Good practice menu and its coverage

This table shows the coverage of a good practice GHG reduction policy menu by 30 major greenhouse gas emitting economies (European Union considered as single country). Numbers in brackets indicate the coverage rates of policies in respective areas (columns) and sectors (rows). Details can be found below the table.


Low coverage ---------------------- High coverage

Changing activityEnergy efficiencyRenewablesNuclear or CCS or fuel switchNon-energy
GeneralClimate strategy
GHG reduction target
Coordinating body for climate strategy
Support for low-emission RD&D
National energy efficiency targetRenewable energy target
Electricity and heatSupport for highly efficiency power plants (including codes and standards and fiscal/financial incentives)Renewable energy target for electricity sectorCCS support scheme, including fiscal/financial incentives and infrastructure investment
Reduction obligation schemesSupport scheme for renewables (including green certificates, fiscal/financial incentives, obligation schemes, net metering or direct investment)
Grid infrastructure development
Sustainability standards for biomass use
Overarching carbon pricing scheme or emissions limit
Energy and other taxes
No fossil fuel subsidies
IndustryStrategy for material efficiency (including product standards and other requirements) Support for energy efficiency in industrial production (including voluntary approaches, fiscal/financial incentives, obligation schemes or white certificates) Support schemes for renewables (including fiscal/financial incentives, green certificates, obligation schemes)CCS support scheme (including fiscal/financial incentives and infrastructure investment)Landfill methane reduction
Energy reporting and auditsSustainability standards for biomass use Incentives to reduce CH4 from oil and gas production
Minimum energy performance and equipment standards Incentives to reduce N2O from industrial processes
Incentives to reduce fluorinated gases
Overarching carbon pricing scheme or emissions limit
Energy and other taxes
No fossil fuel subsidies
BuildingsUrban planning strategies (including infrastructure investments)Building codes and standards and fiscal/financial incentives for low-emissions choices in heating, cooling, hot water, and cookingSupport scheme for heating and cooling
Minimum energy performance and equipment standards for appliancesSupport scheme for hot water and cooking
Sustainability standards for biomass use
Energy and other taxes
No fossil fuel subsidies
TransportUrban planning and infrastructure investment to minimize transport needs Minimum energy/emissions performance standards or support for energy efficient for light duty vehiclesBiofuel targetSupport for modal share switch
Minimum energy/emissions performance standards or support for energy efficient for heavy duty vehicles Support schemes for biofuels (including fiscal/financial incentives and obligation schemes)E-mobility programme
Sustainability standards for biomass use
Tax on fuel and/or emissions
No fossil fuel subsidies
Agriculture and forestryStandards and support for sustainable agricultural practices and use of agricultural products
Incentives to reduce CO2 emissions from agriculture
Incentives to reduce CH4 emissions from agriculture
Incentives to reduce N2O emissions from agriculture
Incentives to reduce deforestation and support for afforestation/reforestation


The 30 major emitting countries analysed are:

Preparation of a good practice policy mix

The first step in this study was to compile a good practice policy menu for climate change mitigation. Such a menu could be a valuable tool for policy makers in defining policies for climate action. Furthermore, this good practice policy package provides an easy-to-use framework of policies that could be employed for future analysis at a country or regional level, as undertaken in this study (see next chapters).

The good practice policy menu (presented in Table 1) was produced based on literature review on climate change mitigation policies, and was structured along segments of sectors and policy areas, as identified in the Climate Action Tracker assessment methodology (Höhne et al., 2011).

A balance between simple and manageable, yet comprehensive, was sought for the compilation of the policy menu. Policies that were recurrently identified as good practice or of high mitigation potential in the literature were categorized into broader types (described with bullet points in Table 1) of policy instruments pertaining to specific sector versus policy area segments. In many areas the good practice includes different types of policies as options. This means that we do not make a judgement on the type of policy instrument specifically used, but rather analyse whether a country is taking good practice action in a given policy segment. The following sections in this chapter provide a more detailed description of the policy menu, formulated per policy sectors.

Information on good practices in climate mitigation policies was gathered from the following sources:

  • Policy menus of the UNFCCC technical papers (UNFCCC, 2014a, 2014b, 2014c, 2014d)
  • Policies proposed in the chapters of the IPCC Fifth Assessment Report (IPCC, 2014)
  • Best-practice policies proposed in the UNEP Emissions Gap Report 2013 (UNEP, 2013)
  • UN-Energy report on policies for industrial energy efficiency (UN Energy, 2009)
  • World Energy Outlook Special Report on Energy and Climate (IEA, 2015)
  • IEA 25 energy efficiency policy recommendations (IEA, 2011)
  • Climate Action Tracker country assessment methodology (Höhne et al., 2011)
  • NewClimate, PBL and IIASA - Impact of good practice policies report (Fekete et al., 2015)
  • McKinsey & Company Pathways to a low-carbon economy (McKinsey&Company, 2009)
  • The New Climate Economy Report (The New Climate Economy, 2014)
  • IEA special report “Redrawing the Energy-Climate Map” (IEA, 2013)
  • BigEE guide on energy efficiency in buildings


Structure of the policy menu

This section was structured according to sectors considered in the good practice policy menu and provides an overview of the package and how it was developed based on the literature.


