolarizationarelikelywhenthereareinfluentialpro-andanticlimateactors,especiallyiftherearedistributionalconflictsbetweenwinnersandlosers(asisoftenthecasewithoilandgasexporters).•Lowlevelsofpolarizationarelikelywhenmostinfluentialactorsarepro-climatepolicyand/orinthecaseoflimitedtrade-offsorcostsforpowerfulactorsorsocietalgoals.Basedonthesedimensions,Dubashetal.(2021)identifyfourtypesofclimatepolitics(table2.2)thattendtoproducefourdistincttypesofclimategovernanceinstitutions:opportunistic,strategic,unstablesectoral,andunstableclimateinstitutions.Strategicclimateinstitutionsaremoreacceptable,durable,andeffectivewhenawork-ingpoliticalclimateconsensusexists—thatis,whentheneedforambitiousclimatepoli-ciesiswidelyacceptedinthepublicdiscourse—andlevelsofpoliticalcontestationarelower.Governmentscanusestrategicclimateinstitutionstofundamentally(re)structurethestateresponsetoclimatechange.Theseinstitutionsprovideanoverarchinginstitu-tionalframeworkthatguidesclimatevision,targetsetting,decision-making,institutionaldevelopment,andimplementation,bringingtogetherthecoregovernancefunctions.Theycantaketheformofaclimatelaworstrategythatfulfillsthefunctionsofnarrativeandhigh-leveldirectionaswellassettingoutprinciplesforaction,mechanismsforupgradingexistinginstitutionstoenableandcoordinatepolicymakingandimplementa-tion,andplansformobilizingandchannelingfinance(Sridharetal.2022).Tobecredible,theseinstitutionsshouldincludeoversight,accountability,andenforcementmeasuresaswellasprocessesthatsupportstakeholderalignment(box2.2).TABLE2.2.TypesofclimategovernanceInterestsIdeasDominantnarrativeonclimatepoliciesExtentofLowEmbeddedMitigation-centricUnder-the-radarclimatepoliticsClimateconsensuspoliticspoliticalOpportunisticclimateinstitutionsStrategicclimateinstitutionspolarizationof“Contestedsector”politicsIn-the-crossfirepoliticsUnstablesectoralinstitutionsUnstableclimateinstitutionsclimatepolicyHighSource:Dubashetal.2021.60WithinReachBOX2.2HowconsensusenabledtheUnitedKingdom’sstrategicclimateinstitutionsand2008ClimateChangeActTheUnitedKingdomprovidesanexampleofclimateconsensuspoliticsthathaveenabledandthenbeenadvancedthroughstrategicclimateinstitutions,specificallythe2008ClimateChangeAct(Averchenkova,Fankhauser,andFinnegan2021).Theactfollowedalmosttwodecadesofclimateinstitutionbuilding,fromthe1994UKProgrammeonClimateChangetothe2000ClimateChangeProgramme,whichestablishedmitigation-centricdiscourse,bolsteredbythecountry’sparticipationinthe1997KyotoProtocolthroughtheEuropeanUnionandadoptingtargetsunderEUclimatepackages.TheClimateChangeActbuiltonandenhancedmitigationtargetsandestablishedadditionalclimateinstitutions,mostprominentlytheindependentClimateChangeCommittee.Theabsenceofapowerfulcoallobby—theresultofdismantlingthecoalindustryinthe1980s—certainlyhelped.Otherpoliticaleconomy–enablingfactorsincludestrongdemocraticinstitutionsandadministrativecapacity.Theactalsofavoredmarket-mimickinginstrumentsthatalignwithprevailingmarketideology-basedpreferences,andtheClimateChangeCommitteehasplayedakeyroleinshapingideasandpolicydiscourse.TheUnitedKingdomhasbeenabletomeetitsfive-yearmitigationtargets,withespeciallydeepdeclinesinthepowersector.Sources:Lockwood2021;WorldBank2023.Bycontrast,highpoliticalpolarizationoracontesteddominantnarrativeonclimatemakesitmuchmoredifficulttodevelopstrategicinstitutionsandstablesectoralinstitu-tions.Whenthereisgreaterresistanceandreactivityinthepoliticaleconomy,itcanbedifficulttoconsolidategovernancegainsandbuildclimatepolicyprogress;climateinsti-tutionsmaybeblockedorrolledbackasvestedinterestsworkagainstthem.Thishap-penedwithBrazil’sActionPlanforthePreventionandControlofDeforestationintheLegalAmazon.Insuchacontext,eveneffortstolayerclimateinstitutionsinkeysectorsareathighriskofbacklashbecausethepoliticaleconomyishighlysensitiveandreactivetochange(box2.3).Opportunisticclimateinstitutionstendtoemergewhenclimatepoliticsareundertheradarbecauseofclimatenarrativesembeddedinotherobjectivesandlowlevelsofpolit-icalcontestationaroundclimatechange,asisthecaseinmanylow-andmiddle-incomecountries.Becauseclimatechangeisnotcentraltopolitics,ormaybeactivelykeptoutofpolitics,climatechangemitigationistailoredtootherdomesticagendasandlayeredontoexistinginstitutions—forexample,byaddingclimatechangemandatesorreportingtoexistingportfolios,suchasenergyortransportation(box2.4).Opportunisticinstitutionscanavoidincreasingcontestationorpolarization,especiallyincontextswheremitigationcouldencounterresistanceifitisperceivedtobeatoddswithotherprioritiesordis-courses.Suchinstitutionsoftendependonindividualchampionsbutcanwitherwhentheirsupportwanes,becausetheyarelesslikelytobeinstitutionalizedthroughlegisla-tion.Byaligningclimatechangeobjectiveswithnationaldevelopmentpriorities,oppor-tunisticclimateinstitutionscanbeanimportantfirststeptowarddevelopingmoreestablishedanddedicatedclimateinstitutionsinthelongerterm.Lackingframeworksthatcanalignactionsacrosssectors,theyalsofacegreaterriskofmiscoordination,whichcanresultinduplicationofeffortsorinterventionsthatworkatcross-purposes.ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition61BOX2.3PoliticaleconomybarrierstoBrazil’sActionPlanforthePreventionandControlofDeforestationintheLegalAmazonThe2004ActionPlanforthePreventionandControlofDeforestationintheLegalAmazon,overseenandimplementedbyseveralgovernmentbodies,contributedtoa76percentreductionintheannualdeforestationratebetween2005and2012.Thisachievementdemonstratesexistentandavailablegovernancecapacity.Butthesuccessoftheseeffortsdrewbacklashfromruralandagriculturalinterests,whichexertedconsiderablepressureonthegovernmentandpoliticiansinamacroeconomiccontextthatmagnifiesrevenuesfromextensiveagriculture(Hanusch2023).Underpressurefromthesevestedinterests,budgetallocationsdeclinedfrom2011,regulationsweakened—forexample,the2012revisedForestCodevastlyreducedthearearequiredforlegalreservesonruralprivatepropertiesanddeacceleratedtheimplementationoftheEnvironmentalCadaster—andhigh-levelpoliticalsupportdissolved,erodingthecapacityoftheclimateinstitutionsunderpinningtheanti-deforestationefforts(Hochstetler2021).By2020,BrazilianAmazondeforestationrateswereattheirhighestinadecade(figureB2.3.1).Initsfirstsixmonths,thenewadministration,whichtookofficeearlyin2023,demonstratedtheimportanceofpoliticalcommitmentforreinstatingpublicpoliciesinsupportoftheenvironmentalprotectionagenda.Effectivepolicychangestodate—includingstrengtheningtheenvironmentalprotectionagencyIbamaastheauthorityinchargeofcombatingillegaldeforestationandtheindigenousagencyFUNAI,leadingtothedemarcationofnewindigenousterritories,thereactivationoftheAmazonfund,andtheswiftapprovalofthecross-ministerialactionplanstocombatdeforestation—haveledtoasignificantreductionindeforestationwithinafewmonths.Theseupsanddownsofclimatepolicyimplementationshowthatthepoliticaleconomyisatleastasimportantascapacitywhenitcomestoensuringdurableclimateaction.Aconsensusofallmajorstakeholderswillnowbeneededtomaintainthoseinitialresultsandavoidanewpoliticalbacklash.FIGUREB2.3.1.DeforestationinBrazil,1996–202030,000Rateofdeforestationperyear(km2)25,00020,000–44%(estimatedfor2020)15,000–80%(target)10,0005,00001996199719981999200020012002200320042005200620072008200920102011201220132014201520162017201820192020YearPPCDAmphaseIPPCDAmphaseIIPPCDAmphaseIIIPPCDAmphaseIV(interrupted)Referenceaverage(1996–2005)Source:SilvaJunioretal.2021.Note:PPCDAm=PlanforthePreventionandControlofDeforestationintheLegalAmazon.62WithinReachBOX2.4TheemergenceofopportunisticclimateinstitutionsinIndiaInIndia,activebutopportunisticclimateinstitutionshaveemergedacrossmultipleministriesbecauseaclimatelenshasbeenlayeredontoestablishedbodies.Buildingonexistingpriorities—includingincreasingenergysupplyandsecurity,andcontrollingairpollution—theseinstitutionshaveemerged,crucially,withoutstrongnationalmitigation-centricstrategicinstitutions,suchasaclimatechangeframeworklaw,thatcouldhavetriggeredbacklashduetoprevailingdiscoursesaroundpotentialtrade-offsbetweenclimateanddevelopmentgoals.Previouseffortstocreatemorestrategicinstitutions,specificallyrelatedtotheNationalActionPlanonClimateChange,havebeenpoliticallydifficult.Incontrast,opportunistic,sector-based,morebottom-upclimateinstitutions—initiativesaroundsolarenergy,energyefficiency,andelectricvehicles,whicharedeliveringsignificantmitigationgains,primarilyasco-benefitstodevelopmentalaims—havebeensuccessful.Between2014and2022,India’srenewableenergypowergenerationcapacity,includinghydropower,increasedbyafactorof2.2,withsolarpowergrowingfrom3to63gigawatts(GovernmentofIndia2023),therebycontributingtoincreasedenergysupplyandenhancedenergysecurity.Andby2018,energyefficiencyimprovementssince2010prevented12percentofadditionalannualenergyuse(IEA2021).Theseopportunisticclimateinstitutionsarealsocreatingnewinterestsinthesesectors;asaresult,climateisbecomingmainstreamed,contributingtoshiftsinthepoliticaleconomythatcouldreinforceclimateactiongoingforward.Source:PillaiandDubash2021.Unstableclimateinstitutionsmightnotsurvivewhentheclimateagendaiscaughtincrossfirepolitics—thatis,whenclimatenarrativesaremitigation-centricbuthighlevelsofcontestationandpolarizationsurroundtheclimateagenda.Climatecanbecomeahottopicwhenitisembroiledinapolarizedandideologicallyfraughtpoliticallandscape,asseeninAustraliaandtheUnitedStates.Insuchcases,climatechangecancometorepre-sentbroaderissuesofpoliticalaffiliationandidentitypolitics,withastrongundertowofvestedinterests.Shiftingnarrativesorlayeringapproachescanhelpembedclimatepoli-ciesinexistingprograms,suchasenergyprocurement,toprotectclimateinstitutionsandpoliciesfromrollbackafterachangeingovernment.Institutionsthatareagoodfitforthepoliticaleconomycancausemoreenablingcon-ditionstoemerge.Climategovernanceinstitutionscantriggerfeedbackintherestofthepoliticaleconomy,withimplicationsfortheevolutionofclimategovernanceovertime.Forexample,wheremitigation-centricstrategicclimateinstitutionsareprematurelyestablishedincontextswithoutclimateconsensusorwhereclimatepoliticsarec­ontested,suchinstitutionscantriggernegativefeedback,increasingpolarizationandoppositiontotheinstitutionitselfandclimateactionmorebroadly,ashappenedinBrazil.Abetterfitinsuchcontextsmightbeopportunisticinstitutions,iftheyleadtopositivefeedbackbysupportingtheemergenceofpro-climateinterestsandmainstreaming,asseeninIndia.Alternatively,sectoralorsubnationalinstitutionsthatfocuslargelyonexistingprioritiesandhavemitigationasaco-benefitmaydeliveremissionsreductionsandsubtleshiftsinthepoliticaleconomyinamorebottom-upmanner,ashappenedinAustraliaandSouthAfrica(boxes2.5and2.6).ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition63BOX2.5PoliticalpolarizationunderminesclimateinstitutionsinAustraliaAustralia’shighlypolarizedpoliticaldiscoursearoundclimatemitigationhasunderminedopportunitiesforbuildingdurableclimateinstitutions(MacNeil2021).TheAustralianeconomy’shighresourcedependency(particularlyonfossilfuels)hasfosteredpowerfulvestedinterestsinkeyemittingsectorsthathaveconsistentlymobilizedagainstclimateactionoverthepastthreedecades.Despitetheestablishmentbetween2007and2013ofseveralclimateinstitutions—includingtheAustralianRenewableEnergyAgency,CarbonPollutionReductionScheme,CleanEnergyActandCleanEnergyFuturesPackage,CleanEnergyFinanceCorporation,CleanEnergyRegulator,ClimateChangeAuthority,ClimateCommission,andMulti-PartyCommitteeonClimateChange—mostwererolledbackorunderminedafterachangeingovernment.In2014,thegovernmentdisbandedtheClimateCommissionandrepealedthecarbonpricelegislatedundertheCleanEnergyAct.Giventhehighlevelsofnational-levelpoliticalcontestationandpolarization,subnationalclimateinstitutionshavebecometheprimarydriverofpolicy-basedemissionsreductionsinAustralia,enabledtoadegreebynationalinterventionsthatimprovedinvestmentconditionsandincentivesaroundrenewableenergy.Specifically,theAustralianRenewableEnergyAgencyandCleanEnergyFinanceCorporationhavebeenessentialinproviding“pull”instrumentsintheformofgovernmentfundingandjobcreationinrenewableenergy.Whethertheseorsimilarinterventionsareenoughtoshiftinterestsandotherpoliticaleconomyfactorstomorestrategicclimateinstitutionalactionisyettobeseen.Followingthemostextensivebushfiresinthecountry’shistory,inthesummerof2019–20,andmajorfloodsinearly2022,anewgovernmentcametopowerinMay2022withamandatetostrengthenAustralia’sresponsetoclimatechange.Thegovernmentpassedaclimatechangeframeworklawenshrininga43percentreductioninemissionsby2030,a2050netzerotarget,andanenhancedroleforindependentexpertadvice.Separatelegislationwaspassedtostrengthenthe“safeguardmechanism”toratchetdownemissionsfrommajorsources.BOX2.6WhycoalpoliticstrumpclimateinstitutionsinSouthAfricaClimateinstitutionsinSouthAfricahavestruggledtotakeholdbecauseofhighlycontestedpoliticsinfossilfuel–basedsectors.Coaldominatesthepowermix(figureB2.6.1)andaccountsfor84percentofemissionsintheenergysector;vestedinterestsinthisandothercoal-dominatedsectors—includingelectricity,syntheticfuel,andsteel—aredeeplyembeddedandpowerful.Incontrasttoothercases,wherecross-sectoralcoordinationisviewedasthekeychallenge,SouthAfrica’smainclimatechallengeliesinreorientingasinglesectordominatedbyafewpowerfulactors(Bakeretal.2015).Climateinstitutionsoutsidetheenergysector,suchasthe2011NationalClimateChangeResponseWhitePaper,andinterventionswithinthesector,suchastheIntegratedResourcePlanandtheRenewableEnergyIndependentPowerProducersProcurementProgramme,havebeendelayedorstalled,orhavehadlimitedeffect.Morerecently,effortshaveshiftedtostrategicclimateinstitutionscenteringonajusttransitionnarrative,throughtheJustTransitionFramework(PresidentialClimateCommission2022),whichspeakstosocialandpoliticalprioritiesrelatingtoredistributivedevelopmentandaddressesconcernsofsomepowerfulinterestgroups(namelylaborunions),withmitigationasaco-benefit.Atthesametime,theenergysupplycrisisandrapidperformancedeclineinSouthAfrica’sagingcoalinfrastructurehaveopenedthewayforreformsthatmightallowfortheneededreorientationoftheenergysector.Ultimately,thesefactorswilllikelydrivethebulkofmitigationinSouthAfrica.Additionally,discussionsincreasinglycenteraroundtheEuropeanUnion’sCarbonBorderAdjustmentMechanismanditsimplicationsfortheSouthAfricanexportindustry.Topreserveindustrialcompetitivenessandincreaseglobalclimateaction,CarbonBorder(Continued)64WithinReachBOX2.6WhycoalpoliticstrumpclimateinstitutionsinSouthAfrica(continued)AdjustmentMechanismsaimtobalancethepricesofgoodsproducedinajurisdictionwithcarbonpricingmechanismsandexternallyproducedgoodsbyapplyinganequivalentcarbonpriceonimportedgoods.PossiblyaffectingalargeshareofSouthAfricanproducers—includingthoseinthesteelindustry,whichemploys28,000people—suchamechanismwillhaveagreatimpactonthecountry’spoliticaleconomyofclimateaction(PresidentialClimateCommission2023).Withhighlyinterdependentnational,provincial,andlocalspheresofgovernment,generatingaclimateconsensuspoliticalnarrativeandbuildingstronggovernmentcoordinationmechanismsandcapabilitiescouldhelpopenthewayformorestrategicclimateinstitutions,accountingfortheresponsibilityofstateactorsandsmoothingthetransition.FIGUREB2.6.1.SouthAfrica’spowermix,1990–2021300Renewables9%Grosspowergeneration(TWh)250Nuclear3%200150Coal87%10050019901995200020052010201520212021Source:ClimateTransparency2022.Note:TWh=terrawatt-hours.Source:TylerandHochstetler2021.FromopportunisticorunstabletostrategicclimateinstitutionsAtfirst,opportunisticorunstableclimateinstitutionsmaybetheonlyfeasibleforminthepoliticaleconomy.Insuchcases,governmentscanworkwithintheexistingpoliticalecon-omybylayeringclimategovernancefunctionsintoexistinginstitutionalstructures,embed-dingclimateintootherpoliticalprioritieswithafocuson“win-win”orsynergies,andfrontloadinginitiativesthathelpbringdowncosts,boostinnovation,andbuildcapacity.Buildingclimateintoexistinginstitutions—insteadofwaitingfortheperfectconditions—canenablequickerandmoreambitiousaction.Tothisend,governmentscanadoptarangeofapproaches,suchas•Co-benefitsanddevelopmentsynergies,bymainstreamingclimatethroughexistinghigh-levelpoliticalpriorities,emphasizingco-benefitsandsynergies,orfocusingontopicalissues,suchasenergyaccessorjobcreation•Integration,bybuildingclimateobjectivesormandatesintosectoralinstitutions(forexample,addingarenewableenergycontingenttoanenergyplanningandprocure-mentbodyoranelectricvehicleunittoatransportationauthority)•Pilotprograms,byusingexperimentalapproachestoallowforinstitutionallearning,proofofconcept,andlitmusforsocialandpoliticaladjustmentClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition65•Publicinvestments,byusinginstitutionstoprovidegreenpublicinvestmentandresearchanddevelopmentstrategiestodrivedowncosts,crowdinotherfinancesources,spurinnovation,andsupportemergentgreeninterests•Monitoring,bybuildingcapacitytoprovideinformationthatcanlaterbeusedinenforcement•Capacitybuilding,througheducationandtrainingprogramsacrossgovernmentdepartments,industry,andprofessionalgroups,andthroughformaleducation.Governmentsshouldaimtomovefromopportunisticorunstabletoenduring,strate-gicclimateinstitutions.Countriescannotachievetransformativesystemicchangewith-outwidespreadsocialbuy-inbecauseofthechangestoproduction,consumption,governance,andlifestylessuchtransformationimplies.Todevelopbuy-in,governmentswillneedtodevelopstrategicclimateinstitutionsthatshowhowtoreachsociety’sgoalsalongsideorthroughclimategoalsandcreateadesirablevisionforthefuturethatalignswithpeople’sdeepervalues,principles,andaspirations.Bycreatingmoreenablingcon-ditions,governmentscanlaythegroundworkforandbegindevelopingstrategicinstitu-tions.Forexample,theycanstarttoestablishclimategovernanceinstitutionsthathelpmediateinterestgroupsandbuildconsensusaroundnarrativeandhigh-leveldirectionsetting,facilitateandinformstakeholderengagementandalignment,fostersupportivecoalitions,andimprovetheoverallinstitutionalcontext.Strategicclimateinstitutions:Frameworklegislation,long-termstrategies,andjusttransitionframeworksClimatechangeframeworklaw,long-termstrategies(LTSs),orjusttransitionframe-workscanprovideanoverarchinginstitutionalbasisformakingandimplementingcli-matepolicy.Incontrasttoopportunisticorunstableinstitutions,whichoftentargetasinglesectororissue,thesestrategicinstitutionsprovideawhole-of-economyframe-workthatintegratesmultipleobjectivesandexistinginstitutions.Theyprovideasharedvisionandmandateforclimatepoliciesandactionbuiltaroundaholisticapproachthatalignsclimatetargetswitheconomicdevelopmentgoals,socialobjec-tives,andcitizenengagementimperatives.ClimatechangeframeworklegislationClimatechangeframeworklegislationprovidesalegalbasisforclimatepolicy.Over60countrieshaveadoptedframeworklegislationtotackleclimatechange,andmorearedevelopingorconsideringit.Suchlawscanhelpcountriesdesigntheirowneffectiveandcomprehensivestrategicclimatelegislation,fromsettingtargetsanddevelopingstrategiestoengagingandoverseeingstakeholders.Buttheyalsoprovidenewavenuesforstakehold-erstoinfluenceclimateaction—forinstance,whentheycreatenewcoordinationbodies,improveandstructurestakeholderengagement,ortranslatenonbindingambitionsintobindingtargetsandopenthedoortousinglitigationasacommitmentdevice(box2.7).Thecomprehensivenessofclimatechangeframeworklegislationvariesacrosscoun-tries,representingdifferentstagesofpoliticaleconomyreadiness.Somecountriesmayneedtoimplementalternativegovernanceinterventionsbeforeorinsteadofadoptingcomprehensiveframeworklegislation,ortodevelopmorelimitedframeworklegislationthattheycanenhanceatalaterstage.Severalcountrieshavetakenthelatterapproach,includingonlysomeoftheelementsoutlinedintable2.3intheirnationalclimatelegisla-tion.Forexample,thefigureshowsthatin2023,ofthe33economiesidentifiedinthe66WithinReachBOX2.7TotalnumberofcasesClimatechangelitigationasatoolforimprovedclimateactionEstablishedlegalframeworkshelpcitizensholdgovernmentstoaccountfortheiractionsandinactionsandserveasabindingregulatorystructurewhenpoliticaladministrationsandprioritieschange.Theseframeworksrepresentawayofinstitutionalizingandprotectingdefinedprioritiesovertime:governmentsareobligedtoadhereto—andcanbeprosecutedforviolating—theirownlawsandregulations.Suchframeworkscanalsoservetomakegovernments’commitmentsmorecredibleinthelongterm,whichisnecessarytoinfluencehouseholdandbusinessdecisions.Climateandenvironmentalactivistsandnongovernmentalorganizationsalsoincreasinglyuseclimatelitigationtoholdgovernmentsandcompanieslegallyresponsibleforcontributingtoglobalwarming(Schiermeier2021).Withinthelast20years,thenumberoflawsuitsrelatedtoclimatechangehasgrownfromlessthan10intheearly2000stonearly200in2020(figureB2.7.1).Today,morethan2,000casesofclimatechangelitigationhavebeenidentifiedworldwide,withcasesfiledintheUnitedStatesmakingupthelargestshare(71percent),followedbyAustralia(6percent),theUnitedKingdom(4percent),andtheEuropeanUnion(3percent);butnumbersarealsogrowingintheglobalSouth(SetzerandHigham2022).Mostcaseshavebeenfiledbynongovernmentalorganizations,individuals,orbothactingtogether;andgovernmentsremainthemostfrequenttargetsinclimatelitigation(SetzerandHigham2022).Forexample,in2015,theDutchenvironmentalgroupUrgendaFoundation,togetherwith900Dutchcitizens,suedtheDutchgovernmentforfailingtotakeenoughactiontopreventclimatechangeandadheretotheagreementofkeepingglobaltemperatureincreaseswithin2°Cofpreindustrialconditions.ThecourtinTheHaguerebukedthegovernmentforitspledgetoreduceemissionstoonly17percentbelow1990levelsby2020asinadequateandorderedittoincreasethisnumbertoatleast25percent.Thecourt’sdecisionconstitutes“thefirstdecisionbyanycourtintheworldorderingstatestolimitgreenhousegasemissionsforreasonsotherthanstatutorymandates.”aSimilarly,supportedbytheestablishmentofnationaljudicialclimatechangeagendaimplementationmechanisms,theBrazilianpublicincreasinglyuseslitigationtopromoteclimategoalsandhashadseveralclimate-relatedappealsbeforethefederalsupremecourt.Forexample,in2020,fourpoliticalpartiesfiledacasebeforethecourt,denouncingthefederalgovernment’sallegedfailuretoadoptadministrativemeasuresconcerningtheAmazonFund;thecaseresultedinreactivationofthefundin2023underthenewadministration.bAlthoughcasesfiledbynongovernmentalorganizationsandindividualsmakeupthelargestshareofclimatelitigation,governments,companies,andtradeassociationscanalsofileclimatecasesinthecourts,asillustratedbymultipleexamplesfromtheUnitedStates(SetzerandHigham2022).In2023,MultnomahFIGUREB2.7.1.Climatechange-relatedlawsuits,2000–21200160120804002000200120022003200420052006200720082009201020112012201320142015201620172018201920202021AllothercountriesUnitedStatesSource:Schiermeier2021.(Continued)ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition67BOX2.7Climatechangelitigationasatoolforimprovedclimateaction(continued)County,Oregon,suedExxon,Chevron,andotherfossilfuelcompaniesandindustrygroupsforoverUS$50billiontoreduceandmitigatetheharmscausedbyclimatechange.ThecountyalsoaccusedconsultingcompanyMcKinseyofsupportingtheindustryinsellingfossilfuelproductsandinfalselypromotingthemasharmlesstotheenvironment(Mindrock2023).cThelawsuitfollowssimilarcasesfiledagainstoilcompaniesinpreviousyearsbyvariousUScities.da.GlobalClimateChangeLitigationdatabase,UrgendaFoundationv.StateoftheNetherlands,https://climatecasechart.com​/­non-us-case/urgenda-foundation-v-kingdom-of-the-netherlands/.b.GlobalClimateChangeLitigationdatabase,PSBetal.v.Brazil(onAmazonFund),https://climatecasechart.com/non-us​-case/psb-et-al-v-brazil/.c.U.S.ClimateChangeLitigationdatabase,CountyofMultnomahv.ExxonMobilCorp.https://climatecasechart.com/case​/county-of-multnomah-v-exxon-mobil-corp/d.U.S.ClimateChangeLitigationdatabase,CityofOaklandv.BPp.l.c.https://climatecasechart.com/case/people-state-california-v​-bp-plc-oakland/;CityofCharlestonv.BrabhamOilCo.https://climatecasechart.com/case/city-of-charleston-v-brabham-oil-co/;CityofNewYorkv.ExxonMobilCorp.https://climatecasechart.com/case/city-of-new-york-v-exxon-mobil-corp/.TABLE2.3.Acomparisonofclimatechangeframeworklegislationacross33economiesLong-termtargetsMidtermandsectoralRiskandvulnerabilityassessmentsClimatechangestrategiesandplansPolicyinstrumentsIndependentexpertadviceMechanismfor­coordinationStakeholderengagementSubnationalgovernmentsFinancingimplementationMonitoringandreviewofprogressOversightand­accountablityAustriaBeninBrazilBulgariaColombiaCroatiaaDenmarkFinlandFranceFranceaGermanyGuatemalaHondurasIreland(Continued)68WithinReachTABLE2.3.Acomparisonofclimatechangeframeworklegislationacross33economies(continued)Long-termtargetsMidtermandsectoralRiskandvulnerabilityassessmentsClimatechangestrategiesandplansPolicyinstrumentsIndependentexpertadviceMechanismfor­coordinationStakeholderengagementSubnationalgovernmentsFinancingimplementationMonitoringandreviewofprogressOversightand­accountablityJapan(adaptation)Japan(mitigation)KenyaKorea,Rep.aLiechtensteinMaltaMexicoMicronesia,Fed.Sts.NetherlandsNewZealandNorwayPakistanPapuaNewGuineaParaguayPeruPhilippinesSloveniaSwedenSwitzerlandaTaiwan,ChinaUnitedKingdomIntegratedSomewhatintegratedNotintegratedSource:UpdatedversionoffigureA.2inWorldBank2020.Note:TheratingofEUmembercountriesontheirclimatechangeframeworklegislationconsiderstheirnationalpoliciesonly.Evenifamembercountrydoesnothave,forexample,along-termtargetinitsnationallegislation,itisstillcoveredbyEUframeworks,suchasFitFor55andothers.a.Updatedlaw.ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition69“ReferenceGuidetoClimateChangeFrameworkLegislation”(WorldBank2020),only12haveadoptedlong-termtargets,13donotdefinerolesforsubnationalgovernments,12donotintegratestakeholderengagement,and17donotincludeprovisionsforfinancingforimplementation.Gapsinclimatechangeframeworklegislationcanundermineitseffectivenessbyallow-ingpoliticaleconomyconstraintstopersistorreemerge.Forexample,withoutlegallybindingtargetsorrulesrelatingtoambitionratchetingtokeeplegaltargetsinlinewithclimategoals,climatechangelegislationcanbecomelesseffectiveovertime,openingthewayforbacksliding,ashappenedinMexico(box2.8).Similarly,thefailuretoestablishorganizationsresponsibleforimplementation—orclearrulesaboutdelegatingrolesandresponsibilitiesandfinancingmechanisms—canmakethelawlesscredibleormorediffi-culttoenforce.Forcountriesthatbeginwithamorelimitedclimateframeworklaw,plan-ningandenactingenhancementstostrengthenitseffectivenessanddurabilityarevital.Long-termstrategiesLTSsofferacomplementaryapproachtodevelopingaclimategovernanceframework,whichcanbebasedonorinformclimateframeworklaws.1AsofSeptember2023,BOX2.8Mexico’sGeneralLawonClimateChangeIn2012,Mexicobecamethefirstlargeoil-producingemergingeconomytoadoptclimatelegislationwhenitsParliamentpassedtheGeneralLawonClimateChange(LeyGeneraldeCambioClimático,orLGCC).TheLGCCestablishedanaspirationalgoalofreducingemissionsby30percentbelowanunspecifiedbaselinescenarioby2020,andby50percentbelowthe2000emissionlevelby2050.Thelaw’skeyimpactsincludedestablishingkeyfederal-levelinstitutionstodealwithclimatechange,definingresponsibilitiesforstatesandmunicipalities,anddefininglong-termobjectives.IteffectivelysetthebasisforclimatepolicyinMexico,includingtheNationalStrategyonClimateChangeandSpecialProgramonClimateChange(AverchenkovaandGuzmanLuna2018).InApril2018,MexicoamendedtheLGCCtoalignitwiththeParisAgreement.Thisamendmentincludedrevisionstogreenhousegasandblackcarbontargets,indicatingthatemissionswouldpeakby2026andthatthecountrywouldreducegreenhousegasintensityperunitofgrossdomesticproductbyabout40percentbetween2013and2030.AlthoughtheSpecialProgramonClimateChangehadamixedimplementationrecordbetween2014and2018,achievingonly43percentofthesetgoals(INECC2017),theLGCChasplayedamajorroleinguidingthelow-carbontransitionintheenergysector.TheEnergyTransitionLaw,adoptedin2015,buildsonemissiontargetssetintheLGCCandhashelpeddrivethedevelopmentofrenewableenergyinthecountry.Itsetstargetsforcleanenergygeneration(35percentby2024and50percentby2050),enablingmechanismsforrenewables,suchaslong-andmedium-termelectricityauctionsandtheCleanEnergyCertificatesmarket.Asaresult,windandsolargenerationtripledoverthefiveyearsleadingto2021(Gabbatiss2021).Sincetheendof2018,however,thecountryhasseenachangeinpoliticalcommitmenttowardclimatechangeandrenewableenergypolicies(ParishFlannery2021).DelaysinrevisingpoliciesundertheSpecialProgramonClimateChange,structuralandoperationalchangestotheclimatechangefundanditscontinueddifficultiesleveragingresources,budgetcutsforclimatechangeactivities,andincreasedsupporttofossilfuels(ICM2020)threatenthecountry’sabilitytomeettheobjectivesofthelawandimplementitsnationallydeterminedcontribution.Theoverallemissionreductionobjectivessetinthelawstand,however,andchangingthemwouldrequireanagreementofthelegislature.70WithinReach67countrieshaveLTSsundertheUnitedNationsFrameworkConventiononClimateChange,providingarealisticpathwaytowardlong-termobjectivesandidentifyingusefulmilestonesforshorter-termstrategiesandplans.Despitethepossibilityofreducingemis-sionsby10or20percentbyactingonlyontheemissionsthatarecheapesttoabate,atran-sitiontowardnetzerorequiresactiononallemissionssourcesandthusadifferentapproachtosequencingandprioritization.Ratherthanidentifyingthecheapestemissionstoabate,achievingnetzeroemissionsrequiresdesigningtheleast-costtransitionforeachsectorandemissionsource,withtherightsequencingandtimingofactions.LTSscanbethebasisfordevelopingshort-termclimateplansorstrategies,includingnationallydeterminedcontributions.LTSshavemultiplerolesandfunctionsinclimategovernance,startingwithinformingpoliticaldebatesandchoices.Iftheinstitutionalsetupiswelldesignedandtheprocessinclusiveandtechnicallysound,designofanLTScaninformpoliticaldebatesincoun-triesandidentifythecriticalchoicesandmilestonestheyneedtomake.Itcanalsosome-timesinformthechoiceofalong-termtarget—forexample,thedatetoachievenetzeroemissions.ButthisrequiresdesigningLTSsinaniterativemanner,usingtheprocesstocaptureknowledgefrompublicandprivateactors,andofferingopportunitiesforallstakeholderstoprovidefeedbackandcontributetothediscussion.TheoriginalLTSeffortcarriedoutinFrancein2012toelaboratethelow-carbonnationalstrategy,orStratégieNationaleBasCarbone,prioritizedthegenerationofwhole-of-economypath-waysconsistentwithkeepingglobalwarmingunder2°Candinviteddifferentstake-holdergroupsandexpertstodeveloptheirownscenarios.Thestrongcentralteam,comprisinggovernmentofficialsandhiredspecialistswithmodelingandtechnicalexpertise,playedacrucialrole;thatteamcollatedandanalyzedawiderangeoftechnicalscenariosfromdifferentstakeholdergroups,andusedthemtocreatefouroverarchingalternativevisionsorpathways,whichinformedthepoliticaldebate.Theteam’sabilitytoincorporateinputandexpertsfromdiversesectors,andtoguidetechnicaldelibera-tionsandsynthesis,gavethesefourpathwayscredibility,andtheywereacceptedasafairrangeofoptionsfornationalconsideration.Similarly,CostaRica’sLTS,thePlanNacionaldeDescarbonización,usedawhole-of-economypathwaythatpresentedtargetsandtime-linestoallemittingsectorstoenabletechnicaldiscussionsthatcouldexploretheextentofnecessarychangesandframeexistingbarriersandtherequiredenablingconditions(seeWorldBank2023).WhenanLTSreceiveswidespreadsupportorisembeddedinlaw,itcanalsoprovideapowerfulinstrumenttomaintainmomentum,coordinateactionacrosssectors,andofferabenchmarktomeasureprogressovertime.Theneedforacoordinatedtransformation—forexample,betweenthepowerandtransportationsectors—isawell-knownobstacletodecarbonization.AnLTScanprovidethekeymilestonestosupportsuchcoordination—forexample,withindicativetargetsfortheshareofelectricvehiclesontheroads,whichboththeenergyandtransportationministriescanusetodesigntheirpoliciesandplans(Fayetal.2015).LTSscanalsoprovideasetofmilestones,suchastheshareofrenewablesinthepowermix,themodalshareofrailinfreight,orthenumberofretrofitteddwellings.Ministriesandpublicagenciescanthenusethesemilestonestosetupmonitoringandevaluationsystemstotrackprogressandidentifylaggingsectorsthatrequireadditionalinterventions;privatesectorstakeholdersandthegeneralpubliccanusethemintheirowndecision-makingandtoassessthegovernment’sperformance.Forthistohappen,itisimportanttomakesurethattheLTS’sobjectivesbecomepartofthefunctionalmandatesofvariousministriesandagencies.InFrance,theClimateChangeLawof2015ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition71hasempoweredthedevelopmentandimplementationoftheLTS.Thisimplementationnotablyincludesthemultiyearenergyprogram,orProgrammationPluriannuelledel’Energie,whichestablishesthegovernment’senergyprioritiesover10years.CostaRicamadeeffortstobuildLTSsintobothnationallawandinternationalcooperationdeals—forexample,agreeingtopolicy-basedloanswithdevelopmentpartnersthatalignfinancingonfavorabletermswithachievingenvironmentalpolicymilestones.Indoingso,itstrengthenedtheinterestoftheMinistryofFinanceandinvestorgroupsinensuringthetargetsweremet.JusttransitionprinciplesandframeworksAgrowingnumberofcountriesaredevelopingjusttransitionframeworks,helpingthosecountriesestablishasocialmandateandguidingprinciplesforclimateactionbasedonequityandfairness.Theseframeworksofferapeople-firstapproachthatconsidershowtoincludeandsupportpeopleandsocietiestoenhancetheequityandfairnessofclimatepolicydecisionsandoutcomes.AnotableexampleisSouthAfrica’sJustTransitionFramework,adoptedbythecabinetin2022(box2.9).JusttransitionsBOX2.9SouthAfrica’sJustTransitionFrameworkSouthAfricaisregardedasaninternationalleaderwhenitcomestotheambitionofitscommitmentsonclimatemitigation,specificallyamongdevelopingcountries.Thispositionisespeciallyremarkablegiventhecountry’shighlyemissions-intensiveeconomy.ItisAfrica’slargestgreenhousegasemitterandtheworld’stwelfthlargest,andatleast84percentofitscarbondioxideemissionscomefromthecoalindustry(Ritchie,Roser,andRosado2020).Aswellassubmittingtwonationallydeterminedcontributions(in2016and2021),itsLow-EmissionDevelopmentStrategy(2020),anditsNationalAdaptationPlan(2020)totheUnitedNationsFrameworkConventiononClimateChange,thecountryhasestablishedseveralclimate-relatedlaws,policies,andstrategies.TheyincludetheWhitePaperonthePromotionofRenewableEnergyandCleanEnergyDevelopment(2003),NationalClimateChangeResponseWhitePaper(2011),GreenTransportStrategy(2018),NationalEnergyEfficiencyStrategy(2019),CarbonTaxAct(2019),andGreenFinanceTaxonomy(2022).ClimateactioninSouthAfricafacesbothchallengesandopportunitiesbecausethepoliticaleconomysurroundingitremainsacontentiousissueandslowsprogress.SouthAfrica’sdistinctivecabinet-approvedJustTransitionFrameworknotonlyexemplifiesthiscomplexitybutalsoprovidesapositiveperspective.Forexample,althoughtheextensiveconsultationsrequiredtobuildconsensuscontributedtothedelayinpassingtheClimateChangeBill,theyalsohighlightthecommitmenttoajustandequitabletransitionandunderpinthegovernment’sresponsibilityinsecuring“ecologicallysustainabledevelopmentanduseofnaturalresourceswhilepromotingjustifiableeconomicandsocialdevelopment,”asstatedinthecountry’s1996Constitution.Onceitbecomeslaw,theClimateChangeBillwillnotonlyenhancetheoverallgovernanceframeworkforclimatechangeresponsebutalsoformallycodifySouthAfrica’snationallydeterminedcontributiontargets,furtheremphasizingthenation’scommitmenttoaddressingclimatechange.Neverthless,aftersomeinitialsuccess,SouthAfrica’spioneeringRenewableEnergyIndependentPowerProcurementProgramwasunderminedbyinfluentialactorswithvestedinterestsinthecoalindustryandideologicaloppositionstoprivatesectorinvolvementintheenergysector.ThoseactorsincludedthestatemonopolypowercompanyEskom,industrytradeunions,andtheMinistryofEnergyandMinerals.Oppositiontotheenergytransitionalsostemsfromandisamplifiedbyconcernsaboutjusticeinacountrystillmarkedbyextremeinequalityandexclusion30yearsaftertheendofApartheid.Inparticular,SouthAfrica’spowerfultradeunionshaveconcernsaboutlaborandthesectoralandspatialeffectsofthetransition.(Continued)72WithinReachBOX2.9SouthAfrica’sJustTransitionFramework(continued)Uncertaintyregardingtheequitabledistributionofbenefitsfromthetransitiontowardrenewablesincreasesfearandresistance(WorldBankGroup2022).Altogether,creatingasharedvisionfortheclimatetransitionwithsupportfromimportantactors,includingcitizens,hasbeenamajorchallenge.Toaddressthissituation,thecountryestablishedthePresidentialClimateCommissionin2020,bringingtogetherrepresentativesfromgovernment,business,labor,civilsociety,andresearchandacademicinstitutionstocoordinateandoverseeajusttransitiontowardalow-carbon,inclusive,climate-resilienteconomyandsociety.Asoneofitsfirsttasks,itdevelopedaJustTransitionFrameworkthatmeetstheneedsofallsocialpartners.Adoptedbythecabinetin2022,theframeworksupportsSouthAfrica’sbroadereffortstoredesigntheeconomytothebenefitofmostcitizensandenabledeep,just,andtransformationalshiftsinthecontextofdeliveringaneffectiveresponsetoclimatechange.Itisbuiltaroundthreeprinciples:1.Distributivejusticedistributesrisksandopportunitiesfairly,cognizantofgender,race,andclassinequalities.2.Restorativejusticeaddresseshistoricaldamagesagainstcommunities.3.Proceduraljusticeempowersandsupportsworkersandcommunitiesthroughthetransition.Theframeworkspotlightsat-risksectorsandvaluechainsandlaysoutkeypolicyareasforajusttransition,governanceimperatives,andfinancing.FIGURE2.2.FourprinciplesforajusttransitionFairsharingofbenefitsandTransparentandinclusivecosts,basedondistributionofdecision-makingandequalaccessrisksandcapacitytorespondtoprocessandjusticemechanisms1.2.DistributionalProceduraljusticejustice4.3.StructuralRecognitionjusticejusticeAddressingandredressingRecognition,respect,value,andinstitutionalstructuresthatrighttoself-determinationofallproduceorperpetuateinjusticeindividualsandgroupsSource:Originalfiguredevelopedforthisreport.willvarydependingonlocalcontextandasdefinedthroughlocalprocesses,buttheyhavefourcommonguidingprinciples:distributionaljustice,proceduraljustice,recognitionjustice,andstructuraljustice(­figure2.2).Whendesigningjusttransitionframeworkstoguidetheirownjourneytonetzero,governmentscandrawlessonsfromothercountries’experiences(KrawchenkoandGordon2021).Theycanalsolearnfromandbuildonexistingsocialserviceandsocialjusticearchitectures,includingnewerandmoreinnovativeinstruments.ClimateGovernance:Strategically(Re)BuildingtheInstitutionalContextforTransition73Countriescanalsointegratejusttransitionprinciplesintootherstrategiesandlaws,includingnationallydeterminedcontributions(UNFCCCSecretariat2021).Forexample,theEuropeanCommission’sproposedFitfor55legislativepackageincludesaJustTransitionMechanismandSocialClimateFund.Industry-orsector-specific­strategiesthatincludejusttransitionprinciplesandmechanismsincludeCanada’sTaskForceontheJustTransitionforCanadianCoalPowerWorkers,Spain’sJustTransitionAgreements,andNewZealand’sJustTransitionUnit(KrawchenkoandGordon2021).Note1.ThissectionisbasedonWorldBankandIDDRI,forthcoming(backgroundpaperforthisbook).ReferencesAverchenkova,A.,S.Fankhauser,andJ.J.Finnegan.2021.“TheImpactofStrategicClimateLegislation:EvidencefromExpertInterviewsontheUKClimateChangeAct.”ClimatePolicy21(2):251–63.https://doi.org/10.1080/14693062.2020.1819190.Averchenkova,A.,andS.L.GuzmanLuna.2018.“Mexico’sGeneralLawonClimateChange:KeyAchievementsandChallengesAhead.”GranthamResearchInstituteonClimateChangeandtheEnvironmentandCentreforClimateChangeEconomicsandPolicy,LondonSchoolofEconomicsandPoliticalScience,London.Baker,L.,J.Burtion,C.Godinho,andH.Trollip.2015.“ThePoliticalEconomyofDecarbonisation:ExploringtheDynamicsofSouthAfrica’sElectricitySector.”ResearchReportSeries,EnergyResearchCentre,UniversityofCapeTown,CapeTown.https://doi.org/10.13140/RG.2.1.4064.9040.ClimateTransparency.2022.“SouthAfrica.”ClimateTransparencyReport2022.https://www.climate​-transparency.org/wp-content/uploads/2022/10/CT2022-South-Africa-Web.pdf.Dubash,N.,A.V.Pillai,C.Flachsland,K.Harrison,K.Hochstetler,M.Lockwood,R.Macneil,M.Mildenberger,M.Paterson,F.Teng,andE.Tyler.2021.“NationalClimateInstitutionsComplementTargetsandPolicies.”Science374(6568):690–93.Fay,M.,S.Hallegatte,A.Vogt-Schilb,J.Rozenberg,U.Narloch,andT.Kerr.2015.DecarbonizingDevelopment:ThreeStepstoaZero-CarbonFuture.Washington,DC:WorldBank.http://hdl.handle​.net/10986/21842.Gabbatiss,J.2021.“TheCarbonBriefProfile:Mexico.”CarbonBriefCountryProfiles,June4,2021.https://www.carbonbrief.org/the-carbon-brief-profile-mexico.GovernmentofIndia.2023.“AnnualReport2022-2023.”https://mnre.gov.in/annual-reports-2022-23.GranthamResearchInstitute(GranthamResearchInstituteonClimateChangeandtheEnvironment).2022.“FrameworkLawonClimateChange–Chile.”ClimateChangeLawsoftheWorld,GranthamResearchInstitute,London.https://climate-laws.org/document/framework-law-on-climate-change-chile_dc8a.Hanusch,M.,ed.2023.ABalancingActforBrazil’sStatesoftheBrazilianAmazon:AnEconomicMemorandum.Washington,DC:WorldBank.Hochstetler,K.2021.“ClimateInstitutionsinBrazil:ThreeDecadesofBuildingandDismantlingClimateCapacity.”EnvironmentalPolitics30(1):49–70.https://doi.org/10.1080/09644016.2021.1957614.ICM(IniciativaClimaticadeMexico).2020.“MéxicoSinAmbiciónParaAtenderlaCrisisClimática.”ICM,December16,2020.https://www.iniciativaclimatica.org/mexico-sin-ambicion-para-atender​-la-crisis-climatica/.IEA(InternationalEnergyAgency).2021.“E4CountryProfile:EnergyEfficiencyinIndia.”IEA,Paris.https://www.iea.org/articles/e4-country-profile-energy-efficiency-in-india.INECC(InstitutoNacionaldeEcologíayCambioClimático,Mexico).2017.EvaluaciónEstratégicadelProgramaEspecialdeCambioClimático2014–2018.MexicoCity:INECC.https://cambioclimatico​.gob.mx/evaluacion-estrategica-del-programa-especial-de-cambio-climatico-2014-2018-2017/.74WithinReachKrawchenko,T.A.,andM.Gordon.2021.“HowDoWeManageaJustTransition?AComparativeReviewofNationalandRegionalJustTransitionInitiatives.”Sustainability13(11):6070.https://doi​.org/10.3390/su13116070.Lockwood,M.2021.“AHardActtoFollow?TheEvolutionandPerformanceofUKClimateGovernance.”EnvironmentalPolitics30(1):26–48.https://doi.org/10.1080/09644016.2021.1910434.MacNeil,R.2021.“Swimmin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objectives.Ontheotherhand,alwayschoosingtransformationalpoliciesmayleadtoinactionaspoliticalforcesorlackofcapacityrenderenactment,implementation,orenforcementofclimatepoliciesimpossible.Itiswellknownthatthesumofleast-costmarginalabatementoptionswillnotachievetheleast-costtransformationneededtoachievelargeemissionreduction,andthatemissionreductionoptionsshouldbesequencedaccordingtoalong-termstrategywithaneyeonthelong-termgoal(Fayetal.2015;Vogt-Schilb,Meunier,andHallegatte2018).Similarly,thesequenceofthemostfeasible7576WithinReachinterventionsisunlikelytodeliverthechangeinpoliticaleconomyneededtomakestructuralchangepossible.Instead,whenchoosingpolicies,countriesshouldbalancethesepolicies’short-termpoliticalfeasibilitywiththeircontributiontolong-termobjectives,includingthroughatransformationofthepoliticaleconomycontext.Howtodoso?Thischapterproposesanapproachtohelpgovernmentssequencepol-iciesthatarefeasiblebutthatalsobuildgreaterpoliticalsupportandreducethecostsofclimateactionovertime,leveragingreinforcingpolicyfeedbackprocessesandtargetingtippingpointstoacceleratetransformationalchangetowardnetzero.Becausepolicyandpoliticalprocessesarenotstatic,policypackagesneedtoevolveovertimeinadynamicallyefficientway.Aswellasbeingcomplexandmultifaceted,thetransitiontonetzerowilloccuroverasignificanttimeframe.Whencountriesintroducenewclimatepolicies,theycreateeffectsthatalterthebroaderpoliticaleconomy,influ-encingthetypesofpolicytheycanintroducelater.Assuch,ithelpstothinkofthecostsandbenefitsofclimatepoliciesintermsofdynamicefficiency—thatis,theefficientallo-cationofresourcesovertime.Whereasstaticefficiencyfocusesonhowresourcesareusedatasinglepointintime,adynamicallyefficientappraisalconsidershowresourceallocationtodayaffectstheavailabilityandproductivityofresourcesinthefuture.Thisisacommonconsiderationforinnovationandindustrialpoliciesthatmaydeliverloweremissionreductionsperdollarinvestedthanalternativeoptionsbutthatreducegreentechnologycostsandmakelargerreductionspossibleandaffordableinthefuture.Thisbookextendsthatconcepttothepoliticaleconomy:whereasthelowest-costoptiontodaymayleadtopoliticalbacklashandcreatehighercostsinthefuture,choosingamoreexpensivepolicytodaymightbemoredynamicallyefficientifitshiftsthepoliticaleconomytomakeiteasiertoimplementmoreefficientpolicieslater.Thisbookthereforerecommendsappraisingpoliciesnotonlyontheircostsandfeasi-bilitybutalsoonhowtheyinfluencethepoliticaleconomy,buildcapacitytocreatenewpolicypossibilities,andunleashthepotentialfortransformativeclimateaction.Thefirstsectionconsiderspolicychoicefromtheperspectiveofinstitutionalcapacity.Itexploreshowdifferencesincapacityacrosscountriescanlimittheabilitytointroducedifferenttypesofclimatepolicyinstrumentsandhow,bymakingforward-lookingpolicychoices,countriescanbuildtheirinstitutionalcapacitytointroducemoreambitiouspolicies.Thenextsectionsconsiderpolicyselectionthroughthelensofpoliticalfeasibilityandlookathowcountriescansequencepoliciestobuildgreaterpoliticalsupportforthosethatareinitiallylesspoliticallypalatable.Althoughbothdimensions(institutionalcapacityandpoliticalfeasibility)arenecessaryforpoliciestobeintroduced,theyrequiredifferentstrategiesdependingoncountries’levelofeconomicdevelopmentandpoliticalcontext.Finally,andconsideringtheneedtocatalyzerapid,transformationalclimateaction,thechapterconsidershowgovernmentscanleveragereinforcingpolicyfeedbackprocessesandtippingpointstobuildmomentumandaccelerateprogresstowardnetzero.StrategiestobuildgreaterinstitutionalcapacitytointroduceclimatepoliciesOverthelastfourdecades,thenumberandvarietyofclimatepoliciesindifferentcountrieshavesteadilygrown.AccordingtotheClimatePolicyDatabase(box3.1),countrieshavecollectivelyintroducedmorethan4,500climatepoliciessincethe1980s.Categorizingthesepoliciesintoover50differentpolicyinstrumentcategoriesprovidesarichdatasetofpolicypathwaystolearnfrom.PolicySequencing:BalancingFeasibilityandLong-TermAmbition77BOX3.1TheClimatePolicyDatabaseTheClimatePolicyDatabase,amaintainedandfrequentlyupdatedbytheNewClimateInstitute,providesoneofthemostcomprehensivedatasetsofclimatepolicies.Incorporatingseveralotherglobalpolicydatabases,suchastheClimateChangeLawsoftheWorldandtheOrganisationforEconomicCo-operationandDevelopment’spolicyinstrumentsdatabase,italsodrawsoncountryreportsandspecificpolicydocuments.Itprovidesausefulclassificationofclimatepoliciesbysector,policyinstrumenttype,andimplementationstatus.BecausetheClimatePolicyDatabasefocusesprimarilyonnationalmitigation-relatedpolicies,ithaslimitedcoverageofpoliciesrelatingtoadaptationandresilience.Italsohasgreaterdepthandqualityofavailableinformationforlargeremittersandcountriesthatarerequiredtoprovidedetailedreportingontheirpolicyimplementation,suchasAnnexIcountriestotheUnitedNationsFrameworkConventiononClimateChangeandOrganisationforEconomicCo-operationandDevelopmentcountries(Nascimentoetal.2021).a.NewClimateInstitute,ClimatePolicyDatabase,https://climatepolicydatabase.org/.Althoughthenumberofclimatepoliciesintroducedacrosscountriesdoesnot­necessarilyreflectemissionsreduction,studieshaveshownasignificantassociation.Forexample,analyzinglegislativedatafrom133countriesbetween1999and2016,EskanderandFankhauser(2020)findthateachnewclimatelawisassociatedwithashort-term(withinthreeyears)reductionof0.78percentandalong-term(beyondthreeyears)reductionof1.79percentincarbondioxide(CO2)emissionsperunitofgrossdomesticproduct.Altogether,climatelawsreducedannualglobalCO2emissionsby5.9gigatonsofCO2in2016,surpassingtheUnitedStates’CO2outputforthatyear.Similarly,whencontrollingforhistoricalemissions,incomepercapita,andcountries’ruleoflaw,NascimentoandHöhne(2023)demonstratethathavingahighernumberofclimatepoliciesisassociatedwithlowerprojectedemissions.Differentpolicieshavehaddifferentimpactsonemissions,eventhoughitisnottheonlylenstoevaluatethemwith.Figure3.1showsavarietyofpolicyinstrumentsandtheassociatedeffectsonemissionsacrosscountries(controllingforpercapitaincome,ruleoflaw,industrialstructure,andotherimportantcharacteristics).Despitethedifficultyinestablishingcausalrelationshipsbecauseofthesimultaneousintroductionofmultiplepoliciesandthecomplementarityacrossthem,legallybindingemissionsreductionandrenewableenergytargetsareassociatedwiththelargestreductionsinemissionsacrosscountries.Introducingabindinggreenhousegastargetisassociatedwitha10percentreductioninannualCO2emissionsperunitofgrossdomesticproductintheshortrun(withinthreeyears)anda22percentreductionoverthelongerterm;acarbontaxpolicyisassociatedwitha3.5percentreductionintheshorttermanda7.8percentreductionoverthelongerterm.Eveniftheydonothaveadirectimpactonemissions,policiesthatremovebarrierstodecarbonizationorbuildessentialcapacityinthecountrycanstillbecriticallyimportantclimatepolicies.Althoughseveralpolicyinstrumentsshowmuchsmallereffectsonemissionreductions,itdoesnotmeantheyareuselessorinefficient.Becausedifferentclimatepolicyinstrumentsactonvarioustypesofmarketfailures,theycansupportthedecarbonizationprocesswithoutnecessarilyreducingemissionsdirectly.Forexample,strategicplanningmaynotreduceemissionsdirectly,butitcanimprovecoordination78WithinReachFIGURE3.1.EstimatedeffectsofdifferentpolicyinstrumentsonreducingCO2emissions(log)CO2emissionsperunitofeconomicoutput(MtCO2e/GDP)FormalandlegallybindingGHGreductiontargetFormalandlegallybindingrenewableenergytargetCO2taxesObligationschemesFormalandlegallybindingclimatestrategyGreencertificatesGHGemissionsallowancesBuildingcodesandstandardsEnergyandothertaxesFundstosubnationalgovernmentsEndorsementlabelProcurementrulesFeed−intariffsorpremiumsAuditingPoliticalandnonbindingenergyefficiencytargetLoansInfrastructureinvestmentsInstitutionalcreationVehiclefuel−economyandemissionsstandardsComparisonlabelGrantsandsubsidiesProductstandardsGridaccessandpriorityforrenewablesMonitoringDemonstrationprojectTaxreliefR&DfundingAdviceoraidinimplementationStrategicplanningPoliticalandnonbindingrenewableenergytargetTechnologydeploymentanddiffusionProfessionaltrainingandqualificationSectoralstandardsInformationprovisionOthermandatoryrequirementsTechnologydevelopmentVoluntaryapproachesPoliticalandnonbindingGHGreductiontargetNegotiatedagreements(public−privatesector)GHGemissionreductioncreditingandoffsettingmechanismPoliticalandnonbindingclimatestrategy−0.3−0.2−0.100.1Treatmenteffect(coefficientsize)Stockofpoliciesinlast3years(shortterm)Stockofolderpolicies(longterm)Source:Mealyetal.,forthcoming.Note:Two-wayfixedeffectsandcontrolsincluded.CO2=carbondioxide;GDP=grossdomesticproduct;GHG=greenhousegas;MtCO2e=milliontonnesofcarbondioxideequivalent;R&D=researchanddevelopment.acrossotherinstrumentsandincreasetheirefficacy.Monitoringsystemscanplayasim-ilarrole:becausetheyimprovepoliciesovertimeandpreventinefficiencies,theycanbenecessarytoasuccessfultransitionwithoutreducingemissionsdirectly.Otherpoliciesnotevaluatedherebecausetheydonotrelatetoclimatechange,suchasreformsoffinan-cialorlandmarketsorgenericresearchanddevelopmentsupport,canactinsimilarways.And,asdiscussedlater,somepoliciesmaybeimportanttoopenthedoortoPolicySequencing:BalancingFeasibilityandLong-TermAmbition79higher-efficacypolicy—forexample,nonbindinggreenhousegasemissiontargetscanbeanimportantsteptowardtheintroductionofbindingtargets.Limitationsininstitutionalcapacitycanrestrictthenumberandbreadthofclimatepoliciesthatcountriescanintroduce.Figure3.2showsvarioustypesofpolicyinstru-mentsadoptedacrosscountriesrepresentedasaheatmap.Eachcolumncorrespondstoagivencountry,andeachrowcorrespondstoapolicytype.Bluesquaressignifythatacountryhasannouncedaparticularclimatepolicyinstrument,whereaswhiteindicatesthatithasnot.Thefigurehasacharacteristictriangularpattern,showingthatsomecountries—suchasGermany,India,Japan,andtheRepublicofKorea,showninthefar-leftcolumns—haveintroducedmanydifferenttypesofpolicies,andthatothers,showninthefar-rightcolumns,haveintroducedveryfew.Moreinterestingly,policiesthatonlyahandfulofcountrieshaveintroduced(showninthebottomrows)tendtoappearinthecolumnsofcountriesthathaveintroducedawidediversityofpolicyinstruments.Thissuggeststhatitmaybepossibletointroducecertainpoliciesonlyincountrieswithsuffi-cientadministrativeandpolicy-makingcapacity(Mealyetal.,forthcoming).Climatepolicymakingispath-dependent,withinstitutionalcapacitylimitationsrestrictingthetypesofpolicycountriescanintroduce(Mealyetal.forthcoming).Policiesaremucheasiertointroduceiftheybuildonpriorrelatedinstitutionalcapacityandknow-how.Forexample,acountrywouldhavedifficultyeffectivelyimplementingvehi-cleorindustrialairpollutionstandardswithoutfirsthavingthecapabilitiestomonitorandauditvehicleorindustrialperformance.Andcountrieswithnopriorexperienceofemissionsmonitoringorreporting—orwithnoformofmarket-basedmechanismforreducingpollutants—maystruggletointroducecarbonpricing.Whenconsideringthedesignofpolicypackages,governmentsshouldtakesuchpathdependencyintoaccount,becausethechoicestheymaketodaywillinfluencetheirpolicyoptionstomorrow.TheClimatePolicySpaceprovidesavisualrepresentationofsuchrelationships,tobetterunderstandhowpoliciesandmeasurescanbuildoneachother.TheClimatePolicySpace(figure3.3)isanetworkinwhichnodesrepresentclimatepolicyinstrumentsFIGURE3.2.Triangular(nested)distributionofclimatepoliciesannouncedbycountriesClimatepolicies(orderedbasedonnumberofMostcommonlyannouncedpoliciescountryannouncements)•PoliticalandnonbindingGHGreductiontarget•Strategicplanning•Politicalandnonbindingclimatestrategy•Politicalandnonbindingrenewableenergytarget•InstitutionalcreationCountriesannouncingCountriesCountriesLeastcommonlythemostpolicies(orderedbasedonnumberofpoliciesannounced)announcingannouncedpoliciesthefewest•Korea,Rep•GermanyCountryhasannouncedclimatepolicypolicies•Removaloffossilfuel•Japan•IndiaCountryhasnotannouncedclimatepolicysubsidies•China•France•Unilateralcommitments(privatesector)•Retirementpremium•Whitecertificates•VehicleairpollutionstandardsSource:Mealyetal.,forthcoming.Note:GHG=greenhousegas.80WithinReachFIGURE3.3.TheClimatePolicySpacea.TheClimatePolicySpaceRemovaloffossilUserchargesfuelsubsidiesClimatepolicyProcurementUnilateralprevalenceTechnologydeploymentrulescommitmentsHighanddiusion(privatesector)PublicLowDemonstrationprojectvoluntaryschemesTechnologydevelopmentAdviceoraidinFundstosubnationalinplementationgovernmentsVehicleairInformationGreenRetirementpollutionprovisioncertificatespremiumstandardsSectoralR&DGHGemissionreductionstandardsfundingcreditingandosetmechanismIndustrialairGHGemissionallowancespollutionCO2taxesb.KeypolicyclustersstandardsGrantsandsubsidiesMonitoringInfrastructureinvestmentsNetmeteringAuditingCoordinatingbodyLoansforclimatestrategyBuildingcodesandstandardsFeed-intarisEnergyandothertaxesMostlytechnology,innovation,andGridaccessandpriorityTaxreliefmiscellaneousforrenewablesObligationschemesrarepoliciesInstitutionalcreationFormalandlegallybindingGHGreductiontargetStrategicplanningMostlyregulatory,PoliticalandFormalandlegallybindingmarket-basednonbindingrenewableenergytargetinstrumentsandrenewableenablingpoliciesenergytargetPoliticalFormalandNonbindingtargetsandBindingtargetsPoliticalandandlegallyFormalandlegallyandinstitutionalnonbindingbindingenergystrategyGHGreductionnonbindingbindingeciencytargetcreationNonbindingGHGtargetclimateclimatereductiontargetstrategystrategyc.ClimatepolicyprevalenceforcountriesatdierentincomelevelsClimatepolicyprevalenceHighLowLow-incomeLower-middle-incomeUpper-middle-incomeHigh-incomecountriescountriescountriescountriesSource:Mealyetal.,forthcoming.Note:CO2=carbondioxide;GHG=greenhousegas;R&D=researchanddevelopment.PolicySequencing:BalancingFeasibilityandLong-TermAmbition81linkedtoeachotheraccordingtotheirrelatednessininstitutionalcapacity(seebox3.2formoredetail).Infigure3.3,panela,climatepoliciesarecoloredaccordingtotheirprevalenceacrosscountries(purplepolicieshavebeenmorecommonlyintroduced);inpanelb,theyarecoloredaccordingtokeypolicyclusters.Inpanelboffigure3.3,thepinkandpurpleclustersatthebottomofthenetworkcon-sistofhighlyprevalentnonbindingtargetsandclimatestrategiesthatarefairlyeasytointroduce.Thesetargetsandstrategiesdonotnecessarilycommitacountryorconstitu-entstodoanything.Theturquoiseclustercomprisesbindingtargetsandthecreationandstrengtheningofrequiredclimateinstitutions,representinganaturalstepupfromnon-bindingtargetsinacountry’spolicypathway.Theblueclusterinthemiddlelargelycon-sistsofregulatoryinstruments,suchasproductandindustrystandards;market-basedinstrumentslikecarbon,energy,andothertaxes;andkeyenablingpoliciesrelatedtoauditing,monitoring,andcoordinatingbodiesforclimatestrategy.Finally,theoliveclus-terincludesavarietyofpolicyinstrumentsrelatingtotechnologicaldeploymentandinnovationandotherrarepoliciesthattendtobefoundonlyincountriesthathavepre-viouslyintroducedawidediversityofpolicyinstruments.CountrieswithdifferentincomelevelsareconcentratedindifferentregionsoftheClimatePolicySpace.Panelcoffigure3.3showsthatlow-incomecountries,whichtypi-callyhavelessdevelopedlevelsofinstitutionalcapacity,tendtohaveintroducedclimatepoliciesfoundinthelowestclustersofthenetwork.Lower-middle-andupper-­middle-incomecountriesshowabroaderrangeofpoliciesintheturquoiseandblueclusters,suggestingthatexpandingpolicy-makingcapacityintobindingtargets,institutionalcre-ation,andregulatoryandmarket-basedinstrumentsmaygohandinhandwithrisinglevelsofeconomicdevelopment.High-incomecountriesspanavastrangeintheClimatePolicySpacenetwork,withanotablepresenceintheoliveclusterthatfocusesonuniqueandtechnology-centricpolicies,arguablytheactionsthatrequirethemostcapacity.CountriesmovethroughtheClimatePolicySpaceinpredictablewaysbecausepastclimatepoliciesinfluencefuturepolicies.TheyshowatendencytointroducenewBOX3.2CalculatingPolicyRelatednessCountrieswilllikelyfinditeasiertointroduceapolicyiftheyhavepriorexperienceintroducingpoliciesthatinvolvesimilar(orrelated)institutionalandadministrativecapacitiesandrequirements.Unfortunately,dataconstraintsmakeitchallengingtodirectlymeasurespecificinstitutionalcapacityrequirementsconsistentlyacrosscountries.Mealyetal.(forthcoming)proposeanovelapproachforestimatingtherelatednessofinstitutionalcapacitybetweentwoclimatepoliciesbyexploitingthepatternofclimatepolicyco-occurrencewithincountries.Specifically,twopoliciesareassumedtorequiresimilarunderlyinginstitutionalcapacityandknow-howiftheyaremorelikelytoco-occurwithincountries.Themeasureisalsoweighted,withcountriesthathaveintroducedmanypoliciesassignedalowerweightintheoverallcalculation.Previousstudieshaveappliedsuchtechniquestoanalyzethepathdependenceofeconomicdevelopmentacrosscountriesandregions(Hidalgoetal.2007;MealyandCoyle2022;Zaccariaetal.2014).Mealyetal.(forthcoming)showthatthemorerelatedanewclimatepolicyistoacountry’sexistingsetofpolicies,themorelikelythatcountrywillbetointroducethispolicyinthenextfiveyears,evenafteraccountingforimportantcountrycharacteristicssuchasincomelevels,ruleoflaw,governmenteffectiveness,andcarbondioxideemissions.82WithinReachpoliciesthatareconnectedtoexistingpoliciesintheClimatePolicySpacenetwork,buildingonpriorrelatedknow-howandinstitutionalcapacity.Mealyetal.(forthcoming)showthatthistendencyisstatisticallysignificantacrosscountries,evenaftercontrollingforimportantcountrycharacteristicssuchasincomelevels,population,corruption,ruleoflaw,andgovernmenteffectiveness,andcanbeusedtomakepredictionsaboutthetypesofclimatepolicythatcountriesaremorelikelytointroduceinthefuture.Assuch,thesetofclimatepoliciesimplementedatonetimeaffectsinameasurablewaythe­probabilityofimplementingfurtherpoliciesinthefuture.ClimatePolicyFeasibilityFrontiers(CPFFs)canhelpinformpolicychoicesthatreal-isticallyworkwithcountries’currentpolicy-makingcapacityandsuccessivelybuildgreatercapacitytointroducemoreambitioustypesofpolicy.Combinedwiththeusualanalysisoftheefficacy,costs,andbenefitsofpolicies,theCPFFcanhelpidentifythemostpromisingpoliciesinagivencountrycontext.Itconsistsoftwokeydimensions:1.Relativelikelihoodofintroducingapolicyinthenextfiveyears.Basedonhowrelatedanewpolicyistoacountry’sexistingpolicies,thismetricisexpressedinrelativeterms,comparingpolicieswithoutmeasuringtheirabsolutelikelihood.Thismetricmeasurestheeaseofimplementingagivenpolicy,basedonacountry’spriorpolicyexperienceandinferredpolicy-makingcapacities.2.Capacity-buildingpotentialaimstocapturethelearningandcapacitydevelopmentpotentialassociatedwiththeintroductionofanewpolicy.Thismetricmeasureshowtheintroductionofagivenpolicyisexpectedtochangeacountry’sinstitutionalcapacities,makingiteasiertoimplementotherclimatepoliciesinthefuture.Figure3.4showsthecurrentpositionsintheClimatePolicySpaceandCPFFsforTürkiyeandVietNam.EachdotintheCPFFdenotesanewpolicynotintroducedbeforeandcorrespondstopoliciescoloredingrayintheClimatePolicySpace.Thefigurealsoshowstheemissionsreductionpotentialofthesepolicies,basedontheanalysisofpastpolicyadoptionsandassociatedchangesinemissionspresentedinfigure3.1.Withthecostsandbenefits,theefficacyofthesepoliciesisacrucialdimensiontoconsiderwhenprioritizinganddesigningpolicies.TheCPFFidentifiespoliciesthatmaybeeasiertoimplement,asillustratedbyasetofpoliciesshownindarkboldcirclesinpanelsa(forTürkiye)andc(forVietNam).ForTürkiye,forexample,policiesthatappeartheeasiesttointroduceinthenextfiveyearsincludealegallybindingclimatestrategyorabindingemissionsreductiontarget,whichwouldrequireincludingsuchastrategyortargetinalaw,suchasaclimatechangeframe-worklaw.1Türkiye’sCPFFshowsthatalegallybindingclimatestrategyisabout30­percentmorelikelytobeintroducedinthenextfiveyearscomparedtotheintroductionofaretirementpremium,whichisfarawayfromTürkiye’sexistingpoliciesintheClimatePolicySpace.TheCPFFcanalsohelpinthedesignofastep-by-steppolicypathway,goingbeyondshort-termopportunitiesandensuringprogresstowardlong-termgoals.Forexample,theCPFFidentifiesanemissionstradingscheme(ETS)orcarbontaxaspotentialnextstepsforTürkiye.Thesetwopoliciesareclosetoeachotherinthepolicynetwork,show-ingtheyareoftenintroducedtogetherandthatthetwoinstrumentsmoreoftencomple-menteachotherthansubstituteeachother.Inpractice,introducingeitherorbothinstrumentsdependsonthepoliticalcontext.PartlybecauseofTürkiye’sgeographicproximitywiththeEuropeanUnionanditsETS,thegovernmentofTürkiyehasrecentlyFIGURE3.4.ClimatePolicySpaceandCPFFs,TürkiyeandVietNamPolicySequencing:BalancingFeasibilityandLong-TermAmbitiona.Policiestodate,Türkiyeb.CPFF,TürkiyeUserchargesRemovaloffossilProcurementUnilateralfuelsubsidiesrulescommitments(privatesector)TechnologydeploymentPublicanddiusionvoluntaryschemesDemonstrationproject0.011TechnologicalTechnologydevelopment0.010developmentCO2taxes0.009AdviceoraidinFundstosubnational0.008Technologicalinplementationgovernments0.007deploymentanddiusionInformationGreenPolicycapacity-buildingpotentialEmissionstradingprovisioncertificatesGreateremissionsreductionpotentialVehicleairRetirementschemeBindingGHGpollutionR&DpremiumstandardsfundingSectoralGHGemissionreductionreductiontargetstandardscreditingandosetmechanismIndustrialairGHGemissionallowancesBindingclimatepollutionstrategyCO2taxesstandardsGrantsandsubsidies0.006MonitoringInfrastructureinvestmentsNetmeteringAuditingCoordinatingbodyLoans0.005RetirementforclimatestrategyBuildingcodesandstandards0.004premiums0.003Feed-intarisEnergyandothertaxesMorefeasiblepoliciesGridaccessandpriorityTaxrelief051015202530forrenewablesObligationschemesRelativelikelihoodofintroducingpolicyInstitutionalcreationFormalandlegallybindinginnext5years(%)GHGreductiontargetStrategicplanningFormalandlegallybindingrenewableenergytargetPoliticalandnonbindingStatisticallysignificantemissionreductionpotentialrenewableenergytargetNotsignificantornotenoughdatatodetermineemissionreductionpotentialPoliticalandPoliticalFormalandnonbindingGHGreductionandlegallyFormalandlegallybindingenergytargetnonbindingbindingeciencytargetclimateclimatestrategystrategyAtleastonepolicyNopolicyPoliciesthatmaybeeasiesttoimplementfortherespectivecountry(Continued)8384FIGURE3.4.ClimatePolicySpaceandCPFFs,TürkiyeandVietNam(continued)d.CPFF,VietNamc.Policiestodate,VietNamRemovaloffossilUserchargesfuelsubsidiesProcurementUnilateralTechnologydeploymentrulescommitmentsanddiusion(privatesector)PublicDemonstrationprojectvoluntaryschemesCO2taxes0.012TechnologydevelopmentAdviceoraidinFundstosubnational0.011Policycapacity-buildingpotentialinplementationgovernments0.010Greateremissionsreductionpotential0.009VehicleairInformationGreenRetirementInfrastructureInstitutionalpollutionprovisioncertificatespremiuminvestmentscreationstandardsSectoralR&DGHGemissionreductionstandardsfundingcreditingandosetmechanismIndustrialairGHGemissionallowances0.008pollution0.007CO2taxes0.006standardsGrantsandsubsidiesBindingGHGMonitoringreductiontargetNetmeteringInfrastructureinvestmentsLoansAuditingBuildingcodesandstandardsCoordinatingbodyEnergyandothertaxesforclimatestrategyTaxreliefFeed-intarisObligationschemes0.005GridaccessandpriorityFormalandlegallybinding0.004forrenewablesGHGreductiontargetInstitutionalcreationStrategicMorefeasiblepoliciesplanning0510152025303540PoliticalandFormalandlegallybindingnonbindingrenewableenergytargetRelativelikelihoodofintroducingpolicyrenewableinnext5years(%)energytargetStatisticallysignificantemissionreductionpotentialPoliticalandPoliticalFormalandNotsignificantornotenoughdatatodeterminenonbindingemissionreductionpotentialGHGreductionandlegallyFormalandlegallybindingenergytargetnonbindingbindingeciencytargetclimateclimateWithinReachstrategystrategyAtleastonepolicyNopolicyPoliciesthatmaybeeasiesttoimplementfortherespectivecountrySource:Mealyetal.,forthcoming.Note:CO2=carbondioxide;CPFF=ClimatePolicyFeasibilityFrontier;GHG=greenhousegas;R&D=researchanddevelopment.PolicySequencing:BalancingFeasibilityandLong-TermAmbition85announcedthefutureimplementationofanETS,confirmingtheCPFFassessmentthatanETSisahighlyfeasibleinterventioninthecountry.TheCPFFalsoidentifiestechnologicaldeploymentanddiffusionandtechnologicaldevelopmentas“stretch”policiesforTürkiye.Althoughthesepolicies(labeledinpurpleintheCPFFandhighlightedinapurplecircleintheClimatePolicySpace)arelessalignedwithTürkiye’sexistingpoliciesandpotentiallymoredifficulttointroduce,theyhavethepotentialtobuildthecountry’scapacitytodeploylow-carbontechnologiesandengageingreeninnovationandtechnologicaldevelopment.Inadditiontotheirclimatebenefits,suchcapacitiescouldalsohaveimportanteconomicadvantagesandbuildmomentumtowardmorerapidclimateaction.TheCPFFemphasizestheimportanceofthecountrycontextandidentifiesdifferentrecommendationsacrosscountries.VietNamhasadifferentsetofinstitutionalcapabili-tiesfromthatinTürkiye.ForVietNam,themostfeasibleandlikelypoliciesincludeinsti-tutionalcreationandbindinggreenhousegastargets.Policiestoboostclimate-relatedinfrastructureinvestmentscouldhelpVietNambuildfurthercapacity.Moreover,althoughcarbonpricingpoliciesappeartobemorechallengingintheshortterm,otherpoliciescanhelppavethewaytowardthisgoal.SequencingtobuildgreaterpoliticalsupportforclimateactionPoliciesthatcandeliverimmediatebenefitstokeygroupsandtheeconomymorebroadlycanbepoliticallyeasiertoimplementandcanhelpbuildsupportforfurtherclimateaction.Withthepublicusuallyfavoring“pull”over“push”policies(DrewsandvandenBergh2016),taxrelief,grants,andsubsidiestendtobeamongthefirstpoliciesimplementedintheupper-middle-incomeandhigher-incomecountriesthatcanaffordthem(Meckling,Sterner,andWagner2017).Whenthesepoliciesfostersupportivecoalitionsandbroaderpublicsupport—asisthecasewithrenewableenergysupportpolicies—theycanbuildmomentumformoreambitiousandlesspoliticallypalatablepoliciesdowntheroad(Pahleetal.2018)—seebox3.3.Strategicallysequencingpoliciescangrowpoliticalsupportovertimeandshapeapoliticaleconomythatismoreconducivetoclimateaction.Forexample,inGermany,earlyrenewableenergyresearchanddevelopmentfunding,subsidies,andcapacitytargetscreatedthebasisforlow-carbonenergyintereststoemerge,drovedowntech-nologycosts,createdsynergieswithotherenergyanddevelopmentgoals,andincreasedpoliticalandpublicsupportforlow-carbonpower—despitethechallengesofestablishingrenewableenergybusinessesinthecountry.Theseactions,inturn,enabledmoreambitiousenergydecarbonizationpolicies.ThecaseofVietNam,whichmobilizedprivatefinancingfor20gigawattsofrenewableenergyinrecordtime,showshowfeed-intariffsandother“pull”instrumentscandeliverimpressiveresultsintheshortrun(Doetal.2021).Butsuchinstrumentsneedtoevolvetobecomefinan-ciallysustainable.InVietNam,financiallossesin2022and2023suggestalackoffinancialsustainabilityandreduceattractivenessforprivatecapital.Countriesmaythereforeneedcomplementarymeasurestopromotetransparencyintransactions,moresustainableterms,andtheabilitytocrowdincutting-edgetechnology.However,policiesthatdistributebenefitsmightstillencounteropposition,especiallywhenpowerfulvestedinterestsunderstandthelong-termimpactsthatthesubsidiescouldhaveonthem.86WithinReachBOX3.3China’ssustainableenergytransitionpolicysequenceIntheirstudyoftheevolutionofChina’snationalsustainableenergypolicymixover40years,LiandTaeihagh(2020)showhowsequencinghelpedreduceresistancefromexistinginstitutionsandincreasesupportbyfosteringwinningcoalitions,whilegraduallyincreasingpolicystringencyandreducingcosts(figureB3.3.1).First,thegovernmentprovided10yearsofsupportforwindandsolarphotovoltaic,buildinginterestgroupsinlow-carbontechnologies.Itthengraduallyratcheteduppolicystringencybyincreasingemissionschargeratesandtighteningemissionslimitsandairqualitystandards,erodingtheincumbencyofcoalpower.Finally,itstartedreducingfeed-intariffsandothergovernmentsubsidiesaftersupportinggrid-parityrenewableenergy.Together,theseactionsreducedthecostofChina’sclimatepolicies.FIGUREB3.3.1.EvolutionofChina’senvironmentalpolicymix,1980–2020Principal19821985199119961998plansand6thFYP7thFYP8thFYP9thFYPSignedobjectives(1981–86)(1986–90)(1991–95)(1996–2000)theKyoto[Ensure[emission[ShiftfromProtocol[no50%–70%ofcapofPM]end-of-pipespecifics]firmstomeettreatmenttoairpollutant1993process-emissionlimits]RatifiedorientedcontrolUNFCCCapproach]Year198019901995Policystrategy:1991directlyaddressing“NationalEnergyCO2emissionsConservationWeek”:AnnuallyPolicyinstrumentmixPolicystrategy:12/198301/1997REsupportProgramRevolvingonRuralElectrificationfundviaSmallforhydroHydropower:projectsIn100countiespreparations(Endedin2003)Policystrategy:07/198203/198606/198809/199210/199601/199701/199805/1999addresssingairpollutantsPDF:ImplementingMandatoryPilotingAmbientEmissionLaunchingShutdownofdeadline:PDFforSO2AirQualityInterimEIAForemissionStandardLimitstheTCZsmallcoalMeasuresabatement(GB3095)(GB13223)powerplants04/1998PDFforSO2:Expandingpilotingareas(Continued)PolicySequencing:BalancingFeasibilityandLong-TermAmbition87BOX3.3China’ssustainableenergytransitionpolicysequence(continued)FIGUREB3.3.1.EvolutionofChina’senvironmentalpolicymix,1980–2020(continued)Principal200120062009plansand10thFYP11thFYA(2006–10)Commitmentinobjectives[1.ReduceenergyCopenhagenUNFCCC(2001–05)intensityby20%;2.Increaseshareof[ReduceSO2nonfossilfuelemisionsconsumptionto10%;3.ReduceSO2,andNOxby20%]emissionsby10%]20002005YearPolicystrategy:200210/20052008directlyaddressingPilotingCDMprojects:NDRCETSforIntroductionofapprovedCO2emissionsMeasuresformanySO2OperationandCDMprojectsManagementover2008–16Policyinstrumentmix12/200103/200301/20062007–1007/2009Policystrategy:ProgramProgramonRELaw(amendedNDRCGoldenREsupportonRuralSubstitutingSmallElectrificationHydropowerforin2009)approvedSunviaSmallFITsforProjectsHydropowerBiofuels01/2006severalRE(EndedinIntroductionofFITforREIntroductionofprojectsAdministrative09/2003AdministrativeMeasures2015)MeasuresSubsidizingwind07/2007powerconcession06/2006GuaranteedApplyingEIAtohydropurchaseofprojectsREelectricity08/2006bygridfirms:ShutdownofhydroIntroductionprojectswithseriousofRegulatoryeco-issuesMeasuresPolicystrategy:07/200301/200408/200504/2007addresssingairpollutantsPDFforbothEmissionPDF:“DoubleShutdownofLimits:track”betweenSO2andNOx:AdjustmentrevenuesandsmallcoalIntroductionof(GB13223)powerplantsexpensesAdministrative07/2007ElectricitypriceMeasurespremiumfordesulfurizationequipment(Continued)88WithinReachBOX3.3China’ssustainableenergytransitionpolicysequence(continued)FIGUREB3.3.1.EvolutionofChina’senvironmentalpolicymix,1980–2020(continued)Principal2011plansand12thFYA(2011–15)objectives[1.Reduceenergyintensityby16%;andCO2emissionintensityby17%2.Increaseshareofnonfossilfuelconsumptionto11.4%;3.ReduceSO2,emissionsby8%andNOxemissionsby10%]2010Year07/20102015“Low-carbonPolicystrategy:provincesand12/201120132014directlyaddressingTop-10,000PresentpilotingTechnologycities”enterprisesPromotionCatalogCO2emissionsETSforCO209/2010programAnnuallyCDMfund:Introductionof20132014Administrative“NationalLowMeasuresCarbonDay”LocalTargetsforAnnuallyCO2emissionreduction:AnnuallyPolicyinstrumentmix06/201101/201208/201306/201406/2015Policystrategy:GoldenSunSpecialFundforSeparateFITsforFIT:OshoreProjectsusingwindProjects:SubsidyRE:IntroductioncentralizedandREsupportofAdministrativewindpowerforurbanchangedistributedheatsupplyMeasuressolarPV10/2014SolarPV-based07/201104/201209/2013povertyalleviationFIT:TarichangeGoldenSunREsupportProjects:SubsidysurchargeprojectsforsolarPVchangeincrease10/2011Hydro:EIAforriver-leveldevelopmentplansPolicystrategy:01/201209/201309/2014addresssingairpollutantsEmissionLimits:ElectricitypricePDF:ratechangeAdjustmentpremiumfor09/2014(GB13223)environmentalReducingon-gridequipmentpriceofcoalelectricity(Continued)PolicySequencing:BalancingFeasibilityandLong-TermAmbition89BOX3.3China’ssustainableenergytransitionpolicysequence(continued)FIGUREB3.3.1.EvolutionofChina’senvironmentalpolicymix,1980–2020(continued)Principal2016plansand13thFYAobjectives(2016–20)[1.Reduceenergyintensityby15%and2015CO2emissionintensityby18%;INDC2.Increaseshareofnonfossilfuelconsumptionto15%;3.ReduceSO2,andNOxemissionsby15%]2015Year2020Policystrategy:12/2017directlyaddressingPlanofNationalETS(electricitysector)CO2emissionsPolicyinstrumentmix01/201501/201601/201701/2018Policystrategy:FIT:TarichangeforwindFIT:TarichangeforREsupportFIT:TarichangeFIT:TarichangeforandsolarPVsolarPVforonshorewindwindandsolarPV05/201809/201501/201601/2017ShutdownofsmallIMSforREREsupportTGC(trial)surchargeincreasehydrowith05/2017eco-issuesin01/2016ProjectsforgridparitywindYangtzeRiverDispatchpriorityEconomicBeltpowertoRE06/201701/2016Labeling“Green”smallhydroGuaranteedpurchase09/2017bygridfirms“Leader”solarPVprojectsPolicystrategy:01/201501/201601/2018addresssingairpollutantsInformationFurtherreducingTerminatingdisclosureofon-gridpriceofpollutingsourcescoalelectricityPDF04/201501/201601/2018FurtherAmbientairqualityEnvironmentalreducingProtectionTaxon-gridpriceofStandard:coalelectricityAdjustment(GB3095)Source:BasedonLiandTaeihagh2020.Note:China’snationalETSbecameoperationalin2021andfocusesontheregulationofpowersectorcompanies.Itusesallowancesfreelyallocatedandbasedonbenchmarksconsideringactualproductionlevels.Thesystemisconstantlybeingfurtherdeveloped,anditscoverageisplannedtoexpandtoothersectorsaswell.Withmorethan4billiontonnesofCO2covered—accountingforover40percentofthecountry’scarbonemissions—theETSistheworld’slargestintermsofcoveredemissions(ICAP2023).CDM=cleandevelopmentmechanism;CO2=carbondioxide;EIA=environmentalimpactassessment;ETS=emissionstradingsystem;FIT=feed-intariff;FYP=five-yearplan;GB=Guobiao,Chinesefor“nationalstandard”;IMF=InformationManagementSystem;INDC=intendednationallydeterminedcontributions;NDRC=NationalDevelopmentandReformCommission;NOx=nitrogenoxide;PDF=pollutantdischargefree;PM=particulatematter;PV=photovoltaic;RE=renewableenergy;SO2=sulfurdioxide;TCZ=twocontrolzones;TGC=TradableGreenCertificate;UNFCCC=UnitedNationsFrameworkConventiononClimateChange.90WithinReachGreenindustrialpoliciesofferagoodstartingpointinapolicysequence,becausetheycanfosterwinningcoalitionsthatprovideausefulpoliticalsupportbase.Manyhaveadvocatedforstartingwithgreenindustrialpolicies,suchasresearchanddevel-opmentsupportorsubsidies,andgreentradepolicies,suchassupportforlow-carbonexportindustries,tocreatecoalitionsofactorswitheconomicinterestsinlow-carbonindustryandclimatepolicyaction(CullenwardandVictor2020;Mecklingetal.2015).Theunprecedentedfallinthecostofsolarandwind—unthinkablejust10yearsago—isoftenattributedtoamixofindustrialandtradepolicies,suchasfeed-intariffsinEuropeanddirectcreditsupportformanufacturersinChina(Lockwood2022;Meckling,Sterner,andWagner2017;Pahleetal.2018).Thishaspavedthewayformoreambitiousrenewableenergytargetsandotherpolicies,suchasGermany’scoalphase-outlaw(Markard,Rinscheid,andWiddel2021).Effectivepolicysequencingcanalsoweakenthepowerofpotentialclimatepolicyopponents(Nacke,Cherp,andJewell2022).Sunriseindustrialpolicies,whichsupportemergingsectorsortechnol-ogies,aresometimescomplementedbysunsetindustrialpolicies,whichfacilitateandorganizethedownscalingofdecliningsectorsorindustries(seechapter4foramorein-depthdiscussion).Takingadvantageofwindowsofopportunitycanmakeiteasiertointroducepolit-icallychallengingpolicies.Thesustainabilitytransitionsliteraturehighlightswin-dowsofopportunityascriticalpointswhenconditionsbecomemorefavorableforchangingincumbentorlocked-ininstitutionallandscapes(Geels2006,2012;Mealyetal.2023).Differentfactorscanopensuchwindows—forexample,itcanbeeasiertoimplementfossilfuelsubsidies,whicharepoliticallydifficult,whenglobaloilpricesarelow(RentschlerandBazilian2017),orclimatefiscalpoliciesorgreenrecoverypackageswhenacrisisresponsesuddenlyincreasesthresholdsforpublicspendingandgovernmentinterventionintheeconomy,asobservedduringtheCOVID-19pan-demic(Dafnomilisetal.2022).Highlyvisiblenaturaldisasterssuchasthe2003heatwaveinEuropeorthe2005landfallofHurricaneKatrinainNewOrleans,bothatleastpartiallyattributedtoclimatechange,havealsoaffectedthepoliticaleconomyofclimatepolicies.Introducingthenecessarypoliciesearly,evenwhentheyarepoliticallychallengingAlthoughstartingwithpoliciesthatareeasiertoimplementcanhelpbuildmomentum,itissometimesnecessarytointroducepoliticallychallengingpolicies,anddoingsoearlieroninapolicysequencecanbedesirable.Forexample,introducingacarbonprice,evenifitisloworpartial,signalsaclearcommitment,allowsactorstoadjust—say,byswitchinginvest-mentstoefficiencyimprovementsandlower-carbonequipment—andsetsthebasisforpriceorcoverageincreasesasactors’expectationsandpreferencesshift(Satoetal.2022).Someadministrativelydemandingpolicies,usuallylesslikelytobeappliedintheearlystages,couldalsobeworthimplementingearlytohelpalignactors’expectationsandbuildinstitutionalcapacity.Forexample,clearefficiencyoremissionslabelingofappliances,vehicles,andotherproductsandservicescreatesawarenessamongcitizensandmayhelpshifttherangeofpoliciesthatareacceptabletothegeneralpopulationatagiventime(Kelsalletal.2022;Rosenbloom,Meadowcroft,andCashore2019).Preventinghigh-carbonpathdependenceisoftenagoodinvestment,especiallyinlow-incomeenvironments,evenifdoingsoisdifficultorexpensive.AlwaystakingthePolicySequencing:BalancingFeasibilityandLong-TermAmbition91easyoptioncoulddecreasethefeasibilityofmoreambitiouspoliciesinthedecadestocome,leadingcountriestocarbon-intensivephysicalorinstitutionallock-in.Thisisamajorriskincountriesstillbuildingalotofinfrastructure,andpolicydecisionscouldputthemonalow-carbondevelopmenttrajectoryorleadthemtocarbonlock-in.Insectorsthatareparticularlyexpensiveanddifficulttodecarbonize,liketransportation,startingearlywillmakethetransformationasprogressiveandsmoothaspossible,minimizinglong-termcosts.Startingwiththemostexpensiveoptiontodaysometimesmakessenseinthelongterm(Vogt-Schilb,Meunier,andHallegatte2018).Urbanizationpatternsrepresentoneofthelargestsourcesoflock-in,justifyingearlyaction.Eventhoughlow-incomecitieshaverelativelylowemissions,iftheygrowwithlowdensityandahighrelianceonindividualvehicles,theywillstruggletodevelopandimplementthetransportationdecarbonizationpoliciestheywillneedinthefuture.Theywillalsostruggletoensureefficientandattractivepublictransportation,whichismoreimportantathigherincomelevels.And,despitethedifficultyinimplementing­transit-oriented,low-carbondevelopmentpoliciestoday,doingsocouldmakeitmuch­easiertodecarbonizetransportationinthecomingdecadeswithoutmajortrade-offsfordevelopment(Avner,Rentschler,andHallegatte2014).Ifpeopleenjoygoodlevelsof­mobilityandaccessibilityinurbanspaceswithpublicoractivetransportation,theyarelesslikelytoopposepoliciesthatincreasethecostofcaruseorphaseoutfossilfuel­vehicles—becausetheyhavereadilyavailablealternatives.Supportfor,oracceptanceof,policiesthatlimitcaruseishigherinEuropeanandScandinaviancitieswithwell-­developedpublictransportationinfrastructure(KussandNicholas2022;Mareschietal.2022).BuildingpolicyambitionandstringencythroughfeedbackandtippingpointsStrategicallyselectingandsequencingfeasiblepoliciestobuildgreaterinstitutionalcapac-ityandpoliticalsupportdoesnotmeanclimateprogresswillbeslow.Bytakingadvantageofthedynamismofsocio-technical-politicalsystems,governmentscanbuildmomentumtoacceleratetransformationalclimateaction.Eachstepagovernmenttakesandeachpol-icyitimplementscanreinforcefurtherclimateactioninthefuture.Introducingspecificpoliciescantransformtheassociatedpolitics,whichinturnshapesthefuturespaceofpolicypossibilities.Policyfeedbackrelatestotheeffectsthatpoliciescanhaveineitherreinforcingorunderminingthedirectionorpaceoffuturepolicymaking.Theadage“newpolicycreatesnewpolitics”capturesthewaythateachclimatepolicyorinterventionaffectsthepoliticaleconomylandscape,cre-atingnewincentives,spreadingnewideas,supportingnewcoalitions,andreforminginstitutions.Somepoliciescandrivepositive,reinforcingfeedbackeffects,leadingtofasterclimateprogressandmoreambitiousaction.Climatepolicyfeedbackeffectsareakeythemeinthesociotechnicalsystemtransitionliterature,withspecialattentionpaidtolinksandinterdependenciesbetweenlow-carbontechnologyinnovationandscaling,ontheonehand,andchangesinsocialandpoliticalvalues,norms,discourses,andbehaviors,ontheother(AklinandUrpelainen2013;Geelsetal.2017;Lockwood2015).Greenindustrialpolicyisessentiallyafeedback-basedstrategythatdirectsbenefitsor“rents”towardgreenindustries,growingthemandusingthemtoincreasepoliticalsupportmorebroadly(Mecklingetal.2015).Suchpoliciescantriggerpositivepolicyfeedbackeffectsthatdriveinstitutionalprocessestowarddeeperorfastergreenreforms.Insodoing,theycan92WithinReachincreasethebaseofsupportforclimatepolicyovertimeasmorewinnersemerge,fromgreenindustryshareholdersandinvestorstotheiremployeesandlaborrepresentatives,thecommunitieswheretheyarebased,theirlocalpoliticalrepresentatives,thecustom-erswhousetheirproducts,andsoon.Factoringinpolicyfeedbackeffectsisanessentialcomplementtocost-benefitassessmentsofeconomicefficiencyandotherapproachesthatcountriesusetoinformtheirpolicychoices.Puttingapoliticaleconomylensonpolicysequencingshowsthat,althoughsecond-(andeventhird-orfourth-)bestpoliciesbasedonstaticeconomicefficiencymightcostmore,especiallyatearlierstages,theycanpavethewayformorestringentandefficientpolicieslater,improvingtheoverallfeasibilityandcostoftransformativepoliciesovertime(Pahleetal.2018).Fromadynamicefficiencyperspective,itisasmuchaboutreducingbarriersasstrengtheningenablingfactorstoensurethepoliticaleconomycanshiftfrombeingabrakeontransformativeclimateactiontodrivingit.Thisispartofthelogicthatunderliesthecallforgreentradeandindustrialpolicy,wherebydirectsupportforgreenindustrycangenerateincreasinglypowerfulwinningcoalitionsthatchampionmoreambitiousdecarbonizationpolicy(Mecklingetal.2015).Manycountriesandsubnationalareas—includingearlymoversGermanyandtheUSstateofCalifornia—deployedtargetedsubsidiesandotherpolicyinstrumentstosupportrenewableenergywithgreatsuccess(Pahleetal.2018).Governmentscanalsoaimtostrategicallytargettippingpointsinsocial,technological,andpoliticaldomains,whichcandriverapidandsystemicchange.Climatepoliciesthatovercomeinertia,reduceopposition,andincreasesupporthelptodevelopmomentumbehindacleardirectionofchange.Inthepowersector,forexample,renewableenergycombinedwithstorageisexpectedtodisplacefossilfuelsinthenextdecadeevenwith-outadditionalpolicysupport(IEA2023).Butgoingintherightdirectiondoesnotguar-anteethatwewillreachourdesireddestination—inthiscase,netzero—intime.Indeed,variousassessmentssuggestthatwearemovingtooslowlytomeetclimategoals(Boehmetal.2022).Tippingpointsthatcanacceleratechangeareacriticalcomponentofacli-matesequencingstrategy(figure3.5).FIGURE3.5.EnablingconditionstotriggerpositivetippingpointsSustainabilitylevelofsystemChallenge:HowtodecreasepoliticalbarriersforenablingpositivetippingpointsTippingpointTimeEnableAccelerateStabilizeSource:Fesenfeldetal.2022.PolicySequencing:BalancingFeasibilityandLong-TermAmbition93Atippingpointreferstononlinearchangeinacomplexsystem,intermsofthespeedornatureofchange(Milkoreit2022).Theprimarydriverofatippingpointisthedomi-nanceofpositiveovernegativefeedbackeffects,whichreinforceschange.Onceatippingpointhasbeenbreached,thelikelihoodofquicklyoreasilyreturningtoapreviousstateorpaceofchangeislow(Milkoreit2022).Severaltypesoftippingpointarerelevantforclimategovernance,transitionstrategies,andpolicysequencingdecisions.•Climatetippingpoints:major,rapid,andabruptchangesintheclimatesystem.Breachingclimatetippingpointswouldlikelytriggerfurthertippingpointsinecologicalandhumansystems.Examplesincludemajorsealevelriseresultingfromcollapsingicesheetsordiebackofimportantbiodiversebiomes,suchastheAmazonRainforest(ArmstrongMcKayetal.2022).Warningsfromthescientificcommunitythatwearefastapproachingclimatetippingpointsarebecomingmoresevere(OECD2023).Ifthosetippingpointsaretriggered,itisreasonabletoassumethatthepoliticalecon-omyofclimatepolicywouldchangerapidly,perhapsleadingtoradicallydifferentapproachestomanagingclimateaction.•Socialtippingpoints:rapidself-reinforcingshiftsinattitudes,beliefs,behavior,and­valuesinsociety.Whethersocialtippingpointsaretriggereddependstoanextentonwherechangehappensinasocialnetwork.Peoplearemorelikelytorespondtochangesintheattitudesorbehaviorofinfluentialactors—forexample,athoughtorpoliticalleader—becausetheyarewell-connectedandmorevisible;butthisresponsewillbemediatedbyfactorssuchastrust,credibility,andsocialidentity(Sönkeetal.2022).Theresponsecanalsobeaquestionofcriticalmass.Oneexperimentalstudysuggeststhat,whenjust25percentofapopulationgroupchangesitsnormsorbehav-iors,themajoritycanbe“tipped”tofollow(Centolaetal.2018).Anothersuggests,however,thatthethresholdislikelytodifferacrosssocieties,dependingonfactorssuchasrisktolerance,nonconformity,andavailableincentivesforearlymovers(Andreoni,Nikiforakis,andSiegenthaler2021).•Technologicaltippingpoints:significantshiftsintechnologymaturity,performance,costs,oraccessibility.Severalkeytechnologicaltippingpointshavealreadybeencrossed—forexample,whenrenewableenergybecamethecheapestoptiontogener-ateelectricityinmostmarkets.•Policytippingpoints:rapidshiftsinsupportforandimplementationofaparticular­policyorsetofpolicies.Majorcrisis,scientificdiscoveryorbreakthrough,changesinpublicopinionsandvalues,apolicyparadigmshift,orachangeinthebalanceofpowerbetweenoppositionalandsupportivecoalitionscanallcontributetotriggeringapol-icytippingpoint.Oncethistippingpointisbreached,reinforcingfeedbackeffectscanacceleratediffusion—forexample,acrosslevelsofgovernment—andembedding,suchasinsocialdiscourse.Inthewakeofapolicytippingpoint,anunpopular,controver-sial,orunfeasiblepolicyorsetofpoliciescanbecomewidelyacceptedandsupported,makingcontinuedprogresslikelyandreversalunlikely.SharpeandLenton(2021)makethecasethatpoliciescanaccelerateprogressbytar-geting“upward-scalingtippingcascades”—thatis,progressiveactivationoftippingpointsthatincreasethelikelihoodoftriggeringanotheratalargerscale.Thiswouldcre-ateasortoftippingpointpathdependence(figure3.6).Althoughtheirstudyfocusesonhowsmallgroupsofcountriesworkingtogethercanactivatetippingpointsintheglobaleconomy,countriescanapplyfindingstotheirnationalcontext.Lookingatthepowersectorandroadtransportationvehicles,theauthorszoominonrelativetechnologycost94WithinReachFIGURE3.6.Upward-scalingtippingcascadestomeetclimategoalsReversibleIrreversibleEVlighttruckscheaperthanReinforcingfeedbacksdieselNationalGlobalDieseltrucksstillcheaperIncreasingscaleSectoralCross-sectoralOilfirmsEVscheaperEVandbatterycommitfullydeploymenttodiversifyingup,costsdowninvestmentsthanpetrolcarswithoutpolicysupportTippingpoint2OilfirmsstillhedgingtheirEVscheaperbetsthanpetrolcars,Renewables+batterystoragecheaperthanafterpolicycoalpowersupportEVandbatterydeploymentTippingpoint1up,costsdownEVsmoreexpensivethanEVsupportpetrolcars,withoutpoliciespolicysupportCoalpowercheaperthaninmajorrenewable+storageeconomiesEVsmoreexpensivethanpetrolcars,afterpolicysupportReinforcingfeedbacksNewrenewablescheaperthanReversibleIrreversibleexistingcoalIncreasingscaleTippingpoint4NationalNationalRenewableRenewablesExistingcoalpowereconomicsfinancedeploymentup,cheaperthancheaperthannewrenewables•Fallingcostsofrenewablesgloballycoalfinancecostsdown•Assistanceforpolicyreformandde-risking•PoweringPastCoalAllianceTippingpoint3CoalfinancecheaperthanrenewablefinanceUKgaspowerUKcoalFasttransition;cheaperthanloss-makinghighpoliticalcoalpowerconfidenceTippingpoint2•RenewableTippingpoint1UKcoalReinforcingfeedbacksGlobalsubsidiesprofitableGlobaleconomicsUKcoalpowercheaper•PowersectorthangaspowerfinancingreformpoliciesIncreasingscale•CarbonpriceSource:SharpeandLenton2021.Note:EV=electricvehicle.PolicySequencing:BalancingFeasibilityandLong-TermAmbition95tippingpoints,whenlow-carbontechnology(gasandthenrenewableenergyinthepowersector;electricvehiclesinthetransportationsector)becomecheaperthanhigh-emittingtechnology(coalandthengasinthepowersector;internalcombustionenginesinthetransportationsector),firstwith—andthenwithout—policysupport.Theyshowhowthesetippingpointsleadtochangesnotonlyintechnologysharesbutalsoinclimatepolitics,enablingmoreambitiousandfasterpolicychange.Radicalclimatepoliciescanhelptriggerpositivetippingpoints.Policy(feedback)effectscancontributetopathdependence,actingasafunnelforfuturepolicyoptions.Strategicpolicysequencingcanharnesstheseeffectstonarrowtherangeofpolicyoptionstoamoreambitiousormorestringentsetofoptions,includingbyfosteringmorepolicywinners.Butatippingpointstillneedstobetriggeredtoacceleratechange,andthattriggeringmayrequireintentionalforcing(Absonetal.2017;Fesenfeldetal.2022;vanderPloegandVenables2022).VanderPloegandVenables(2022)makethecaseforradicalclimatepoliciesthatcanprovidethenecessary“bigpush,”arguingthatmarginalpolicies,suchassettingthepriceofcarbontothesocialcostofcarbon,areunlikelytoworkasatrigger.Instead,theysuggestthatcountrieswillneed“bigpush”policies—forexample,asizableelectricvehiclesubsidy—totriggertippingpoints,suchassociotechni-calreinforcingeffectsthatleadtoarapidelectricvehiclediffusionanddisplacementofinternalcombustionengines.Althoughexpectedtobecostly,such“bigpush”policiescanbetemporary,becausetheywillnolongerbenecessaryoncetheeconomyshiftstowardthenew,superior,equilibrium.Note1.Targetsorstrategiesareconsidered“binding”whenindividualsandinstitutionsinthepublicandprivatesectorsmustcomplywiththem—forinstance,becausetheyarepartofnationallegislation.ReferencesAbson,D.,J.Fischer,J.Leventon,J.Newig,T.Schomerus,U.Vilsmaier,H.vonWehrden,P.Abernethy,C.D.Ives,N.W.Jager,andD.J.Lang.2017.“LeveragePointsforSustainabilityTransformation.”Ambio46(1):30–39.https://doi.org/10.1007/s13280-016-0800-y.Aklin,M.,andJ.Urpelainen.2013.Renewables:ThePoliticsofaGlobalEnergyTransition.Cambridge,MA:MITPress.Andreoni,J.,N.Nikiforakis,andS.Siegenthaler.2021.“PredictingSocialTippingandNormChangeinControlledExperiments.”ProceedingsoftheNationalAcademyofSciences118(16):e2014893118.https://doi.org/10.1073/pnas.2014893118.ArmstrongMcKay,D.I.,A.Staal,J.F.Abrams,R.Winkelmann,B.Sakschewski,S.Loriani,I.Fetzer,S.E.Cornell,J.Rockström,andT.M.Lenton.2022.“Exceeding1.5°CGlobalWarmingCouldTriggerMultipleClimateTippingPoints.”Science377(6611):eabn7950.https://doi.org/10.1126​/science​.abn7950.Avner,P.,J.E.Rentschler,andS.Hallegatte.2014.“CarbonPriceEfficiency:Lock-InandPathDependenceinUrbanFormsandTransportInfrastructure.”PolicyResearchWorkingPaper6941,WorldBank,Washington,DC.https://openknowledge.worldbank.org/handle/10986/18829.Boehm,S.,L.Jeffery,K.Levin,J.Hecke,C.Schumer,C.Fyson,A.Majid,andI.Jaeger.2022.StateofClimateAction2022.WorldResourcesInstitute.https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oimprovethewaystheyrelatetoeachother,organizethemselves,andworktogether.Forexample,inIndonesia,localnormsandpractices,suchasgotongroyong—traditionsofcollectiveaction,obligationstowardothers,andmutualassistance—contributetoadaptivecapacity(WorldBank,forthcoming).Asolelyhousehold-centricunderstandingofdistributionalaspectsofclimatepoliciescanover-lookthesecommunitydynamicsandcodependencies.Usingtheexampleofataxreformthatincreasesthepriceoffossilfuels,thischapterhighlightsthatdistributionaleffectsareacrucial—albeitnottheonly—elementofthepoliticaleconomyofclimatepolicies.Understandingdistributionaleffectscanhelpcountriesnotonlyidentifyandsupportpopulationgroupsthatareparticularlyvulnera-bletoadversepolicyimpactsbutalsorecognizeandmanagepotentialsourcesofopposi-tion.Thechapterhighlightsthechannelsthroughwhichdistributionalimpactsoccur,acrossincomegroups,geographicalareas,andsocialvulnerabilities.DriversofsocialexclusionandinjusticeAlthoughthefocusisoftenonincomegroups,occupations,orspace,othersocialfactors—suchasethnicity,gender,sex,age,disability,religion,displacement,andsexual­orientation—canmakegroupsmorevulnerabletotheadverseimpactsofpolicydecisions.Byevaluatingtheimpactsofpoliciesintheirrealimplementationcontext,expoststudiesofferinsightsintoquestionsofsocialjustice,intersectinginequalities,andotherfactorsthatdeterminetherealimpactsofclimatepolicies(box4.1).Thedistinctionbetweensocioeconomicvulnerabilityandsocialvulnerability—withtheformertypicallybasedonincome,consumption,orwealth,andthelatteronfactorsthatBOX4.1GenderandclimatechangemitigationpoliciesinagricultureDespitewomen’simportantcontributiontoagriculture,genderinequalitiespersistandwomentendtohavelessaccesstoresources,includingland,inputs,financialservices,education,anddecentemploymentopportunities(Ermanetal.2021).Genderrolesinagriculturehaveimplicationsnotonlyforhowclimatemitigationpoliciesaffectsocialequityoutcomesbutalsoforhowdifferentgroupsadjusttothesepoliciesandwhethertheyfacilitateajusttransitionforall.Iftheydonotrecognizegenderdynamicsandrelatedtransitionalchallenges,mitigationpoliciesandinstrumentscouldexacerbateexistinggenderinequalities.Technologicalsolutionstomitigategreenhousegasemissionsandreducehardphysicalworkcreateopportunitiesandtrade-offs(BeucheltandBadstue2013).Long-termgainsinreducingemissions,women’sdrudgery,andunpaidlabordonotpreventshort-termtransitionalimpacts.Emissions-reducingtechnologiesthatlowerlaborrequirementsalsoposetransitionalchallengesforwomenworkers,whooftendothemorelabor-intensiveworkinagriculture.Makingmitigationpoliciesgender-responsiveposesachallengebecausethosewhocanbenefitoftenlackpoliticalvoice.Thelackofpower,voice,andrecognitionisevidencedfromthebeneficiarylevel(Larsonetal.2015)tonationalandinternationaldecision-makingandgovernanceframeworks(Gautametal.2022).Astudyongender,power,anddecision-makingintheBolivianAmazon(Boyd2010)reportsthat,atthebeneficiaryandcommunitylevels,bidstomakeprojectdesignandimplementationparticipatoryandinclusivehavefocusedmostlyon“practicalgenderneeds”suchashealth,education,incomegeneration,andfoodproduction,ratherthanonrecognizing“strategicgenderneeds”andwomen’sinterests,whichcanempowerthemandchangetheirstatusinsociety,thusadvancingtheirinterests.(Continued)PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies101BOX4.1Genderandclimatechangemitigationpoliciesinagriculture(continued)Recognizingwomen’sknowledgeandroleinsustainablepracticesandcreatingmeaningfulopportunitiesfordecision-makingcanincreasemitigationeffectivenessandreducegendergaps.ManyinitiativesinBangladesh,Indonesia,andNicaraguahaveempoweredandmobilizedwomenindisasterriskmanagement(WorldBank2011).InBangladesh,engagingwomenindecision-makingandcommunitydisasterriskmanagementpracticeshasgarneredwidersupportfrombothmenandwomenforwomen’sdisasterriskmanagementneeds,alsoaddressingculturalreasonsthatpreventwomenfromaccessingsheltersduringdisasters(Ikeda2009).Thischangehashelpedreducethegendergapindisaster-relatedmortalityratesinBangladesh(WorldBank2011).Womenareagentsofchangewhohaveastrongbodyofknowledgeandexpertisethroughtheirinteractionswiththeenvironment.AwiderangeofliteraturefromAfrica(BraunandDuveskog2011;Friis-HansenandDuveskog2012),Asia,andLatinAmerica(Ashbyetal.2000;Humphriesetal.2012)demonstratesthatmenandwomenengagewiththeenvironmentdifferentlyandacquiredifferentskills,whichcanbeusedinclimatemitigation(andadaptation)inagriculture.Source:Kabir,DeVriesRobbe,andGodinho,forthcoming.makepopulationgroupssociallyvulnerable—isimportantfromapolicyperspective.Recentestimatesconfirmthatsubstantiallymorepeopleareatriskofbeingexcludedonthebasisofidentity,circumstances,andsocioeconomicconsiderationsthanarepeoplelivinginmonetarypoverty.Forthelatestavailableyear(2017),2.33billionto2.43billionpeople,or31.1­percentto32.4­percentoftheglobalpopulation,areatriskofexclusion(CuestaLópez-NovalandNiño-Zarazúa2022).Exclusionandotherformsofdeterioratedsocialsustainabilityaremultidimensionalinnature.ArecentanalysisofintersectingsocialvulnerabilitiesinSouthAfricaestimatesthat65­percentofitspopulationismultidimensionallyexcluded(BallonandCuesta,forthcoming).Theincidenceofmultipleexclusionsishigheramongwomen(70­percent)thanmen(58­percent);and,at74­percent,BlackpeoplearemorethantwiceaslikelyasWhitepeopletobeexcluded(29­percent).Acrossallethnicgroups,perceptionsofunequallyadministeredlawsandpoorgovernmentperformance,alongwithlackofaccesstopublicassistance,contributemosttomultipleexclusions.Confidencein­governmentinstitutions,ownershipofassets,andqualityofhousingshowthelargestgapsinexclusionbetweenBlackandWhitepopulations.DistributionaleffectsofclimateactionImpactsofclimatepoliciesonconsumptionBecauseofdifferentconsumptionpatterns,consumptionimpactsonhouseholdstendtovaryacrossincomelevelswithincountries,andthenear-poorandlower-middleclassesareoftenparticularlyvulnerable(Dorbandetal.2019;KöpplandSchratzenstaller2022;Steckel,Renner,andMissbach2021).Inmanylower-incomecountries,poorerpopulationshavelimitedaccesstoenergy-consumingassetsandservices—suchascars,aircondition-ing,orgasforheatingandcooking—andarethereforelessexposedthanricherhouseholdstothedirectimpactsofanincreaseinfossilfuelprices.Thus,carbonpricingtendstohaveaprogressiveeffectincountrieswherepoorhouseholdshavelower-than-averageenergyexpenditure,asisoftenthecaseinlower-middle-incomecountries(figure4.1).Inlow-­incomecountries,overallconsumptionimpactstendtobesmallerbecausehouseholdsacrossthewholeincomespectrumspendrelativelylessonfossilfuelsandenergy,butthose102WithinReachFIGURE4.1.Consumptionimpactsofa(noncompensated)increaseinfuelpricesinasubsetofcountries,byincomelevel0Medianconsumptionincidence(%consumption)−0.5−1.0−1.5−2.0−2.512345678910123456789101234567891012345678910Low-incomecountriesLower-middle-incomeUpper-middle-incomeHigh-incomecountriescountriescountriesIncomedecilesSource:Dorband,forthcoming,usingtheClimatePolicyAssessmentTooldevelopedbytheInternationalMonetaryFundandtheWorldBanktoestimatetheimpactofcarbonpricing(https://www.worldbank.org/en/topic​/­climatechange/brief/climate-policy-assessment-tool).Note:Theseillustrativesimulations,performedin74countries,assumetheintroductionofataxofUS$60pertonofcarbondioxideandtheremovalofenergyandfossilfuelsubsidies,withnorecyclingoftherevenuesorsavings.Theseassumptionsaremeantnottoberealisticpolicypackagesbuttoillustratethevulnerabilityofhouseholdstochangesinfuelprices.Thefigureshowsmedianeffectsforconsumptiondecilesandforcountrygroups.Itdoesnotshowthelargeheterogeneityofconsumptioneffectsacrosscountriesaswellaswithincountriesorconsumptiondeciles.Becauseimpactsareheterogenousandskewed,theyarelargerifaveragesareusedinsteadofmedians,butthedistributiondoesnotchangesubstantially.impactstendtobeneutralorslightlyprogressive.Amongupper-middle-incomecountries,theevidenceismoremixedandvarieswithlevelsofaccesstopublictransportationandelectricityandotherlower-carbonalternatives.Inhigh-incomecountries,wheremosthouseholdshaveaccesstoenergy-consumingassets,lower-incomehouseholdsareslightlymorevulnerabletoenergypriceincreasesbecausetheyspendalargerportionoftheirexpenditureonfuels.Irrespectiveofthedistributionacrossincomegroups,a1­percentdecreaseinconsumptionisexpectedtohavelargeradverseeffectsonthewelfareofrela-tivelypoorerindividuals.Thiscreatesaspecificvulnerabilityforthenear-poorandlow-er-middleclasses,whohaveaccessandenoughresourcestoconsumefossilfuelsbutarevulnerabletosmallchangesinpriceandreductionsintheirpurchasingpower.Poorpeopletendtospendalargefractionoftheirincomeonfoodandcanthereforebeheavilyaffectedifclimatepoliciestranslateintohigherfoodprices.Agriculturalproductsandtheirsupplychainsaremajorgreenhousegasemitters,throughagricul-ture’suseoffertilizers,transportation,andfuels,andthroughdeforestation(WRI2019).Althoughcarbonpricingsystemsrarelycoverland-basedemissions,climatepoliciesthataffectagricultureandfoodsystemscouldhavelargeimpactsonfoodprices.PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies103Forexample,inBolivia,70­percentoftheimpactofcarbonpricingontheconsumptionofthebottomquintilewouldcomefromfoodprices(Vogt-Schilbetal.2019).Andthatestimateassumesthatfarmerscanpasstheincreasedcostofinputstofinalfoodprices.If,instead,farmersmustreducetheiruseofagriculturalinputs,agriculturalyieldscouldbereducedandtheresultingincreaseinfoodpricescouldhurtpoorpeopleevenmore.Carbonpricingwithanarrowerbase—coveringonlyenergy-relatedemissions,asismostcommon—hasmuchsmallerimpactsonfoodpricesinmostcountries,preventingsucharegressiveimpact(Dorbandetal.2019).Availableestimatesondistributionaloutcomesacrosslow-,middle-,andhigh-incomeeconomiesareinconclusive,anddependonthemethodsusedandpolicyassumptionsmade(Ohlendorfetal.2021).SomestudiesfindprogressiveimpactsofcarbonpricinginChina(Brenner,Riddle,andBoyce2007),India(Datta2010),Indonesia(Steckeletal.2021;Yusuf2008),Mexico(Renner2018),Nigeria(Dorbandetal.2022),Pakistan(ShahandLarsen1992),SouthAfrica(vanHeerdenetal.2005),Thailand(Saelim2019),andVietNam(NurdiantoandResosudarmo2016;Steckeletal.2021).OthersfindneutralorregressivedistributionsinBoliviaandEthiopia(Steckel,Renner,andMissbach2021);Brazil(daSilvaFreitasetal.2016);China(WorldBankGroup2022b);India(Steckeletal.2021);Indonesia,Malaysia,andthePhilippines(NurdiantoandResosudarmo2016);andSouthAfrica(Devarajanetal.2011;Steckel,Renner,andMissbach2021).Inhigher-­incomecountries,regressiveconsumptionimpactsaremorelikely(Becketal.2015;DissouandSiddiqui2014;Fengetal.2010;Goulderetal.2019;GraingerandKolstad2010;Kerkhofetal.2008;Kerkhof,Nonhebel,andMoll2009;Wieretal.2005).MorerecentresearchacrossEuropeancountries,however,findsneutralorprogressivecon-sumptioneffectsinmostcountries(AnderssonandAtkinson2020;Feindtetal.2021).Consumptionincidencestudiesbyincomegroupdonotcapturealldistributionalissues—andrelatedpoliticaleconomyrisks—becausedifferenceswithinincomegroupsarelargerthanvariationsacrossincomegroups(Dorbandetal.2022;Douenne2020;Feindtetal.2021;Missbach,Steckel,andVogt-Schilb2022;Steckel,Renner,andMissbach2021).Consumptionpatternsvarymorewithsocioeconomiccharacteristicsthatareunrelatedtoincome,suchasaccesstocleanenergytypesortransportationmodes(Javaid,Creutzig,andBamberg2020;Malakar,Greig,andvandeFliert2018;MullerandYan2018).Differencesalsooccurbetweenruralandurbansettings(Dorbandetal.2022;Douenne2020;Feindtetal.2021).Forexample,estimatessuggestthat,inbothlow-andhigh-incomecountries,low-incomeruralhouseholdspayagreaterbudgetshareforcar-bonpricingthandotheirurbanpeers.Oftenwithlimitedaccesstopublictransportationandelectricity,especiallyinlow-incomecountries,thesehouseholdstendtospendalargeshareoftheirbudgetandtimeonacquiringcookingandtransportationfuels,includingforelectricitygenerators.Inmanycountries,particularlyinSub-SaharanAfrica,householdsspendmoreongeneratorfuelthanongridelectricity,andgeneratorsproducemoreelectricityannuallythanthenationalgrid(IFC2019).Becausetransporta-tionfuelsarealsooftensubsidized,apricingreformthatincludestheremovalofthesesubsidiesmayparticularlyaffectlow-incomeruralhouseholds.Inlow-andmiddle-incomecountries,higherfuelpricesmaynotimmediatelyaffectpoorpeople;withoutcomplementaryactionandaccesstoaffordableelectricity,however,suchpoliciescouldslowprogresstowarduniversalaccesstomodernenergyandcleancooking.Consumptionincidencestudiesthattakeastaticview—thatis,lookingattoday’sconsumptiononly—mayfailtoidentifysuchlong-termrisks.Thus,itisimportantthatassessmentsofclimatepoliciesandtheirdistributionalimpactsbecarriedoutina104WithinReachdynamicfashion,particularlyinrapidlygrowingcountries.Forexample,anincreaseinfossilfuelpricesmaynotdirectlyaffecthouseholdscookingwithbiomass,butthechangeinpricemaydelaytheabilityofthesehouseholdstoshifttomoderncookingtechniquesiftheydonothaveaccesstoaffordableelectricityandelectriccookstoves(GreveandLay2023).In2020,approximately2.4billionpeoplearoundtheworldcookedwithtradi-tionalpollutingfuelsandtechnologies,contributingtoairpollutionandprematuredeaths(WorldBank2023a).Switchingtocleanercookingfuelsandmoderntechniquesisanecessarysteptoimprovepeople’shealthandwell-being.Buttheswitchmightleadtoanimportantexpenditurefactoriffuelpricesincrease,especiallyinareaswithlittleaccesstoelectricityandwherebiomassisavailablefreeofcharge.Carbonpricingmightthereforereducetheuptakeofmoderncookingfuelsamongpoorhouseholdsthatcannotaffordthetransition(Rao2015).Cameronetal.(2016)provideevidencethatclimatechangemitigationpoliciesinSouthAsiacouldincreasefuelcostsby38­percentin2030relativetoabaselinescenario,andriskkeeping21­percentmorepeopleontraditionalstoves.Investment,taxreforms,andcashtransferscanprotectpeopleagainstthedirectimpactsonconsumptionClimatepoliciescoupledwithinfrastructureinvestmentscanbestronglyprogressive,butcomplementarypolicies—suchasimmediatemonetarytransfers—areoftennecessaryintheshortterm.Notonlyisaccesstoelectricitycrucialforimprovingwell-beingand­productivity,butitcanalsohelpinsulatehouseholdsfromfossilfuelpriceshocks,providecleanerandsaferenergyalternatives,andsupportpovertyreduction(see,forexample,Fagbemi,Osinubi,andAdeosun2022).Becauselackofaccesstobasicpublicservicesisconcentratedamonglow-incomeindividualsandruralcommunities(Dorbandetal.2022),investingcarbonpricerevenuesinimprovingenergyaccesswouldparticularlybenefitpoorandruralgroups.Butinfrastructureprovisionanditsassociatedwelfarebenefitstaketimetomaterializeandcannotcompensatefortheimmediateconsumptionshock.Thus,althoughcashtransferscannotreplacemorestructuralreformstowardachievingtheSustainableDevelopmentGoals,immediateredistributionandcompensationwilloftenbeneededtoalleviatetheinitialconsumptioneffectandmanagepublicresistance(Boyce2018;Goulder,Hafstead,andWilliams2016;HassanandPrichard2016;Klenertetal.2018;Metcalf2008).Recyclingjustafractionofcarbonpricingrevenuesorrepurposingsubsidiesthroughdirecttransfercanmakereformspro-poor.Fossilfuelsubsidiesareoftenimplementedtosupportpoorpeople’senergyaccess,andcarbonpricingisoftencontestedforitsimpactonenergyaccess.However,becauserichhouseholdsconsumethebulkoffuelsinabso-luteterms,energyorfossilfuelsubsidyschemesrepresentanextremelyinefficienttoolforpro-poorsupport:mostoftheresourcesflowtowardhigher-incomepeople.Theseschemesalsodisincentivizeenergyconservationefforts.Socialsafetynets,suchastar-getedoruntargetedcashtransfers,bycontrast,aremoreeffectiveandlesscostly(Banerjee,Niehaus,andSuri2019;CoadyandLe2020;HannaandOlken2018).Whencountriesreducefossilfuelsubsidiesorimplementcarbonpricing,justafractionoftheresourcestheymobilizeisenoughtofullycompensatethebottomsharesoftheincomedistribution.InEcuador,forexample,Schaffitzeletal.(2020)findthatremovingallenergysubsidiesandrepurposingashareofthisrevenuetoincreasethecashtransferprogram,BonodeDesarrolloHumano,wouldincreasethepoorestquintile’srealincomeby10­percentandleavemorethanUS$1.3billionforthepublicbudget.ForasampleofPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies105LatinAmericancountries,Fengetal.(2018)estimatethatabout20­percentofsavingsfromsubsidyreformswouldfullyalleviatetheconsumptionimpactonthebottom40­percentoftheincomedistribution.Compensatingpeopleishard:itrequiresappropriatesystemsanddeliverymecha-nisms,includingbroad,strong,andflexiblesocialprotectionsystems.Thelargehet-erogeneityinimpactsmakesitdifficulttotargettransferstosupportthemostaffectedandvulnerablehouseholds.Countriesalreadyequippedwithhigh-coveragesocialprotectionsystemscanusethesetohelphouseholdsmanagepriceshocksinwaysthatarebothbettertargetedandmoreefficientthansubsidies.Buteventhebestsocialprotectionsystemshaveimperfectcoverageandtargeting.ArecentLatinAmericanstudyexploresthegapsandoverlapsbetweenthe20­percentofhouseholdsmostaffectedbyacarbonprice,thepoorest20­percentofhouseholds,andhouse-holdsthatarenotcoveredbysocialtransfers(Missbach,Steckel,andVogt-Schilb2022).Highlightingthechallengegovernmentsfacewhencompensatinghouseholds,thatstudyfindsthat,first,theimpactsofcarbonpricingaremoreheterogenouswithinthanacrossincomeclassesand,second,deliverymechanismsarenotalwaysavailable.Forexample,theauthorsfindthat,inChile,Colombia,Ecuador,andUruguay,socialtransfersdonotcover3–4­percentofhouseholdsamongthepoorest20­percentandmostaffectedbycarbonpricing.Somecountries,includingIndonesiaandtheIslamicRepublicofIran,haveusedfossilfuelsubsidyreformtofinancethecreationofnewsystemstocompensatehouseholdsmoreefficientlythanexistingtools(Damaniaetal.2023).Asdiscussedinchapter5,evenredistributive,low-carbon,andfiscallyresponsiblepoliciestoremovefuelsubsidiescanleadtosocialunrest,soensuringparticipative­decision-makinganddevelopingagoodcommunicationstrategytoaccompanyclimatepoliciesisvital.Whenthepriceofliquefiedpetroleumgas—usedmostlyforvehicles—doubledovernightinKazakhstanin2022afterthegovernmentliftedpricecaps,protest-erstooktothestreetsandtheensuingturmoilledtomorethan200deathsandtheresignationofthegovernment(Horowitz2022).SectoraleffectsonlaborandskillsAmpleevidenceshowsthatwell-designedclimatepoliciescanbenetjobcreators(Dussaux2020;Godinho2022;Markandyaetal.2016;MetcalfandStock2020;WorldBankGroup2022a).Transitioningtowardrenewableenergysourcesand­adoptingsustainablelandusepracticescangeneratenewjobopportunitiesin­emergingindustries.Manystudiesfindthatindirectandinducedjobsareamajordriverofthesenet-positiveoutcomes.Forexample,employmentopportunitiesrelatedtoinvestmentsininfrastructure,inducedbyprojectsinothersectors,canbelargerthandirectjobcreationonprojectsites(Edwards,Sutton-Grier,andCoyle2013;ZhangandZhang2020).Positiveemploymentoutcomesarenotautomatic;rather,theydependonthedesignofclimateandotherpolicies.Jobcreationislinkedtothetransitiontowardgreenertech-nologiesandpractices—forexample,whenclimate-smartagriculturepracticesorrenew-ableenergysolutionsaremorejob-intensivethanexistingpatterns.Buttherealityofthesenewjobswilldependontheinvestmentclimate,theavailabilityofinfrastructureandatrainedlaborforce,andappropriatetaxpoliciesandtraderegulations.Tobecomepartofagreenglobalvaluechain,andbenefitfromthejobcreationitcanbring,countries106WithinReachmustbeabletoimportkeyupstreamcomponentsatanacceptablecost,whichill-­designedtariffsortraderegulationsmaypreventthemfromdoing.Tounderstandtheeffectofclimateanddevelopmentpoliciesonlaborandskills,ananalysisofclimatepolicypackagesthatpromotesustainabledevelopmentwasconductedusingaglobaldemand-ledeconomicmodelbasedonmultiregionalinput-outputdata(Dorband,forthcoming).ThepolicyscenarioisaUS$60domesticcarbontaxaccompa-niedbyacompletephase-outoffossilfuelsubsidies,withgeneratedrevenuessplitasfollows:40­percentonincomesupport(incometaxcutsorsocialsafetynets);40­percentongovernmentspendingrelatedtotheSustainableDevelopmentGoals(education,health,staplecropproduction,andpublictransportation);and,whereapplicable,20­percentonrenewablewindandsolarenergysubsidies.Theanalysisincludedthe121countriesintheGlobalTradeAnalysisProject(Aguiaretal.2019).Theanalysisfindsthat,despitemostlypositiveneteffects,theclimatepolicypackagescanresultinsizablesectoraljobreallocationsandpolicy-inducedstructuralchanges,particularlyinmorecarbon-intensiveeconomies.Figure4.2showstheeffectsofthesepackagesonjoblosses(y-axis)andgains(x-axis).Countriesabovethediagonalhavenetgainsinjobs,andthosebelowexperiencenetlosses.Evencountrieswithnetgainscanexperiencejoblossesaslargeas1­percentor2­percentoftotalemployment,whereasgainsamounttobetween3­percentand4­percent.Althoughcarbon-intensiveeconomiesmaynotexperiencelargerneteffects,theydoundergolargerstructuralchanges,withgreaterreshufflingofjobs.SocialprotectionandactivelaborpoliciescanreduceandhelpmanageconcentratedsectorimpactsCountriesmayneedtoprovideadditionalsocialandlocationalsupporttofacilitatethelabormarketandskillstransitionandtoreducepotentialsocialandeconomicfrictionalcosts.Reallocatingworkerstoothersectorswillhavedistributionalandequityeffectsacrossincomegroups,skilllevels,andoccupations,aswellasbetweenprovincesand­countries(Azevedo,Wolff,andYamazaki2018;HilleandMöbius2019;MarinandVona2019;Yamazaki2017).Thenatureandqualityofcompensation,stability,protection,andoccupationalsafetyofferedmayalsovarybetweenlostandnewjobs(Botta2019).Assuch,governmentsmayneedtoputtargetedsocial,labormarket,orlocationalsupportmeasuresinplacetofacilitatejobtransitions,easeskillmismatchesandfrictionalcosts,andincreasepublicacceptability(Saussayetal.2022;Vona2019).Barrierstolabormarketmobilitycansignificantlyincreaseunemploymentoutcomesassociatedwithlow-carbonstructuralchange.Forexample,intheUnitedStates,CastellanosandHeutel(2019)showthatthemodeledunemploymentimpactsofacarbontaxwere24­percenthigherwhenthelabormarketwasassumedtobeperfectlyi­mmobile—thatis,workerscouldnoteasilychangejobs—asopposedtobeingperfectlymobile—thatis,whenworkerscouldfrictionlesslytransitionintoanyjob,eveninadifferentlocation.Similarly,inBrazil,Berrymanetal.(forthcoming)showthataccountingforempiricallyderivedpatternsofjobswitchingacrossoccupationsandgeographiessignificantlyincreasesunemploymentoutcomesassociatedwithmodeledscenariosintendedtoboostproductivityandreducedeforestation.Theyalsofindthat,inthesescenarios,workersinthebottomincomedeciles,particularlythoseintheagriculturesector,arelikelytoseethemostadverseunemploymentimpacts.Countriesneedtomakesuretheytargetpoliciestoreduceadverseemploymentout-comesandincreaselabormarketflexibility.Forexample,coalminershaveskillsthatPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies107FIGURE4.2.Effectsofclimatepolicypackagesonjoblossesandgainsin121countries,bycarbonintensityofcountries’economies0PANNAMGEOBEULTUGRCBENMARARMPAKKOEZMBNZLSVKJPNEGYIDNARENICJACTURTHAINDISRSENMWIMEXROUJACCIVPOL–0.5CMRLKABGDMYSCHNBGREconomywideemployment(%)TUNPERMNGGHABRAVNMZAF–1.0ESTARGKAZZWE–1.5–2.001234Economywideemployment(%)Source:Dorband,forthcoming,usingtheMINDSETmodel.Note:Netlabordemandincreasesincountriestotherightofthegreenline.Lightbluedotsshowcountrieswithhighcarbonintensity,graydotsshowcountrieswithintermediatecarbonintensity,andyellowdotsshowcountrieswithlowcarbonintensity.couldbeadaptedtomininggreenminerals,suchasgraphite,butwouldhavetorelocatebecausetheseminesareindifferentregions.Similarly,petroleumengineershaveskillsthatcouldallowthemtotransitionintoseveralalternativeoccupations,butmanyoftheseoccupationsdonotpayaswell.Foractivelabormarketpoliciestoeffectivelyhelppeopletransition,governmentsmustthereforeensuretheytargetthepoliciesatthe­constraintsworkersface.Comprehensiveadaptivesupportneedstotakeabroadapproach,usinginitiativessuchascounselingandothersocialservicesforworkersandtheirfamiliesandsupportingtheirreentryintojobs(box4.2).Empiricalstudiesontheemploymentimpactsofclimatepolicieshighlighthowpolit-icaleconomyfactorsalsoshapeemploymentoutcomes(Godinho2022).Model-basedassessmentsoftheimpactsofenergyandsustainabilitytransitionsmaynotcapturethewayinwhichpoliticaleconomyfactorsrelatingtoinstitutionalstructures,powerasym-metries,andothercontextualitiescanshapepolicyoutcomes(Somanathanetal.2014).Empiricalstudiesofferanimportantcomplementbyreflectingsociopolitical,labor108WithinReachBOX4.2AchievingajusttransitioninagricultureGiventhelargepopulationsharesemployedinthesector,especiallyinSouthAsiaandSub-SaharanAfrica,understandingthenatureofagriculturalemployment,andhowandwhatworkerswilltransitionintowhenmitigationpoliciesareimplemented,isimperative.CasestudiesfromBrazilandMalishowthatskillandspatialmismatcheswilllikelymakeitdifficultforworkerstotransitionintojobsoutsideagriculture.Despitethepossibilityoftransitionsintononagriculturaloccupations,historicallythesetransitionsarerareandrequireahighdegreeofretraining,skillsupgrading,and,inthelongterm,economicdiversification.Theseasonal,andoftentransient,natureoftheagriculturalworkforcefurthercomplicatesachievingajusttransitioninagriculture.Agriculturalmitigationpoliciesaffectemploymentandwagesthroughtotalfactorproductivityandvalue-addedinputs(Dorin,Hourcade,andBenoit-Cattin2013).Ifpoliciesreduceproductivity,agriculturewillrequiremorelaborandland,slowingtransformation;however,boostingproductivity—forexample,throughclimate-smartpractices—canleadtolong-termlaborrelease(Fuglieetal.2020;Gautametal.2022).Aslabormarketchallengeshinderaquicktransition,policiesthatboostproductivityriskcreatingunemploymentforworkerswhoarealreadyhighlyvulnerable.Ajusttransitiondoesnotmeantransitioningoutofagriculture.Dependingonthestructureanddevelopmentoftheagriculturesector,acountry’sgreentransitioninagriculturemayfocuson•Helping(primary)agriculturalworkersadaptandbecomemoreresilienttotheeffectsofclimatechangebyadoptingandbuildingnewskillsforclimate-smartpractices;•Exploringavenuestohelpworkerstransitionoutofprimaryagricultureproductiontoactivitieswithintheagriculturevaluechain;•Structurallytransformingthecountry’seconomybybuildingknow-howanddiversifyingintonewprod-uctstocreateopportunitiesoutsideofagriculture;•Raisingagriculturalproductivityby,forexample,investinginresearchanddissemination(Fuglieetal.2020;Fuglieetal.2020,2022);•Repurposingagriculturalsubsidies,forexample,towardsafetynetsandtofarmers’income(Gautametal.2022);and•Helpingworkersupgradetheirskillsforproductivity-enhancingtasksandtransitionintootherjobs(Townsendetal.2017).Justiceconcernsshouldbeatthecenterofanysustainabilityefforts,notonlyforfarmersasprimaryproducersandlandmanagersbutalsoforfarmandfoodchainworkers,consumers,ruralcommunities,andothermarginalizedgroups(BaldockandBuckwell2022).Ensuringinclusivityanddistributionalequity,andrecognizingthevoice,values,andrightsofthosewhoworkinandconsumeagriculture,iskeytoachievingenvironmentalandfoodsecuritygoalswhileensuringclimatejusticeforthosewhoselivelihoodsdependonagricultureandthosewhoconsumeitsproducts.market,andotherfactorsthatdeterminerealizedoutcomes—specifically,whowinsorloses.Forexample,severalstudiesonrenewableenergypolicieshighlightthat,becauseofimmigrationoroffshoring,jobcreationdoesnotalwaysbenefitlocalpopulations(delRíoandBurguillo2009;Jumanietal.2017;Obouretal.2016).And,evenwithjobcreation,workersmaynotfeellikewinnerswhentheyhavelowwages,safety,orsecurity(CormackandKurewa2018;Huesca-Pérez,Sheinbaum-Pardo,andKöppel2016;Terrapon-Pfaffetal.2019),orwhenemploymentoutcomesareshort-livedordecreaseaftertheinitialconstructionperiod(Caietal.2016;LeistritzandCoon2009;Ortegaetal.2015).Thepoliticaleconomycanalsoaffectwhobenefits,withstudiesfromrenewableenergyprojectsinIndiaandKenyarevealingthatpoliticalaffiliationorethnicitymayinfluencewhogetsjobs(CormackandKurewa2018;Lakhanpal2019).TocorrectsuchPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies109unfairdistributionalimpactsandsupportajusttransition,countriesmaythereforeneedtotakeadditionalpolicyapproaches,basedonengagementwithaffectedcommunitiesandworkers.Althoughgovernmentscanusecashtransferstocompensateformonetarylosses—forexample,lossesduetochangesinrelativeprices—itishardertocompensateforthelossofemploymentandlivelihoods,andevenmoresoforlosingcultureorasenseofplace.Thus,viewingjoblossessolelyfromanincomeperspectivemissessomekeyaspects,suchasthesenseofcommunityderivedfromwork,familystructuresbasedonthedivisionofhouseholdandexternaltasks,ortheidentitygivenbyanaspectoflabor.Forexample,USestimatesofthemediansubsidyrequiredforapersontobeindifferentaboutmovingtoasimilarlocationexceed100­percentofannualincome,increasingby43­percentifthepersonhasfamilylivingintheoriginallocation(Bartik2020).Thesehighnumbersexplaintherelativelylimitedmigrationacrossregionsandthepersistenceoflocalunderemploymenthotspots,evenincountrieswithalowlevelofaggregateunemployment.GreenindustrialpoliciescanbuildpoliticalsupportandreducethecostofgreentechnologyAswellasfosteringwinners,greenindustrialpolicycanhelpreduceimpactsforpotentialpolicylosersandsmooththetransition.Rozenberg,Vogt-Schilb,andHallegatte(2020)demonstratehowenactingregulationsthatapplyonlytonewcapital,asfueleconomystan-dardsor“feebate”programsdointheautomobilesector,canfavoratransitiontowardagreenereconomywithoutnegativelyaffectingthosewhodependonexistingpolluting­capital.Avoidingimpactsonthevalueorpriceofexistingassetscertainlyhelpsovercomepoliticaleconomybarriers,becauseitpreventsimpactsthatareoftenconcentratedandconsideredunfair.Butactingonlyonnewinvestmentswithoutchangingtheincentivesregardingtheuseofassetsmakesthetransitionslower,creatingatrade-offbetweenitspaceandpoliticalacceptability.Greenindustrialpoliciescansupporttheeffectivenessofotherpoliciesandreducetheirdistributionalimpactsbutarenotnecessarilyasubstituteforotherapproaches.Hallegatte,Fay,andVogt-Schilb(2013)developedasimplematrixtoexploretheroleof,andrelationshipbetween,greenindustrialandpricingpoliciesintheclimatepolicytool-kit(figure4.3).Thematrixisbasedontwointerdependentfactors:priceeffectiveness(theextenttowhichpricinginstrumentscantriggertheneededstructuralchanges)andpriceadequacy(theextenttowhichthepoliticaleconomymakesitpossibletoadjustpricelevelstothelevelneededtochangebehaviors).Bothdependonelasticityofdemandandinfluencewhichpolicieswillbefeasibleandefficient.•Ifdemandforagoodorserviceisveryresponsivetoevensmallchangesinprice—suchasdispatchdecisionsinthepowersystem—effectivepricescanbequitelow,whichtendstobesociallyandpoliticallyacceptable(quadrant1infigure4.3).Inthiscase,price-basedmechanisms,orregulations,canbeefficientlyimplemented.•Whenchangesinpricehavelittleeffectondemand,asisthecasewithhouseholddeci-sionsregardingtransportationordecisionstoinfluencelong-termresearchanddevel-opmentforsteelproduction,thepriceneededtochangebehaviorsandtechnologieswouldneedtobeveryhigh.Thathighpricewouldinturnlikelytriggerpushbackfromaffectedgroups.Inthatcase,itmakessensetostartbyimplementingpoliciesthatincreasepriceelasticitybycreatingsubstitutionoptions,suchasgreenindustrial110WithinReachFIGURE4.3.AmatrixtodeterminewhenandhowtodeploygreenindustrialpoliciesEectivenessofpriceinstruments(marketfailures)HighLowAdequacyofpricesHigh(1)Pricingsolutions,with(2)Temporary(sunrise)industrialpolicy(politicaleconomyandappropriatecomplementarypoliciestohelpdevelopnewsectorsandgovernmentfailures)technologiestomanagedistributionaleectsLow(3)Policiestosmoothtransitionand(4)Sunrisegreenindustrialpoliciestohelpreducecompetitivenessconcerns,developgreensectorsandtechnologies,alongsideeortstoimproveadequacyofsuchassupportforsunsetindustriesandsocialortradepoliciespricing,suchassupportforsunsetindustriesandsocialortradepoliciesSource:AdaptedfromHallegatte,Fay,andVogt-Schilb2013.Note:Sunrisepoliciessupportandacceleratesectorsortechnologiesthatareexpectedtogrowinproductivityandcompetitivenessovertimeandbenefitfromclimateandindustrialpolicies;sunsetpoliciessmooththedownscalingofdecliningsectorstominimizetransitionandsocialcosts.policies(quadrants2and4).Greenindustrialpoliciesincreasepriceelasticityby,forexample,expandingtheavailabilityofsubstitutesthroughsupportforgreeninnova-tionorindustriesthatcouldscalegreentechnologies,suchaselectricvehiclebatterymanufacturing.Thus,whenthegovernmentsubsequentlyimplementspricingpoliciesandincreasesthepriceoffossilfuelcarsorcoalpower,alternatives,suchaselectricvehiclesandrenewableenergy,arereadilyavailable.•Evenwhenpricesareefficient,increasingthemmightbeimpossibleforpolitical­reasons.Thismaybethecase,forexample,inplaceswherelargefossilfuelsubsidieshaveledtoverylowenergyefficiencyandwhereanychangeinenergycouldhavelargesocialandeconomicimpacts.Inthosecases(quadrant3or4),governmentscanusegreenindustrialpoliciestoreducetheeconomy’svulnerabilitytohigherpricesandtransformthepoliticaleconomy.And,whenthemainpoliticaleconomyobstacleisthepoliticaleconomyofconcentratedimpacts,governmentscanusegreenindustrialpol-iciestosupportsunsetindustriestofacilitatetheirdownscalingoradjustment.Toreapthefullbenefitsofgreenindustrialpolicies,countriesneedtocarefullyman-agesomepoliticaleconomyrisks,includingcorruption,policycapture,anddistributionalconflicts.Corruptioncanincreasecostsandreducetrust,erodingsupportformoreambi-tiousclimatepolicyandpotentialeconomicgains.Itcanalsoleadtopolicylobbyingorcapture,workingagainstadaptivereformsthatcanimproveemissionsandeconomicoutcomes,ortoalock-intocertaintechnologiesattheexpenseofcheaperormoreeffi-cientones(box4.3).Forexample,studiesfromtheEuropeanUnionshowthatrenewableenergyandgaslobbygroupshaverecentlyformedcoalitionsthatacceleratedthetransi-tionawayfromcoalbutcouldultimatelyworkagainstfullpowersectordecarbonization(LindbergandKammermann2021).TheurbandimensionsofclimatepolicyimpactsUrbantransportationcostsconstituteakeyfactorindeterminingpeople’saccesstojobsandpublicservices,includinghealthcareandeducation,aswellaspeople’slocationandtransportationchoices.PoliciesthataffecturbanaccessibilitycanhaveimpactsonPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies111BOX4.3Greenindustrialpolicies:HowtominimizetheriskofcaptureItisdifficulttoanticipatethepotentialofnewtechnologyoracountry’slatentcomparativeadvantage,andbeingwrongcanhavealargecost.AsmentionedinRodrik(2014),industrialpolicyaimstodiscoveranddeveloptheappropriatenewtechnologiesandproductsandcannotbeexpectedtosucceedinallcases.Therefore,arealpotentialexistsforcostlyfailureandwasteofscarcepublicresources,witharealriskthatthepublicwillsharethecostoffailuresandsmallgroupscaptureanybenefits.Greenindustrialpoliciesfacesignificantrisksofcaptureandrent-seekingbehaviors.Forthisreason,Johnson,Altenburg,andSchmitz(2014)andPegels(2014)framethedebateongreenindustrialpolicyintermsofmanagingtherent(risk-adjustedabove-averageprofits)createdbyindustrialpolicytoincentivizeinvestmentingreensectorsandtechnologies.Theaimofagreenindustrialpolicyistocreatetheappropriatelevelofrentfromgreeninvestmenttofacilitatethegreentransition.Rent-seekingbehaviorislikelytoinfluencepolicies,evenincountrieswithhighinstitutionalcapacityandappropriatechecksandbalances(AnthoffandHahn2010;Helm2010).NevenandRöller(2000)identifysharplypartisanpoliticalsystems,weakgovernments,andanabsenceoftransparencyasfactorsthatincreasethelikelihoodofsuchproblems.Rentcaptureremainspossible,eveninthemostefficient,balanced,andtransparenteconomy,becauseindustriallobbiesarepowerfulactorsinanyeconomy.Whendevisingandimplementinggreenindustrialpolicy,adheringtothreekeydesignprinciplescanhelpreducetheriskofcapture(AlternburgandAssmann2017;Rodrik2014):1.Embeddedness.Policymakersshouldworkcloselywiththeprivatesectortounderstandhowkey­industriesfunctionandhowspecificbottleneckshampergrowth.Becausethesefactorsarehighly­contextspecificandcanevolveovertime,industrialpolicyshouldbeseenasajointexplorativeprocesswherebypublicandprivateentitiesconstantlyadaptandcollaborateforindustrialdevelopment.2.Discipline.Acloserelationshipbetweenthegovernmentandprivatesectorcanposegreaterriskofcollusionandpoliticalcapture.Governmentsshouldthereforehaveclearobjectiveswithmeasurableindicators,routinelymonitorfirmandprogramperformance,andhavetheautonomytochangeorwithdrawincentivepackageswithoutbeingswayedbylobbyists’pressures.AshighlightedbyJuhász,Lane,andRodrik(2023),thesuccessofindustrialpolicyisoftenlessaboutthegovernment’sabilityto“pickwinners”andmoreaboutitsabilityto“letlosersgo.”Clearseparationofpolicyroles,­competitiveserviceprovisioning,andtransparentguidelinescanhelpdeterundueinfluenceandmaintainintegrity.3.Accountability.Ensuringthatpolicymakersareheldresponsibleforindustrialpoliciesiscrucial.Imple-mentingstrictreportingrequirements,disclosureobligations,anddemocraticoversightbycentral­auditingauthorities,politicalparties,courts,andthemediacanhelpfostertransparencyandcredibility.householdwell-being,becauseurbantransportationservicesaredeterminantsoflabormarketoutcomes,urbanareaproductivity,andlocationaloptionsavailabletohouse-holds.Significantempiricalevidencedemonstratesthatincreasedaccessibilityleadstobetterindividuallabormarketoutcomes,suchasreducedunemployment,better-paidjobs,ormoreformalandmorepermanentemployment(Aslund,Osth,andZenou2010;Franklin2018;JinandPaulsen2017).Conversely,climatepoliciescanaffectemploymentaccessibility,labormarketoutcomes,andoverallurbanproductivity.Inparticular,increasedtransportationcostscouldreducethewelfareofthepoorestbyconstrainingthemtoliveinlocationswherehousingcostsarehighorbylockingthemoutoftheurbanlabormarket.Inlow-andmiddle-incomecountries,fuelpriceincreasesappeartocauselimitedaccessibilityreductionsforlower-incomehouseholds,generallybecausemanyofthemcannotaffordmotorizedtransportationinthefirstplace.Abackgroundstudyforthis112WithinReachbookinvestigatestheimpactoffuelpriceincreasesonaccessingemploymentbypublictransportationinKinshasa,DemocraticRepublicofCongo,andRiodeJaneiro,Brazil;itfindsthat,ifhouseholdscannotaffordpublictransportationservicesbeforethefarechange,anincreaseinfuelpriceswillseemnottoaffectthem(Nelletal.2023).Inbothcities,adoublingoffuelpricesaffectstheaccessibilityofmiddle-andhigh-­incomegroupsthemost.Map4.1showslossesinabsoluteaccessibility(shareofjobsnolongeraccessible)inKinshasaandRiodeJaneiro,spatiallyandbyincomedecileinascenariowitha100­percentincreaseinfuelpricesanda75-minutemaximumtraveltime.Overall,themapsuggeststhatfuelpriceincreasesdonothaveregressiveimpactsinKinshasa,althoughmanyseverelyaffectedoutliersappearindeciles1and2.Individualsalreadypricedoutofusingtransitwouldalsoneedtospendanevenhighershareoftheirbudgettoaffordpublictransportationservicesunderthecarbonpricingpolicy,limitingtheirparticipationintheurbaneconomyandreducingtheirlabormarketprospects(Franklin2018).Thiseffectissimilartothemechanismsdescribedearlierinthischapterwherebyincreasesinfossilfuelpricescancausehouseholdstoreverttocookingwithbiomass,exacerbatingtheimpactsofindoorairpollutiononhealth.Combinedwiththelackofvoiceandinfluenceofthepooresthouseholds,thishighervulnerabilityofnear-poorhouseholdsexplainswhyprotectingthepoorestalonehasfailedtoensurethewideracceptabilityofclimateorenergypolicies.Electrifyingpublictransportationandhavingcompacturbanareascancushionagainstalossofaccessibilityfromfuelpriceincreases.InRiodeJaneiro,suchincreaseshadrel-ativelylittleeffectoncommunitiesneartherailandmetrosystemsbecausetheycanrelyondecarbonizedtransportationsystemstoreachjobs.InKinshasa,thecity’scompact-nessmeansthataccessibilityremainshigh,becausedistancesbetweenjobsandresidentsareshortandrequirefewmotorizedtransportationlegsandexpenses.Thisfindingisatestimonytothepowerofcompactdenseurbanareasinconnectingworkerswithjobopportunitiesandhighlightsthepoweroflandusepoliciesandtransportationdecarbon-izationincushioningthesocialimpactsoffuelpricingandclimatepolicies(GusdorfandHallegatte2007).Anotherstudyforthisbookestimatestheimpactsofa20­percentfuelpriceincreaseonhouseholds’economicwelfareacrossfourincomegroupsinCapeTown,SouthAfrica,capturingtheinterplaybetweentransportationandhousingcosts.Itaccountsforhouse-holds’dynamicadaptationstrategies,highlightingtheimpactoffuelpriceincreasesoninequality.Liottaetal.(2022)findevidentspatialinequalities,evenwithinincomegroups,immediatelyafterintroductionofthepolicy,beforehouseholdscanimplementanyadaptationstrategies(map4.2).Foragivenincomeclass,theworkerslivingfarfromemploymentcentersaremoreaffectedbythefuelpriceincreasethanthoselivingclosetothecenters,becauseofdistanceandmodesoftransportationchosen.Intheshortterm,thefueltaxcanaffecttwohouseholdsinthesameincomeclassinlargelydifferentways.Consideringaggregatedstatisticsperincomeclassonlywouldhidetheseeffects,s­howingtheimportanceofaspatialanalysistounderstanddistributionalanalysisandanticipatepoliticalopposition.Althoughhouseholdsineveryincomegrouphaveoptionstomitigatetheadverseimpactoffuelpriceincreasesontheirwell-being,thepooresthouseholdsfacethegreat-estwelfarelosses.Thechangeintransportationcosts,triggeredbyfuelpriceincreases,willaffectthehousingandlandmarketsastheattractivenessoflocationschange.Inturn,householdscan,iftheirfinancialpositionallowsthem,choosetoswitchtransportationmodewhenanalternativeisavailable,changeemploymentorhousinglocation,andPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies113MAP4.1.LossesinaccessibilityofjobsusingpublictransportationinKinshasaandRiodeJaneiro,100­percentfuelpriceincreasescenariowitha75-minutemaximumtraveltime,byareaandincomedecilea.Kinshasa,DemocraticRepublicofCongoKeytransitroutes0Lossinaverageaccessibility(%ofjobs)–1Lossinaverageaccessibility(%ofjobs)–2–3–4–5–6–7N1Binza6Kusenso10km2Bombala7Limete03BonMarché8Masina11MontNgafula–14Gombe9Matete12Mpasa–25Kasa-Vubu10Mikala13Ndjili–314Selembao–415Socimat–5–62345678910–71Incomedecile(Continued)114WithinReachMAP4.1.LossesinaccessibilityofjobsusingpublictransportationinKinshasaandRiodeJaneiro,100p­ercentfuelpriceincreasescenariowitha75-minutemaximumtraveltime,byareaandincomedecile(continued)b.RiodeJaneiro,BrazilNon-petroleum-basedmodesPetroleum-basedmodes0Lossinaverageaccessibility(%ofjobs)–1Lossinaverageaccessibility(%ofjobs)–2–3N–410km1Anchieta8IlhadoGovernador15Olaria2Bangu9Ipanema16RecreiodosBandeirantes3BarradaTijuca10Irajá17Rocinha4Botafogo11Jacarepaguá18SantaCruz5CampoGrande12Madureira19SãoCristóvão6Centro13Maré20Sepetiba7CidadedeDeus14Méier21Tijuca0–1–2–3–412345678910IncomedecileSource:Nelletal.2023.PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies115MAP4.2.Directimpactofthefueltaxonincomesnetoftransportationcosts(inclusiveofthecostoftime)underascenariothattaxesallpollutingmodes,CapeTown,SouthAfricaIncomeclass1(pooresthouseholds)Incomeclass4(richesthouseholds)JobsJobs1,255–1,9041,255–1,9041,904–2,4671,904–2,4672,467–3,2752,467–3,2753,275–7,0763,275–7,0767,076–37,5257,076–37,525ImpactonincomeImpactonincomenetoftransportationnetoftransportationcosts(%)costs(%)–11.58––8–11.58––8–8––4–8––4–4––3–4––3–3––1.5–3––1.5–1.5––0.5–1.5––0.5–0.5––0.3–0.5––0.3–0.3––0.2–0.3––0.2–0.2––0.1–0.2––0.1–0.1––0.05–0.1––0.05–0.05–0–0.05–0Source:Liottaetal.2022.decidetoliveinsmallerorlargerdwellings.Tosomeextent,theseadaptationstrategiesandhousingmarketadjustmentscanlimittheimpactsofthefuelpriceincreaseonhouseholds’welfare.Therichesthouseholds(incomegroups3and4)experiencetheleastimpact,whereasthepooresthouseholdssufferthelargestwelfarelosses(incomegroups1and2).UrbanandtransportationpoliciescanmitigatethespatialimpactsofclimatepoliciesGovernmentscanmitigatethenegativeimpactsoffuelpriceincreasesbyimprovinglandandhousingpoliciesandregulationsandthroughurbanplanning.Landandhousing­marketsplayakeyroleinlimitingthepooresthouseholds’abilitytoadapttothetranspor-tationcostincreases.InCapeTown,subsidizedhousingandinformaldwellingsaretheonlyoptionsavailableforthepooresthouseholds,buttheseoptionsaregeographicallyconstrained.Subsidizedhousingunitsprovidedfreebylocalauthoritiestopoorhouse-holdshavepositivewelfareimpactsbyfreeingupbeneficiaries’budgetforotherpriorities;however,theirlocationfarfromemploymentcentersonaverageimposeshighcommutingcostsandincreasesthevulnerabilityofthepoortotransportationcostshocks.Similarly,informalsettlementscanbeerectedonlyonvacantandpubliclyownedland,generallyinthecity’soutskirts.Thesegeographicalconstraintsleavethepooresthouseholdswithfeweroptionsformitigatingthefuelpriceincrease—forexample,theycannotrelocateclosertoemploymentcenters.Therefore,reducinghousingmarketrigiditiescangivethemgreaterflexibilitywhenadaptingtochangesinthetransitsystem.116WithinReachProvidingaccesstocollectiveurbantransportationcantriggerclimatebenefits;and,becausetheygiverisetofewerconcernsaboutdistributionalimpactsthancarbonpricingorfueltaxation,suchpoliciescanbemorepopularthantaxationschemes(Carattini,Carvalho,andFankhauser2018).Twomaintypesofpublictransportationpolicyexist:investinginpublictransportationinfrastructureandoperations,andsubsidizingpublictransportation.•Investmentsinpublictransportationinfrastructurecarrypotentiallargewelfaregains,becausetheyallowcommuterstosavetimeandmoney,reducecongestion(withbenefitsbeyondpublictransportationusers),andimproveairquality.Butsuchplace-basedpoliciescanalsoleadtogentrification,whichincreaseshousingrentsanddisplacespoor-incomehouseholds,givingrisetoinequalityconcernswhenthedis-placedendupworseofforunabletocapturethebenefitsthroughlandorhousingprices.Poorrentersareparticularlyaffected:theycannolongeraffordtoliveinthegentrifiedarea,whereashomeownerscanchoosetosell,thusbenefitingfromtheirpropertypriceappreciation.•Publictransportationsubsidiescanhavestrongpositivewelfareimpactsbutarelessefficientandmoreregressivewhentheydonottargetthepoor.However,asubsidyschemethatreducesfaresbyafixedratewouldmostbenefitthosewholivefarfromtheirjobs.EvidencefromtheUnitedStatesshowsthatpublictransportationsubsidiesbenefitthoselivingintheperipheryofurbanareasnearlyfivetimesmorethanpeoplelivinginthecitycenter(Börjesson,Eliasson,andRubensson2020).Thedistributionalimpactthereforedependsonwherethepoorliverelativetotherich.LookingattheBuenosAirestransitsubsidyprogram,Bondorevsky(2007)concludesthat,althoughavailabletoall,theprogramoverwhelminglybenefitedthemiddle-incomegroupmorethanthepoor.ConcentratedregionalandspatialimpactsSomecommunitiesorregionshaveaheavyspecializationinactivitieswithhighcarbonintensityandwillneedaplace-basedapproachtopreventtheconcentrated(andsome-timespermanent)impactsthataremostunfairandmostlikelytotriggeropposition.Insuchcases,aggregateimpactsbecomecritical,withregionsexperiencinglargeincreasesinunemployment;dropsinincome,taxrevenues,andinvestments;outmigrationofthemostskilledworkers;andotherfactorsthatincreasethechallengeoftransitioningtoalternativeactivities.TheexperiencesofEuropeancoalregions,whichlosttheircoal-relatedrevenuesandemploymentdecadesago,illustratehowcarbon-intensiveregionsneedtoadoptanapproachthatgoesbeyondindividualcasestocreatenewactivitiesandemploymentopportunities.Theseinsightsarerelevantnotonlyforothercoalregionsbutalsoforotherareaswithconcentratedactivities,suchastheAmazon,whereagriculturalpracticesleadtodeforestation,orregionsorcitieswithheavyindustries,includingcementandsteel.EuropeancoaltransitionscanprovidelessonsforcoalregionsandareaswithconcentratedactivitiesingeneralCoaltransitionscanbemanagedtominimizeshort-termimpactsandpreventlong-termeffects,buttheytaketimeandresources.Evenwhenaccelerated,coaltransitionstypicallytakedecades,witholder,poor-performing,oreconomicallyunviableminesandpowerplantsclosingfirst.Withoutproperplanningandpoliciestofacilitatethetransition,shocksPolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies117canleadtovolatilesociopoliticalconditionsand,ultimately,economicandsocialdeclineincoalregions.The“unmanagedshock”oftheBritishcoaltransition(figure4.4)providesexamples,intheminingstrikesandindustrialdisputesinresponsetocoalclosureplansinthe1970sand1980s,andthelong-termimpactsonformercoalcommunities,whichcon-tinuetosufferfromlowerjobdensity,worsehealthoutcomes,andhigherunemployment,deprivation,anddepopulationthanthenationalaverage(Brauers,Oei,andWalk2020).ThemoregradualapproachadoptedbyGermanywasexpensive—estimatedat€38billionbetween2006and2018alone—buthasresultedinbettersocioeconomicoutcomes(Oei,Brauers,andHerpich2019).TheDutch10-yearcoalphase-out,whichincludedsubstantialsupportforworkerswholosttheirjobsandwassupportedbythetradeunion,showsthatawell-plannedtransitiondoesnothavetohaveseverelong-termadverseimpactsorhighcosts(WorldBank2021).Becauseasmoothtransitioniseasiertomanage,startingcoaltransitionplanningearlyandinaparticipatoryandcomprehensiveway,evenbeforesignificantnegativeimpactsarevisible,canhavelargebenefits.Thisplanningcanincludeearlyeffortstograduallyreducecoalproductionandconsumptiontosmooththetransition,preventlock-ineffects,reducestrandedassetrisks,andfavordiversification,thusavoidingindustrialconcentration.Successfulstrategiesalsotendtocombinestructuralreformwithmoretargetedsupport—forexample,adoptingstructuralpoliciesthataregearedtowardincreasingresiliencetoshocks,byimprovingaccesstofinancialinstrumentsandbor-rowing;strengtheningsocialsafetynets,criticalinfrastructureandrelatedservices,andhealthcare;facilitatinggreaterlabormarketflexibilityandmobility;andcreatingalter-nativeemploymentbyincentivizingeconomicinnovationanddiversification.Targetedpoliciesaimedataffectedworkers,suchasearlyretirementpackagesorfinancialandreemploymentsupport,canexistalongsidebroadercommunity-orregional-levelinitia-tives,suchasskillstraining,investmentsinhumancapital,localeconomicdevelopmentFIGURE4.4.CoalproductionandemploymentinGermanyandtheUnitedKingdom,1958–2018a.Germanyb.UnitedKingdom600800600800500700500700600600400400500500MilliontonsEmployees(inthousands)300400300400MilliontonsEmployees(inthousands)200300200300200200100100100100000019581962196619701974197819821986199019941998200220062010201420181958196219661970197419781982198619901994199820022006201020142018LigniteproductionHardcoalproductionHardcoalimportsEmployeesincoalproductionSource:WorldBank2023b.Note:TheUnitedKingdomphasedoutcoalemploymentinabout30+years,whereasittookGermany60+years,despitesimilareconomicconditions.118WithinReachprograms,andenvironmentalregeneration.Manydevelopingcountrieshaveembarkedontheircoaltransitionprocessandhaveauniqueopportunitytoidentifyhighlylocal-ized,anticipatedeconomicandsocialimpactsearlyon,withaviewtodevelopingupstreamtransitionpolicieswiththeparticipationofkeystakeholders.Managingmajoreconomictransitionsmustconsidereffectsonlabor;social,human,andeconomicdevelopment;localownership,participation,andmobilization;stake-holderinclusion;andinclusiveness.Ratherthanadoptingsimplecompensationmecha-nismsthatfocusonlyonemploymentimpacts,successfultransitionsincludetargetedsocial,human,andeconomicdevelopmentinterventions.Theseconsiderationsensurethattransitionplanningcanbepartof—oracatalystfor—regionalandnationalsocioeco-nomicdevelopmentplans,includingattractingpublicfinancingandprivateinvestments.Commonelementsofsuchtransitionsincludeinvestinginandputtingmeasuresinplacetoimproveinfrastructure;developingpoliciesandregulationstoattractnewbusinesses,education,andskillsprograms;supportingresearchanddevelopment;andexpandingsoftlocationfactorsinminingregions—suchastertiaryeducationinstitutionsand­cultural,leisure,andnaturalinfrastructure—toattracttheinward(andpreventthe­outward)migrationofpeople,business,andinvestment.Localownershipof,participationin,andearlymobilizationforpolicydesignandimplementationareimportant.Localeconomicdevelopmentanddiversificationarekey,andpolicydesignneedstorespondtolocalneedsandwants.Incoalregions,economicstructurestendtobeconcentratedaroundcoalandrelatedindustries,andcoaltendstohaveculturalimportance.Inclusiveprocesses,localleadership,andmobilizingpublic,private,nongovernmental,andotheractorscanhelpdeveloplocallyrelevantandrespon-sivetransitionplans.Buildingconsensusaroundtheneedtotransition,anddevelopingpoliciesthatareguidedbycommunityneedsandvisionsofanattractivealternative,con-tributestopoliticalacceptability.InGermany’sRuhrcoalregion,forexample,transform-ingpreviousindustrialsitesintolandmarksorculturalsitesmadethetransitiontangible;thisinitiativemarkedabreakwiththepastandunveiledamoreforward-lookingvisionfortheregionbutstillmaintainedadistinctlocalidentity.Otherinitiativesincludedopeninguniversities,expandingtheeducationsystem,andimprovingtransportationinfrastructure(AroraandSchroeder2022).Mainstreaminggenderconsiderationsinpolicydevelopmentcanproducemoreinclu-siveoutcomes.Whenitcomestosupportforworkers,itisworthnotingthattransitionsalsoaffectmanyindirectjobs.Policiesthatsupportonlyminersmaycontributetoexclud-inganddisadvantagingthefemaleworkerswhorelyonthecoalsector.Evidencealsoshowsthatjobtransitionscancontributetocrowdingoutfemaleworkerswhencompe-titionforlimitedjobsincreases—forexample,beforeRomaniarestructureditsminingsector,womenaccountedfor16­percentoftheworkforce;sevenyearslater,thispropor-tionhadreducedtojust7­percent(Lahiri-Duttetal.2022).Mainstreaminggender­considerationsinpolicydevelopmentcanhelpensuregender-inclusivetransitionsandeconomicdevelopmentpathways.Policiesthatincludepsychologicalhealthandsupportforhouseholdorfamilymembersareothergender-sensitiveapproaches.Environmentalrehabilitationandregenerationarekeyenablersofalternativeeco-nomicdevelopment.Coalmining,powergeneration,andrelatedindustriescausesignif-icantenvironmentaldegradationthatcanlimitthepotentialforalternativeeconomicactivities,suchasfarmingortourism.Communitieslivingincoalregionscanexperiencelong-termimpactsofsuchenvironmentalpollution—includingnegativehealthimpacts,poorwaterquality,soilcontamination,andsafetyissues—longaftertheindustryhasleft.PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies119Historicalexperiencessuggestthatgovernmentsdonotalwaysplanadequatelyforthiselementofcoal(orotherindustrial)transitions,hinderingthelonger-termeconomicrenewalofformercoal-dependentregions.Alongwithstrengtheningregulationsandenforcementmechanisms,includingclearlyestablishing“polluterpays”mechanismsinmininglicensestocreateappropriateincentives,earlyandprogressiverehabilitationeffortscanensurethatcoalminingandothercompaniesaddressenvironmentallegaciesbeforetheyleavethearea.Nationallycoordinatedfiscalsupportplaysanimportantrole.Despitetheimportanceofbottom-upandlocallyledapproaches,asuccessfulcoaltransitionrequiressignificantnational-levelsupportandcoordination.Sectoraladjustmentsortransitionsrequirecon-siderableresources:inmosthistoricalcases(primarilyfromtheEuropeanUnion),nationalgovernmentshavehadtocoverthem,becauseofinsufficientlocalresourcesandlocalfiscalcapacityerodedbytheeconomicimpactofthecoaltransition.Afullcost-­benefitanalysisneedstoincludethecostofdirectandhiddencoalsectorsubsidies,andthecostsofenvironmentalandpublichealthexternalitiesfromcoalminingandcombus-tion,whicharetypicallyseveralmagnitudeslargerthanthedirecteconomicbenefitsofcoaluseorthefiscalcostsofthecoaltransition.Countriescanusecarbonpricing,levies,taxes,andothertoolstocompensateforthesecostsandraiserevenuestopayforthecoaltransition.Nationalcoordinationisespeciallyimportantinthisregard,toensurethatraisedfundsareappropriatelydirectedandfullyused.Place-basedpoliciescanhelpbalancespatialandregionalpolicyeffectsOutmigrationcanhelppeopleadjusttoshocks,butnotwithoutcostsorlimits.Althoughmanystudieshighlighttheroleoflabormobilityinadjustingtolocalshocks(DurantonandVenables2020;Hornbeck2012),thatroleisoftenlimited.Bartik(2020)observesrestrictedoutmigrationindepressedareasoftheUnitedStates,evenwithsubsidies.Grover,Lall,andMaloney(2022)alsofindthatmobilityislowinmanydevelopingcountries,forvariousreasons,includingskillmismatches,alackoffinanceandinformation,areluctancetoselllandataloss,attachmenttoplaces,andexplicitrestrictionsonmobilitythroughlawsandregulations.Insomecases,outmigrationcanmakethesituationworseforthepopulationleftbehind.Forexample,Beaudry,Green,andSand(2018)findthat,onaverage,outmigra-tionintheUnitedStatesreduceslabordemandandsupplyinasimilarway,soitdoesnotreduceunemploymentforthelocalpopulation.Althoughitisgenerallypreferabletoinvestinpeopleinsteadofplaces(WorldBank2009),governmentscanjustifyplace-basedinter-ventionsthatreducebarrierstoorthecostsofmigration,increasespatialequity,orhelpfulfilltheeconomicpotentialofaffectedregions.Widelyusedtosupportthetransitionofdistressedcommunities,place-basedpoliciescanincludearangeofmeasures,fromtaxincentivesandexpenditurestomanufacturingextensionandtrainingprograms.AsdiscussedinDurantonandVenables(2020)andGrover,Lall,andMaloney(2022),theseinterventionsneedtoincludemultipleinstru-ments,suchastransportationinvestmentstoimproveconnectionswithinlaggingregionsandbetweenlaggingandmoreprosperousregions;fiscalincentivesanddirectserviceprovisions;andapackageofmeasurestofosterskills,enterprisedevelopment,andinnovation.Tobesuccessful,however,transitionsmustcoordinateactionsacrossthesefunctions,asillustratedbyanearlypilotfortheIntegratedRuralDevelopmentprogramsofthe1970sand1980sinColombia,wheresuccessesinsomedimensions(technologyassistanceandinputcomponent)werenegatedbyfailureinothers(marketintegration).120WithinReachPlace-basedpoliciescanhaveapermanentimpactonemployment,butthisimpact,andthepolicies’cost-effectiveness,dependondesignandscale.Bartik(2020)findspermanentpositiveimpactofjobshocksindepressedareas,witheachjobcreationincreasingemploymentby1.2jobsand,ifnewjobsareinthetradablesector,by1.5–2.5jobs.Grover,Lall,andMaloney(2022)findthatsuchelasticitiesareevenlargerinlower–incomecountries,exceedingfivejobsinCostaRica,theDominicanRepublic,andMexico(figure4.5),partlybecauseofthelargeagriculturelaborreserve,magnifiedindepressedareasbytheavailabilityofworkersfromdecliningindustries.Considerableevidencedemonstratesthattaxincentivesalonearenotenoughforapolicytosucceed(DurantonandVenables2018).Lookingatdataacross77countries,Farole(2011)findsthatinfrastructureandtradefacilitationhaveasignificantpositiveimpactbutthattaxandotherfinancialincentivesarelessimportant.InBangladesh,studiessuggestthatspecialeconomiczonesdeliverbenefitsbyofferingwell-servicedlandtomanufacturinginvestors(DurantonandVenables2018).IntheUnitedStates,Bartik(2020)findsthattaxincentivescostUS$110,000–US$200,000perjobcreated;however,infrastructureprogramsliketheTennesseeValleyAuthority,customizedpublicservicestobusiness,andinvestmentsthatmakelandavailableforbusinessdevelopment,havemuchlowercostsperjobcreated,atUS$77,000,US$35,000,andUS$13,000,respectively.Researchonthecostsandbenefitsofplace-basedpoliciesisinconclusive,suggestingthatresultsdependonscaleanddesign,andthatplace-basedpoliciesneedtotacklewell-identifiedmarketorcoordinationfailures.Bartik(2020)estimatesthesocialbene-fitsofeachjobcreatedinadepressedareaatUS$240,000–US$400,000(with5­percentFIGURE4.5.Jobmultipliersforcreatingjobsinthetradablesector10EGYMEXJobmultiplier,tradableonnontradableDOMPRY5KHMCRIVENESPKENECUMYSVNMHNDGTMMARPANNICTURUSABENBOLSWETHAFJIJAMCHLARG0ZMBIDNROUCHNPRIITAPRTBWAFRAAUTGRCCAN–567891011Percapitaincome,logAdvancedeconomiesEmerginganddevelopingeconomiesSource:Grover,Lall,andMaloney2022.Note:Thefigureplotshowmuchemploymentinthelocalnontradeablesectorisgeneratedbya1­percentincreaseinemploymentinthetradablesector.EstimatesfortheUnitedStatesarefromMoretti2010.GDPpercapitadataarefromthe2018WorldBankWorldDevelopmentIndicators(accessedin2021).EstimatesusetheIntegratedPublicUseMicrodataSeries(IPUMS)censusdata.DatalabelsuseInternationalOrganizationforStandardizationcountrycodes.PolicyDesign:ManagingtheDistributionalEffectsofClimatePolicies121or3p­ercentdiscountrates),leadingtoabenefit-costratioofabout1.5fortaxincentives,andhigherratiosforinfrastructureprograms,customizedpublicservices,andinvest-mentsinlandavailability.Althoughthoseestimatesareveryuncertainandcomefromasinglehigh-incomecountry,theyneverthelessemphasizethepotentialvalueofwell-­designedpoliciestosupportjobcreationindepressedareas;benefitsshouldbelargeriftheregionhasalatentcomparativeadvantage—forexample,becauseitiswellconnectedtoothereconomiccentersoralreadyhasalargelabormarket.Distributionalconcernsandpoliticaleconomyconsiderationswouldonlymakethesepoliciesmoreattractive.Grover,Lall,andMaloney2022highlightthatdecisionsonwhetherandhowtodesignandimplementplace-basedpoliciesshouldbebasedonidentifyingthemarketorcoordi-nationfailurestobeovercomeandonarigorousevaluationofthecostsandexpectedbenefitsoftheinterventions.AsnotedinWorldBankGroup(2018),outmigrationislikelytoplayanimportantroleinsomeareas,especiallyforcoalcommunities,whichfacethemostseverechallengestoreinventingthemselves.Thepotentialtocreatejobsintheseareascanbelimitedbyanarroweconomicbase,geographicisolation,wagedifferencesbetweencoalmininga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s.Forapolicydecisiontobeacceptableandimplementable,mostactorsinasocietyneedtoconsidertheprocesstobecredible,fair,andacceptable,especiallythoseactorswhostandtoloseorwhoopposethepolicy(Barronetal.2023)—seebox5.1.Thesocialandpoliticalacceptabilityofclimatepolicyisnotonlyaboutchoosingthe“right”objectivesandinstrumentswhilemanagingeffects;itisalsoabouthowthesedecisionsaremade.Governmentscanusefeaturesofthepolicyprocesstostrengthentheacceptabilityofoutcomes.Oppositiontoclimatereformsarisesformanyreasonsbutmostlybecauseactorsbelievethattheywillbenegativelyaffected,thatoutcomeswillbeunfair,orthattheyhavebeenexcludedfromthepolicyprocess.Lowlevelsoftrustingovernmentcanmagnifytheseconcerns,forinstance,ifpeoplefeeltheyarenotrepresentedorthatelectedofficialsareunaccountable.Toovercomesuchchallenges,governmentswillhavetomediateandbrokercompromisesbetweengroups,whileensuringthatthesegroupsaccepttheprocessandoutcomesasfairandcredible.Althoughanecessarypartofthepolicyreformprocess,publicengagementstrategieshavesomelimitationsingeneratingreformsupport.Studieshaveshownthatstrongnorms,combinedwithattitudeslikeNIMBYism,1canpresentchallengesinbuildingsup-portforpolicyreformandunderminethemomentumfordevelopment.Althoughfeed-backandinformationsessionscanhelpincreaseparticipationandinclusion,theyoftenfailtomakecitizensfeelgenuinelyheard.Suchsessionscanalsofallshortonencourag-ingcitizenstounderstandthecompetingpressurespolicymakersandotherstakeholdersmightface,hinderingthecitizens’willingnesstocompromise(Doberstein2020).Becauselittleempiricalevidenceexistsontheeffectsofpublicinvolvementindecision-making,thepositiveeffectsexpectedintheoryfromsuchastrategy—suchasgreateroverall­satisfaction—donotnecessarilyoccur(Roweetal.2008).Tomeetthedemandsof­democratic,equitable,andinclusivedecision-making,policymakersshouldthereforebePolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy131BOX5.1Processlegitimacy:HowdecisionsaremadeOneoffourcriticaldimensionsofsocialsustainability—alongsidesocialcohesion,inclusion,andresilience—processlegitimacyisabouthowpolicymakingandimplementationaredone,theirconsistencywithagivencontext,andtheirperceivedlegitimacy.Specifically,ithastodowiththeextenttowhichactorsinsocietyacceptwhohasauthority,thegoalstheyformulate,andhowtheymakeandimplementdecisions.Processlegitimacyisstrongwhenactorsbelievethatdecisionsaremadebycredibleauthoritiesinwaysthatalignwiththeirvaluesandreflectacceptedrulesandnormsrelatingtodecision-making,includingaroundmeasuresthatsupportconflictresolutionandcompromise.Transparentandparticipatoryprocesses,anddesirableoracceptableoutcomes,canenhanceprocesslegitimacy.Thisisespeciallyimportantwhenpoliciesincurcostsandwheninclusionofandengagementwithpotentialpolicylosersarecritical.Fivecommondriversstrengthenprocesslegitimacy:1.Credibilityofdecision-makers.Thepowertomakedecisions,setpolicies,andimplementprogramsgainslegitimacywhenitstemsfromanacceptedsource,suchasanelection,formalorinformaldesig-nation,ortechnicalexpertise.2.Consistencywithagreed-uponrules.Therulesfollowedtomakeandimplementdecisionsgainlegitima-cywhentheyreflectestablishedmethodsorapproachesthatacommunityorsocietyagreestobeacceptableandcredible,suchaslegalprecedents,professionalstandards,proceduralguidelines,infor-maltraditions,orcustoms.3.Consistencywithsocietalvalues.Policiesgainlegitimacywhentheyrespectorfollowpeople’sbeliefsormoralconvictionsaboutwhatandhowthingsshouldbedone.Thisincludesreligious,philosophical,andideologicalconvictions,andwidelyrespectedbutnonbindingrules,suchasinternationalrulesregard-ingwarcrimeorhumanrightslaws.4.Perceivedbenefitsfortheaffectedpopulation.Policiesandprogramsgainacceptanceandlegitimacy,evenifsomepeopleregardthemasdubiousormorallyfraught,aslongaskeystakeholdersarecon-vincedthattheyare(orwillsoonbe)richer,safer,orbetteroffinsomeotherway.Inthissense,theendsjustify,orlegitimize,themeans.5.Participationandtransparency.Dialogue,engagement,feedback,andpartnershipbetweenauthorityfiguresandmembersofagivencommunityorsociety—coupledwithopenandtransparentdecision-​making—cangeneratelegitimacy,especiallywhentherearedisagreementsortensions.Source:Barronetal.2023.awareofthepossiblelimitationsofpublicengagementstrategiesandconsideracombi-nationoftestedapproachestoenhancetheirsuccess.Theclimatecrisisandrelatedsymptoms—suchasweatherextremesandhealthimpacts—requireurgentaction,whichcancreatetensionswiththetimeneededformean-ingfulengagement,especiallywhenmanystakeholdersareinvolved.Expandingpublictransportation,developingrenewableenergyinfrastructure,andotheractionstoaddresstheimpactofclimatechangecanaffectthepopulationthroughdifferentchannels.Ifnotaddressedproperly,theseeffectscanspurprotestandopposition.Forexample,energysecurityconcernscausedbythewarinUkrainegaveahugepushtotheexpansionofrenewablesincountriesformerlydependentonenergyimportsfromtheRussianFederation.Thisexpansionofgreenenergyhasbeenfacilitatedbymeasurestoeaseplan-ningandpermittingprocesses,includingthestreamliningofimpactassessments,whichsomehavecriticizedforshorteninganddevaluingparticipatoryprocesses(GeißlerandJiricka-Pürrer2023;GonzalesandSobrini2023).IntheUnitedKingdom,considerationsofreplacingenvironmentalimpactassessmentsandstrategicenvironmentalimpact132WithinReachassessmentswithenvironmentaloutcomereportstoshortenplanningconsentprocedureshavelikewisebeenmetwithresistance,becauseoftheexpectationthattheuseofsuchreportswillsignificantlyreducepublicparticipationindecision-­making(Fischer2022).Governments’policyresponsestothe2020pandemic,includingrestrictionsonfreedomofmovementandassembly,weresimilarlywidelycriticizedforlackinglegitimacy(ArmeniandLee2021).Findingtherightbalancebetweenenoughtimeforpublicengagementandthetimeconstraintsofdevelopingagreentechnocraticresponsepresentsatrade-offwithastillunknownoptimum.BuildingpublicsupportthroughcitizenengagementandstrategiccommunicationSomepeopleclaimthatgovernmentactiononclimatehasbeenslowbecausecitizenshavenotdemonstrateddemandforitandbecausepoliticiansfearadoptingunpopularmeasuresandnotbringingvoterswiththem(Wilson2018).Butevidencesuggeststhatmostpeopleinmostcountriesareconcernedaboutclimatechangeandsupportmoreambitiousclimateaction.Aninternationalsurveyof1.2­millionpeoplein50countriesfindsthattwo-thirdsbelieveclimatechangeisaglobalemergency(UNDPandUniversityofOxford2021).IntheUnitedStates,concernoverclimatechangeremainsatanall-timehigh:morethanhalfofallUScitizensbelievetheyarebeingharmed“rightnow”bycli-mateimpacts.ThesetrendsaremirroredinChina,Sweden,andtheUnitedKingdom,wherenearly50percentofpeoplepolledare“extremely”or“very”worriedaboutcli-matechangeandnearly60percentwanttoseeurgentactiontoaddressit(CAST2021).InBrazil,concernsoverclimatechangeareevenhigher,at75percent(ITS2021).Severalchallengescontributetoadisconnectbetweenthisdemandandtherealityofclimateinstitutionstoday.First,asdiscussedinchapter4,beneficiariesofclimateactionaredispersedwithinandbetweensocieties—indeed,thosewhowillbenefitmostareyettobeborn—whereascostscanbeveryconcentrated.Second,citizenscanbediscouragedbythelittledirectcontroltheyhave,orthinktheyhave,overleversofchange,especiallywhentrustingovernmentislow.Finally,thescaleofthechallengeanditssolutionscanbeoverwhelming,yetmainstreamandsocialmediaoftenprovidelittleinformationthatcouldhelppeoplemakesenseofit.Thisunequalaccesstoinformationcanmakeitdiffi-cultforthepublictounderstandsomeofthecomplextechnicalissues,especiallybecausemostindividualsorcommunitieslacktimeandresources.Civicengagementandwell-­designedpolicycommunicationcanbeusedasstrategictoolstoencouragecitizens’­participationindecision-makingprocesses,buildlegitimacy,developcompromises,andincreaseownershipandpublicpolicysupport.Thefollowingsectionsintroduce­underlyingconceptsandbestpracticesfromreal-worldexamples.Publicperceptions:WhenwinnersfeellikelosersWhenassessingthedistributionalimpactsofclimatepolicy,attentiontypicallyfocusesonempiricallyestimatingtheeffectsontheincomesofdifferentpopulationgroups,ratherthanhowthosegroupsperceivethedistributionaleffects,whichisinfluencedbythenarra-tiveandpoliticsofthereform,asoutlinedinthe4iFramework(seechapter1).Publicoppo-sitioncanbemotivatedbyalackoftrustandoftencomesfromgroupsthatbelieve—rightlyorwrongly—thatapolicywilladverselyaffectthem.Evenwhenapolicyisdesignedtobenefitthem,peoplemaynotknowitbecauseofpoorpubliccommunication,ortheymayPolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy133nottrustthegovernmenttodelivereffectively.Thus,pairingtheanalysisofthedistribu-tionaleffectsofclimatepolicieswithasolidunderstandingofthepublicperceptionsofthefairnessandaccountabilityofgovernmentpolicymakingcanbecrucialfordetermininghowclimatepolicieswillbereceived.Publicperceptionscanbeimportantdriversofoppositiontoclimatepolicies,espe-ciallywhenwinnersfeellikelosers,andevenwhenpoliciesfollowasoundandprogres-sivedesign.ElSalvador’s2011gassubsidyreformillustratesthispoint(Calvo-Gonzales,Cunha,andTrezzi2015).Althoughthereformincreasedthewelfareofhouseholdsinallbutthetoptwodecilesoftheincomedistribution,itwasunpopular,especiallyamongthelower-incomegroupswhoweresettobenefitmost.Analysisofhouseholdsurveysindi-catedthatpublicdissatisfactionbeforeimplementationwasrootedinmisinformation,mistrustinthegovernment’sabilitytoimplementthepolicy,andpoliticalbeliefs.Perceptionsimprovedgradually—andsignificantly—overtimeashouseholdsbenefitedfromthereform,withtheshareofpeopleexpressingsupportforthepolicyincreasingfromjust30percentatthestartofimplementationtoabout65percentwithinayearandahalf(figure5.1).Thiscaseshowsthatevenbeneficiariesofwell-designedpro-poorpol-icyreformsmaynotperceivethemselvesaswinners,soreformstrategiesneedtoaddressinformationconstraintsandpriorperceptions.Winningpublictrustcanbekey.EmpiricalevidencefromIndonesiashowsthatoppositiontofossilfuelsubsidyreformisdirectlylinkedtolocalperceptionsofcorruption(Kyle2018).Asillustratedin­figure5.2,whencorruptionlevelsareperceivedtobelow,poorhouseholdsaremorethantwo-and-a-halftimesmorelikelytosupportthantoopposefuelsubsidyreform.Whencorruptionisperceivedtobehigh,supportdeclinesby18percentagepointsandoppositionincreasesby14percentagepoints.Clearly,publicperceptionsmatter.People’sabilitytosupportasubsidyreformrequirestheirconfidencethattheproposedreformisintheirinterestandthatpromisedcompensationpaymentswillmaterializewhenthesubsidyisremoved.Governmentsneedtoearnpublictrust:withoutit,evenwell-designed,well-intentionedpromisesofcompensationandredistributioncanlackcredibility.FIGURE5.1.Shareofpopulationthatreportedbeing“satisfied”or“verysatisfied”withElSalvador’s2011subsidyreform,2011–13706560Percent555045403530May2011Aug2011May2012Aug2012Sep2013Jan2011Source:Calvo-Gonzalez,Cunha,andTrezzi2015.134WithinReachFIGURE5.2.SupportforandoppositiontosubsidyreforminIndonesia,byperceivedlevelofcorruption6050Predictedprobability403020100020406080100ShareofsubsidymissingSupportreformNeutralOpposereformSource:Kyle2018.Note:Shareofsubsidymissingisaproxyformisappropriationofsubsidyfundsandcorruption.Avalueof100suggeststhehighestlevelofmisappropriation(and0thelowest).Buildingpublictrustnecessitatesunderstandingandmitigatingtheimpactsofsubsidyreformonthepoorestandmostvulnerablegroups,notonlytoprotectlivelihoodsandensureapro-poorreformbutalsotogalvanizesupportfromthesegroups.Spatialinequal-ities,socialmarginalization,andlow-incomestatusmaycausecertainpopulationgroupstosufferdisproportionatelyfromsubsidyreforms.Forexample,identifyinggroupsthatwillbeharmedbysubsidyremoval—suchaslow-incomeurbantaxidrivers,whocouldexperiencesignificantshockstotheirdisposableincome—anddevisingadequate­compensationandsocialprotectionschemesarevital.Governmentsshouldpayspecialattentiontowhatstakeholdersperceiveasnegativeexternalitiesofthereform.Indoingso,governmentscanaddressthoseexternalitiesinatargetedwayandmitigatetheir­consequences,thusavoidingsituationsinwhichperceptionsthatcompensationisinad-equateincreaseoppositiontothereform.Governmentscanalleviatecredibilityconcernsbypromptlyissuingcompensationandsocialprotectionpayments,evenbeforeraisingcarbontaxesorreducingfuelsubsidies,aswasdoneinIranin2010(IMF2013).Toconvincinglydemonstratetheircommitment,governmentsshoulddesignsuchpaymentstoensuretheyadequatelyaddresstheneedsofaffectedstakeholdersandshouldcontinuetopaythemforaslongasrequiredtohelpprotectvulnerablelivelihoods.Startingcomplementaryandrevenuereinvestmentmea-suresearlywillalsoaffirmthegovernment’scommitmenttotheprudentuseofreformrevenuesinthepublicinterest.Carefullyconsideringcompensationandusingitincon-junctionwithothermeasuressuchasinformationcampaignsandpublicengagementprocesseswillavoidgivingtheimpressionthatthegovernmentistryingtobuyapproval.Transparencyincontractsandprocurementisessentialforgainingpeople’ssupportforpolicyreform,itcanreducemisconduct,anditisnecessaryforfaircompetition.Unlikeinoil,mining,andsovereigndebtcontracts,transparencyinenergypurchasingPolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy135contractsisnotagloballypracticednorm,particularlyinemergingmarkets(MossandIbrahim-Tanko2022).Becausemanyofthesecontractsinvolvepublicmoneyandliabili-ties,secrecyspurspublicdistrust,uncertainty,andanger,butalsoinefficiencies.2Forexample,between2011and2016,theGhanaiangovernmentsigned43powerpurchasingagreementsformorepowerthannecessary;becausesomeofthesecontractsincludedexcesscapacitycharges,theMinistryofFinancepaidaboutUS$620millionforunusedenergyin2019(MossandIbrahim-Tanko2022).Evenifdisclosingsuchagreementsdoesnotfullyremovecontractrisks,ifpracticedconsistently,itcanreducethem.Thiswouldhaveapositiveeffectonpeople’strustinthesystem,limitcorruptionorcapture,provideincentivesforcompetition,andacceleratetheexpansionofreliableandcleanenergy(Ibrahim-TankoandMoss2022).3UsingcivicengagementtoincreasesupportthroughthepolicyprocessIntergovernmentalorganizationsandscholarshavelongadvocatedforcivicengagementinclimatepolicy.The1992RioDeclarationonEnvironmentandDevelopmenthasexplicitgoalsforinformationsharingandcitizenparticipation,the1997KyotoProtocolhighlightstheimportanceofpublicawarenessandaccesstoinformation,andthe2015ParisAgreementaffirms“theimportanceofeducation,training,publicawareness,publicparticipation,publicaccesstoinformationandcooperationatalllevels.”Intheacademicliterature,agrowingnumberofpublicationsrelatetopublicengagementandparticipa-tioninclimateaction(HügelandDavies2020).Butcivicengagementcanbecostly,time-consuming,andresourceheavyassuch,itcomesupagainstcapacityorpoliticalresourceconstraints.Thisisespeciallytrueforclimatepolicybecauseofitstechnicalcomplexity,whichcanbecompoundedbylowerliteracylevels,physicalmobility,orinternetaccess,andbecauseofthetimeandeffortrequiredtounderstandproblemsandparticipateindecision-making.Involvingmargin-alizedandvulnerablegroupscanbeespeciallydifficultwherecivicengagementeffortshavepreviouslyfailedordisappointed(Wesselinketal.2011).Successfulcivicengage-mentdependsonengagingallactors,eventhosewhomayhavebecomedisengagedordisaffected.Targetingthosewhoare“willingbutunable”aswellasthosewhoare“ablebutunwilling”(OECD2017)mayrequirepolicymakerstoadoptadifferentsetofstrategiesandapproaches.Civicengagementthatisnotperceivedtobemeaningfulorfair—forexample,becauseoflackofinfluence—couldresultinwastedeffortorundesirableoutcomes(GaventaandBarrett2010;Wamsleretal.2020).Iftreatedasamereformalityorbureaucraticafterthought,itisunlikelytoprovidepositiveoutcomesandcouldriskincreasingoppo-sition,especiallyifitlookslikeanattempttodeflectprotests.Alackoffairnesscanalsobeamajorissue,forexample,whencertaingroups,suchasIndigenouspopulationsorfuturegenerationswholackmeanstoparticipateintraditionalengagementprocesses,areunjustifiablyexcludedfromtheprocessorwhencitizens’voiceisweakenedby­powerfulinterestgroups.But(un)fairnesscanalsorelatetootherproceduralprocesses,includingrushedproceedings.IntheUSstateofNorthCarolina,forexample,thosewhoattendedhearingsonnewriversystempollutioncontrolregulationsfoundtheprocessunfairbecauseitdidnotgivethemenoughtimetodigestcomplextechnicalinformation(MaguireandLind2004).136WithinReachCivicengagementisespeciallyeffectivewhenusedthroughoutthepolicy-making­process,fromdesignthroughimplementationtotransition.Box5.2presentsseveralexamplesofpublicstakeholderengagementatdifferentstagesofthedecision-makingprocess.Therestofthischapterlooksathowcivicengagementcanhelppolicymakersnavigatethepoliticaleconomyacrossthesestages.UsingcivicinputstoimprovepolicydesignandimplementationEngagingdifferentactorsinpolicydesignisawaytoensurethatpoliciesandprogramsaccountfortheprioritiesandvaluesof—andpotentialeffectson—differentgroups.Forexample,intheUnitedStates,theDistrictofColumbiaheldextensivecommunitycon-sultationsthroughmultipleconversationswithcitizensatvariouslocationsandevents,focusgroups,andphonepollingwhendevelopingitsSustainableDC2.0Plan(GovernmentoftheDistrictofColumbia2021).Citizenscouldproposedirecteditstothedraftplanviaanonlineplatform,andtheprocessmadeeffortstoensureparticipationofunderrepre-sentedgroups.ThisengagementallowedpolicymakerstotapintothewiderangeofBOX5.2DeliberativeandinclusivepolicyprocessesgovernmentscanusetoengagecitizensonclimateactionCitizens’juries.Thesetypicallyinvolveasmall,representativegroupoflayparticipantsconvenedtoconsideraparticularquestionorissue.Overseveraldays,participantsreceive,cross-question,discuss,andevaluate“evidence”fromexpertsandaretheninvitedtomakerecommendations.Areportisdrawnupreflectingtheirviews,includinganydifferencesofopinion.Multicriteriamapping.Thismethodologycombinesthetransparencyandclarityofstatisticalapproacheswiththeunconstrainedframingofopen-endeddeliberations.Afterselectingatopicareaanddefiningbasicpolicyoptions,researchersinterviewparticipantsindividuallytodevelopmorepolicyoptionsanddefineevaluativecriteria,scoringtheoptionsandapplyingrelativeweightingstothecriteria.Participantsthencometogethertodiscusstheresearchers’preliminaryquantitativeandqualitativeanalysis,leadingtoafinalreport.Thisapproachhasbeenusedtoexploreenergytransitions(Chilversetal.2021).Scenarioworkshopsorvisioningexercises.Thesemethodsallowparticipantstoarticulatetheirvisionofthefutureandconsiderthekindoffuturetheywouldliketocreate.Theactivitiescanbeappliedtobroadstrategicquestionsorspecificlocalorsectoralissues.TheTransitionNetworkusessuchexercisestohelparticulatewhatapostcarbonworldmightlooklike(Hopkins2019).Standingconsultativepanelsorcitizens’panels.Normallylargerepresentativegroupsofcitizens,thesepanelsareconsultedperiodically,withaproportionofmembersreplacedatregularintervals.Panelscanbeusedtosamplechangingopinionsandattitudesaboutarangeofissuesovertime,suchastheUnitedKingdom’sstandingPeoples’Panel,whose5,000randomlyselectedmembersofthepublicareconsultedonkeyissuestotrackhowandwhyviewsarechangingandtoconductsurveys.Theycanalsohaveamoreproactiveandpolicy-facingrole,asinCostaRica’sConsejo5C(seebox5.3).OmbudspersonforFutureGenerations.CreatinganOmbudspersonforFutureGenerationsisawaytosupportcivicengagementwithyoungerpopulations.Australia,Hungary,Israel,andWalesareamongthecountriesthathaveintroducedsuchpositionstoincreaseyoungergenerations’influenceovergovernmentdecisions.Unliketraditionalombudspersons,whooftenfocusonmaladministration,individualcomplaints,andthefailureofgovernmentprocedures,anOmbudspersonforFutureGenerationsrepresentsacollectionofinterestsfrompeoplenotdirectlyrepresentedthroughdemocraticprocessandpolicydecision-making.Source:Barronetal.2023.PolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy137on-the-groundexperiencesandperspectives,andtousethemtoimprovethedesignoftheplan.Civicengagementcanbringdifferentcommunities’policyconcernstothesurface,allowingpolicymakerstoidentifywherecomplementarymeasuresareneeded.Urbangreeningpolicies,forexample,areoftenassociatedwithgentrification(Anguelovskietal.2022;Derickson,Klein,andKeeler2021),eveninrelativelysmallprojects(Anguelovskietal.2022;Derickson,Klein,andKeeler2021;RigolonandNemeth2019).IntheUnitedStates,forexample,greendevelopmentinitiativesinAtlantahadsignifi-cantimplicationsforhousingaffordability,withhousingvaluesincreasingupto26.6percent(ImmergluckandBalan2017).Byengagingaffectedcitizens,policymakerscangainabetterunderstandingofsomeofthefactorscontributingtogreengentrifica-tionandidentifymeasuresthatcanaddresssocialinequitiesinurbangreendevelop-ment.Citizenperceptionsingentrifiedneighborhoodsoftenrelatenotonlytoresidentialandsocialdisplacementbutalsotoracialdisparitiesandsocialcohesion(BernsteinandIsaac2021).Inthefaceoftheseadditionallayersofcomplexity,civicengagementmeth-odsareevenmoreimportant.Creatingspaceswherecitizenscanlearnaboutandbeinvolvedinclimategovernancedecisionscanhelpgovernmentsdevelopacceptable,durable,andeffectiveclimatechangeframeworklegislationandlong-termstrategies.Countriesareincreasinglycreat-ingcitizensassemblies,platforms,commissions,andotherspacestofeedintoorproduceclimategovernanceframeworks,suchasclimatelawsandstrategies(box5.3).Forexam-ple,theFrenchCitizens’Assemblywascharacterizedbysustainedinteractionsbetweencitizensandthesteeringboard,withsignificantinputfromtechnicalandlegalexperts,andastrongemphasisoncreatingconsensus.Asaresult,thecitizensadopted149­recommendationsforthegovernmenttotranslateintolaw(Giraudetetal.2022).Nevertheless,citizenassemblieslikethesehaveoftenbeencriticizedforgrantingonlylimitedinfluencetocivicactors,whousuallyself-selecttoparticipateintheprocess,leavingmanylay-citizenswhodonotproactivelyengageoutofthediscussion.Civicengagementcanalsohelpspurpolicyinnovation.Citizenscience—thatis,scien-tificresearchconductedincollaborationwiththepublic—isaneffectivecivicengage-mentmethodthatcanspurinnovativesolutionstoclimatechallenges.Researchandinnovationarekeytosolvingtheclimatecrisis,andcitizenscienceoffersaneffectiveBOX5.3Consejo5C:Citizens’AdvisoryCouncilonClimateChangeIn2018,theCostaRicanMinistryofEnvironmentandEnergycreatedtheCitizens’AdvisoryCouncilonClimateChange,alsoknownasConsejo5C,tofulfillofoneofitscommitmentsundertheParisAgreement.aWithrepresentativesfromacross-sectionofcivilsociety,Indigenous,business,andtradeuniongroupsengagedwithclimateissues,thecouncilaimstoactasadeliberativespacethatadvisestheMinistryofEnvironmentandEnergyonissuesrelatedtoclimatechange.Theministryandothergovernmententitiesmayalsosubmitconsultationstothecouncilonthedesign,implementation,andevaluationoftheirclimatepolicies,programs,andmetrics.Thecouncilmeetsregularlyandmonitorsthecountry’simplementationofitsnationallydeterminedcontributionandclimatechange–relatedSustainableDevelopmentGoalcommitments.a.InformationfromLATINNO,Citizens’ClimateChangeAdvisoryCouncil,https://latinno.net/en/case/6115/.138WithinReachapproachtoleveragingthecollectiveintelligenceofcitizens(WarinandDelaney2020).TheRISEprogram’sfloodmonitoringprojectinFijiandIndonesiaoffersanexampleofacitizenscienceinitiativeinwhichcitizensusesmartphonetechnologytogatherflooddata.Theiractivecontributiontothedevelopmentofadatabasedocumentingwaterlev-elsandriskzonestosupportinfrastructureplanning,andtheirprovisionofevidencetovalidatefloodmodels,alsoempowerscitizenstoadvocateforinfrastructureimprove-ment(Wolff2021).Suchco-creationofknowledgemorelikelyreflectsthediscourseofdiversegroups,leadingtomoresuccessfulpolicydesignthantraditionaltop-downapproaches(Cogganetal.2021).Community-leddevelopmentsupportslocalempowerment,capacitybuilding,andefficientresourceallocation.Givenappropriatetechnicalandfinancialsupport,accesstoinformation,andclearandtransparentrules,communitiescanefficientlyidentifyprior-ities,allocateresources,andaddressdevelopmentchallengesinpartnershipwithlocalgovernmentsandotherinstitutions.4Followingacommunity-led,bottom-upapproachcanbettertargetclimateadaptationmeasurestoaddresslocalneeds.Forexample,withsupportfromtheNationalBiodiversityCentreofBhutan,farmerssetupcommunityseedbankstomaintainbuckwheatvarietiesandenhancethearea’sgeneticdiversitybyrestor-ingclose-to-extinctvarieties,increasingtheadaptivecapacityoflocalagriculture(Vernooyetal.2017).InZambia,unconditionalcashtransfersintheaftermathofagricul-turalproductionorpriceshockshaveempoweredruralhouseholdstousecopingstrate-gies,substantiallyincreasingtheirfoodconsumptionandoverallfoodsecurity(Lawloretal.2017).Givingcitizensagreatervoicecanhelpgovernmentsdesignclimateinstitutionsthatresonatewithsocietalconcerns,values,andaspirations,butlackoffollow-throughcre-atesrisks.Franceprovidesacaseinpoint.AftermonthsofdebateinParliament,thelawvotedoninJuly2021includedonlyaboutathirdtoahalfofthe146measuresproposedbytheCitizen’sAssembly(Giraudetetal.2022).Dismissaloftheoutcomesandrecom-mendationsofcivicengagementbodiesandprocessescanundermineclimateactiongoingforwardandleadtopublicdissatisfaction.Atthesametime,however,itiscrucialthatthesebodiesdonotduplicateorreplacetheroleofexistingstructure,includingpar-liamentsandotherdecision-makingbodies,andthatgovernmentscarefullyandtrans-parentlymanageexpectationsabouttheprocessfordecidingwhethertoimplementrecommendationsfromaspecificconsultativebody.Communicatingrationale,design,andriskstoincreasepublicsupportCommunicationhelpsbuildandsustainsupportwhenimplementingclimatepolicies.AsoutlinedbytheWorldBank’sEnergySubsidyReformAssessmentFramework(Worley,Pasquier,andEzgi2018),bestpracticeinvolvesintegratingapolicycommuni-cationstrategythroughouttheplanning,development,andimplementationstagesofareform;thisstrategymustalsoaddressallaffectedandinterestedstakeholders,aswellasthosewhocaninfluenceitssuccess.Itisimportanttodesigncommunicationstrategiestoreachallsegmentsofsociety—includingpeoplewithdisabilities,peoplewhoareillit-erate,orthosewithlimitedaccesstomedia—andtotailorstrategiestotheopinionsandattitudesofthestakeholders,identifiedintherealmsofopinionresearch,including,forexample,focusgroupconsultationsandpublicopinionsurveys(seeWorley,Pasquier,andEzgi2018).PolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy139Despitetheusefulnessofcivicengagementmethodsinaddressingconcernsonalocallevel,increasingpublicsupportforpolicyreformatalargerscalerequiresstrategiccom-munication.Participatoryapproachestocivicengagement—suchasconsensusbuildinginGhana(CentreforPublicImpactandCalousteGulbenkianFoundation2021),partici-patorygreenbudgetinginGuinea(OshimaandPerrin2018),community-ownedrenew-ableenergyprojectsintheUnitedKingdom,5andparticipatorywindturbinesitingnegotiationsintheUnitedStates(Firestoneetal.2020)—promoteasenseofownershiporagency,thusimprovingimplementationoutcomes.Suchapproachestendtofocusonsmall-scalelocalprojectsandarelesswellgearedtoincreasesupportforbroader,nation-al-levelclimatepoliciessuchascarbonpricingreformsorenergyefficiencyregulations.Butgovernmentshaveways,includingcommunicationstrategies,toreinstateagency,particularlyifthosestrategiesarecomplementedbybehavioralinterventions.Energylabels,feedbackdevices,andnudging,forexample,arepopularpolicymeasuresusedtoreduceenergydemand(CompostoandWeber2022;Cornago2021).Clearcommunicationisessentialforasuccessfulcivicengagementprocess.Becausecivicengagementinterventionsrangefromempoweringparticipantsindecision-m­akingtoraisingawarenessandprovidinginformation,theobjectivesofengagementcanvaryandarenotalwaysclear.Tomanageexpectationsandmakethemostofcivicengage-ment,clearlycommunicatingthedesignandobjectivesoftheprocessisvitaltoensureparticipantsknowexactlywhatisexpectedofthemandhowtheirengagementwillinformpolicymaking,facilitatingaprocessthatisunambiguous,transparent,andeffec-tive(Uittenbroeketal.2019).Thiscommunicationincludesexplaininghowstakeholderandcivicsocietyinputswillbeorhavebeenconsideredindecision-makingandprovid-ingexplanationswhentheoutcomedoesnotreflectthoseinputs(LindandArndt2016).Forexample,theColombianEnvironmentMinistrypublishesresponsestocommentsonlineandindicates,withanexplanation,whetheracommentisacceptedorrejected;inCostaRica,responsesaresenttoindividualsviaemailandcommentsandresponsesaremadeavailableonline.Atthesametime,itisimportanttoestablishvenuesthatallowcitizenstoidentifypolicyissuesthatareapriorityforthem.Suchvenuescanpreventcivicengagementonspecificissuesfrombeingtaintedbyothertopicsthatcitizensfindmorepressing.Whenwelldesigned,communicationcanhelppolicymakersnavigatethepoliticaleconomyandbuildsupportforkeyreforms.Forexample,inthelead-uptoandafterwin-ningnationalelectionsin2014,theIndonesianpresidentcommunicatedtheregressivenatureofsubsidiestotheelectorateandofferedtargetedsupporttootherareas,suchaseducationandhealthcare,tobuildsupportforthereforms;thegovernmentimplementedthosereformswhenoilpriceswerelowandnegativeeffectswouldbelimited.And,beforeremovingmostofitsfossilfuelsubsidiesin2015(underInternationalMonetaryFundconditions),Ghanacarriedoutextensivestakeholderengagementandcommunica-tioncampaignsthatexplainedtheneedforreformandcollectedinputsforreformdesign,includinganexemptionforlow-octanefuelusedbypoliticallyimportantcoastalfishingcommunities(McCulloch2023).Developingcomprehensivecommunicationstrategiesandbuildinganinstitutionalsupportstructurecanhelpcounteractmisinformation.Reachingskepticalaudiencescanbedifficult,becauseindividualsoftenseekinformationfromsourcesthatreinforcetheirworldviewsandaresubjecttoconfirmationbiaseffects(Newman,Nisbet,andNisbet2018).Thistendencyprovidesfertilegroundforlobbiesthatdirectconsiderableresourcestoinfluencingpublicperceptionsandopinions,includingthroughmisinformation140WithinReachcampaigns(Farrell2016;Lewandowsky2021;Moreno,Kinn,andNarberhaus2022).Forexample,researchhasrevealedthat80percentofExxonMobil’sinternaldocumentsbetween1977and2014acknowledgedhuman-causedclimatechangebut81percentofitspublic-facingmaterialsexpresseddoubt,andthatthecompanydirectedsignificantfund-ingtothinktanksknownforproducingresearchthatmisrepresentedthescienceoncli-matechange(OreskesandConway2010;SupranandOreskes2017).Usefulstrategiesforprotectingpopulationsagainstmisinformationincludeemphasizingscientificconsen-sus,highlightingrisksofmisinformationandpreemptiverefutation(vanderLindenetal.2017),havinganauthorityfiguretrustedbyskepticscorrectingmisinformation(BenegalandScruggs2018),limitingmisinformationnetworks—forexample,usinglitigationtoholdvestedinterestlobbygroupstoaccountwhenspreadingmisinformation—andincreasingtransparencyinlobbying(Farrell,McConnell,andBrulle2019).Climatepolicychoicesandcommunicationshouldconsideractors’motivationforpro-climateactions.People,especiallyyoungergenerations,areincreasinglyadoptingplant-baseddiets,usinglow-carbonmodesoftransportation,recycling,andpurchasinggreenlabelproductsandsecondhandclothes.Motivationsforadoptinggreenlifestylechoicescanbeintrinsic(personallyrewarding)andextrinsic(forexample,inresponsetoanexternalfinancialincentive).Butitisgenerallyacknowledgedthatintrinsicmotiva-tionistheleadingforcebehindpro-environmentalbehavior(SilviandPadilla2021)andthatextrinsicmotivationinducesonlyshort-termbehaviorchange(vanderLinden2015).Thebehavioraleconomicsliteraturealsosuggeststhatextrinsicmotivationcancrowdoutintrinsicmotivationforpro-environmentalbehavior(Rode,Gomez-Baggethun,andKrause2015).Forexample,arandomizedcontrolledtrialinEcuadorfoundthathouse-holdsthatreceivedalettercomparingtheirenergyusetothatoftheaveragehousehold(intrinsicmotivation)consumedlessenergyinthepostinterventionperiod,whereasthosewhoreceivedaletterthatalsohadinformationonexpectedenergysavings(extrinsicmotivation)didnotchangetheirconsumptionbehavior(Pelleranoetal.2017).Market-basedinstruments,suchascap-and-trademechanismsorenvironmentaltaxes,arealsopronetocrowdingout(Cinneretal.2020).Civicengagementcanhelppreventcrowdingoutandcancrowdinmorepro-climateactionamongcitizens.Crowdingoutcanresultfromseveralpsychologicalmechanisms,includingreducedinternalsatisfaction,reducedsenseofagency,andreducedmoralresponsibility.Adoptingmultileveldecision-makingapproachesthatinvolvepublic,pri-vate,andcommunityactorscanhelpreducethecrowding-outeffect(Ostrom2002).Differentformsofcitizenengagementcanhelprestoreintrinsicmotivation.Forexample,engagementthatenhancesthelevelofinformationthatcitizenshaveaboutthebehaviorofotherscanincreasewillingnesstocontributetopublicgoods,includingclimatechange(Fischbacher,Gaechter,andFehr2001;Schleich,Schwirplies,andZiegler2017).Maintainingintrinsicmotivationisimportanttoensuresuccessfulimplementationof­climatepolicies.Ontheflipside,individual-orhousehold-levelactionsguidedbyintrinsicmotivationtoclimateactionriskcrowdingoutsupportfornational-levelpolicy(Knook,Dorner,andStahlmann-Brown2022).Informationandawarenessabouttherelativepoten-tialofdifferentmeasures,andtheimportanceofnational-levelinterventions,canhelp.Informationsharingandawarenessraisingcanhelpshiftpreferencesandshapebehavior.Forexample,thegovernmentofChilemetinitialresistancefromIndigenouscommunitiestodevelopinggeothermalenergyprojectsintheirterritories.Butcommu-nicationandengagementefforts,focusedonraisingawareness,showedthattheresis-tancestemmedfrommisperceptionsabouttheimpactsandpotentialbenefitsofthePolicyProcess:UsingPublicEngagementandCommunicationtoImprovePoliciesandTheirLegitimacy141development(WorldBank2021).Afterthesemisperceptionswereaddressedthroughworkshops,geothermalplanttours,andotherinitiatives,localsupportincreasedsignifi-cantly.Engagingeffectivelywithcitizensonnational-levelpoliciescanbemorechalleng-ingbecauseofthosepolicies’inherentcomplexitiesandextendedscales,butmethodsthatrelyonawarenessraisingandeducationcanhelpencourageandempowercitizenstohavemoreinformeddiscussions(Pidgeonetal.2014).TheUnitedKingdom’sClimateAssembly,forexample,broughttogethercitizenstodiscusshowthecountrycanmeetitsnetzeroemissionstarget.Participantsreceivedcomprehensiveinformationonthedif-ferentwaystoachievenetzero,enablingthemtomakeinformedrecommendationsoncomplexpolicyissues(Cherryetal.2021,ClimateAssemblyUK,n.d.).Nevertheless,suchengagementisnosilverbullet.Forexample,thesteadyincreaseofthecarbontaxinFrancehasbeenmetwithsuspicionbymanycitizens—despitepublicengagementandinformationsharing—becausetheyperceivedthatitwasimplementedtomeettheneedsofthegovernment’sgeneralbudgetratherthantoreducegreenhousegasemissions(Bureau,Henriet,andSchubert2019).Incaseswhereawarenessraisingisinsufficient,supportcanalsobeincreasedbyensuringthatcomplementarymeasurestoalleviatedis-tributionalimplicationsareinplaceandthatthesemeasuresareclearlycommunicatedtothoseaffectedbythepolicyinquestion.Tacklingtrade-offsandrisksispartofeffectivecommunicationandcanbuildtrustandsupport.Researchshowsthatcommunicatingnotonlyhowapublicpolicyworksbutalsoitsassociatedrisksandtrade-offscanhelpincreasepolicysupport(OECD2021)—andclimatepoliciesarenoexception.Anexperimentalstudyacross20countriesfindsthatprovidinginformationontheeffectivenessanddistributionalimplicationsofclimatepoliciessignificantlyimprovessupport,whereasprovidingpeoplewithinformationontheimplicationsofclimatechangehaslittleornosignificantimpact(Dechezleprêtreetal.2022).Notes1.TheNIMBY—from“notinmybackyard”—conceptisusedtoexplainpublicoppositiontonewdevelopmentsconsideredundesirablenearpeople’shomesandcommunities(Devine-Wright2009).2.FromEnergyforGrowthHub’s“ContractTra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rm:Communication.EnergySubsidyReformAssessmentFramework(ESRAF)GoodPracticeNote.Washington,DC:WorldBank.http://documents.worldbank.org/curated/en​/939551530880505644/Designing-Communication-Campaigns-for-Energy-Subsidy-Reform​-Communication.ECO-AUDITEnvironmentalBenefitsStatementTheWorldBankGroupiscommittedtoreducingitsenvironmentalfoot-print.Insupportofthiscommitment,weleverageelectronicpublishingoptionsandprint-on-demandtechnology,whichislocatedinregionalhubsworldwide.Together,theseinitiativesenableprintrunstobeloweredandshippingdistancesdecreased,resultinginreducedpaperconsumption,chemicaluse,greenhousegasemissions,andwaste.WefollowtherecommendedstandardsforpaperusesetbytheGreenPressInitiative.ThemajorityofourbooksareprintedonForestStewardshipCouncil(FSC)–certifiedpaper,withnearlyallcontaining50–100percentrecycledcontent.Therecycledfiberinourbookpaperiseitherunbleachedorbleachedusingtotallychlorine-free(TCF),processedchlorine–free(PCF),orenhancedelementalc­hlorine–free(EECF)processes.MoreinformationabouttheBank’senvironmentalphilosophycanbefoundathttp://www.worldbank.org/corporateresponsibility.Climatechangepresentsauniquechallengeinthatpolicymakersneedtobalancethespeedandscalerequiredtoachieveglobalobjectiveswithinthetimerequiredtoensurepoliticalacceptabilityandsocialsustainability.WithinReach:NavigatingthePoliticalEconomyofDecarbonizationidentifiesthekeypoliticaleconomybarriersandexplorestheoptionstoaddressthemthroughfourkeyrecommendations:•Climategovernance:strategicallyadapttheinstitutionalarchitectureandembedclimateobjectivesintoapositivedevelopmentnarrative.Strategicgovernanceinstitutionsthatreflectsocietalgoals—suchasclimatechangeframeworklaws,long-termstrategies,orjusttransitionframeworks—canalterthepoliticaleconomy,setclearobjectives,facilitatecoordinationacrossactors,andhelpmonitorprogressandholddecision-makersaccountable.•Policysequencing:balanceshort-termfeasibilityandlong-termambition.Becausethepoliticaleconomyandinstitutionalcontextaredynamicandcanbeinfluencedbypolicies,policymakerscanselecttheirpriorities,notonlytomakepolicyimplementationfeasiblebutalsotoactivelybuildcapacityandchangethepoliticaleconomyandinstitutionalcontext,buildingmomentumtowardthelong-termobjectiveandtransformation.•Policydesign:focusonpeopleandmanagethedistributionaleffectsofclimatepolicies.Climatepolicieshaveheterogenousimpactsacrosshouseholds,sectors,andlocations.Activelaborpolicies,reskillingprograms,compensationsandtransfers,place-basedpolicies,andgreenindustrialpoliciescanbeusedtoprotectvulnerablepopulations,facilitateajusttransition,andmakepoliciesmoreacceptableandsustainable.•Policyprocess:usepublicengagementandcommunicationtoimprovedesignandlegitimacy.Civicengagementcanimproveapolicy’sdesign,enhancelegitimacy,fostercompromise,andhelpidentifyunintendedconsequencesearly.Effectivecommunicationcanmakereformsmoreaccessibletothepublicandincreasesupport.Thisbookshowshowappropriategovernancefameworks,stronginstitutionalcapacity,well-designedpolicieswithadequatecompensationmeasures,andearlyengagementwithallstakeholdersareessentialstrategicelementstobuildingconsensusandmomentumfortransformativepolicies.Bydeployingthesetools,policymakerscannavigatetheurgencyinclimateactionanditspoliticaleconomychallengestoachievetheirlong-termclimategoalsandsecurealivableplanet.ISBN978-1-4648-1953-7SKU211953