General

On the overarching level, for instance, we list as good practice when a country has an overall climate strategy supported by a designated coordinating body (IPCC, 2014). National strategies have a higher chance of being implemented if they are coordinated by an institution created for this purpose. Furthermore, setting GHG emission targets, national energy efficiency targets and national renewable energy targets are crucial in guiding the development of effective policies, in accordance with the longer term goals, and in providing clear signals across all sectors (IEA, 2015). We did not count as good practice sectorial strategies that lack clear targets or concrete plans for implementation, as they were dimmed unlikely to trigger significant changes in the policy sectors.

Finally, efforts to support low-carbon Research, Development and Deployment (RD&D) are needed to prepare for a long term transition to a low-carbon economy (UNFCCC, 2014a, The New Climate Economy, 2014). The good practice matrix includes this aspect as an overarching, cross-sectorial theme, covering all policy area.


Electricity and heat

The electricity and heat sector provides a high potential for mitigation not only through improvements in the efficient use of fuels, but also through a possible transition to zero emissions energy production.

In this sector, good practice policy addressing energy efficiency include fiscal or financial incentives and sectoral standards to support highly efficient power plants and to ensure the phase out inefficient power plants (UNFCCC, 2014a, UNFCCC, 2014c, The New Climate Economy, 2014, McKinsey&Company, 2009, IEA, 2015, Höhne et al., 2011, IPCC, 2014b). Additionally, a particularly innovative regulatory instrument is the energy reduction obligation schemes, where the electricity producers have to ensure energy savings in internally, or to offset by supporting energy efficiency improvements in other companies or sectors (Höhne et al., 2011). Policies that tackle electricity demand are considered in the demand sectors - industry, buildings and transport.

The development of renewable sources of energy is essential for the transition to a highly decarbonized economy, replacing fossil fuels that are currently widely used for energy production in the electricity and heat sector. Achievable renewable energy targets for this sector can send clear policy signals and encourage investments (UNFCCC, 2014c, Fekete et al., 2015). Furthermore, support schemes for renewables in general were grouped together and include a wide variety of policy options such as green certificates, feed in tariffs, obligation schemes, loans, and others (UNFCCC, 2014a, UNFCCC, 2014c IEA, 2015, Höhne et al., 2011, IPCC, 2014b). Measures for the development of the electricity grid and provision of access priority for renewables have to be included to allow high shares of renewable electricity in the system (UNFCCC, 2014c, Höhne et al., 2011). Implementing sustainability of biomass use is also considered good practice for this area of climate policy (Höhne et al., 2011).

UNFCCC (2014b, 2014d) describes carbon capture and storage (CCS) as a mitigation instrument of high potential, essential for a transition to net-zero emissions. Carbon capture and storage (CCS) development can be supported through fiscal or financial incentives, as well as direct investments in specific infrastructure (UNFCCC, 2014d, McKinsey&Company, 2009, Höhne et al., 2011).

Finally, it is good practice to include overarching measures in this sector such as carbon pricing schemes and/or emission limits, energy taxes (UNFCCC, 2014a, The New Climate Economy, 2014). Furthermore, exclusion of all fossil fuel subsidies are essential in encouraging energy savings and paving the way to a transition to cleaner technologies (UNFCCC, 2014a, The New Climate Economy, 2014, IEA, 2015).


Industry

For a low-carbon economy it is important that all materials are used highly efficiently, i.e. long lasting recyclable products. Reducing emissions in industrial production can be achieved, for instance, by a change in materials used or applied processes (Höhne et al., 2011, IPCC, 2014b).

Efficiency in industrial production can be supported by a variety of instruments, including fiscal or financial incentives, obligation schemes and white certificates (BigEE, 2015, Fekete et al., 2015, UN Energy, 2009, Höhne et al., 2011). Energy reporting and audits are relevant as well, but alone may not lead to a significant effect (UN Energy, 2009, IEA, 2011). On the regulatory side, minimum energy performance standards for industrial use equipment (e.g. electric motors used in industry) were proved to be effective instruments in increasing energy efficiency (UN Energy, 2009, IEA, 2011, IPCC, 2014b). In addition to regulatory and economic incentives, voluntary approaches, such as voluntary agreements of GHG emission reductions or energy efficiency increase, are also identified as good practice climate measures (BigEE, 2015; UNFCCC, 2014a, McKinsey&Company, 2009, UN Energy, 2009).

The use of renewable energy in industry can be encouraged or imposed through a variety of instruments, including fiscal or financial incentives, green certificates or obligation schemes (BigEE, 2015, Höhne et al., 2011). Industrial producers could, for instance, be encouraged to switch from use of fossil fuel combustion to biomass combustion (McKinsey&Company, 2009), although for efficient emissions reductions, sustainable standards for biomass use should be implemented (IPCC, 2014b). Carbon capture and storage (CCS) is particularly important in industry sections where alternatives are not available. It can also be supported in many ways, including financial incentives and direct investments (UNFCCC, 2014b, UNFCCC, 2014d, McKinsey&Company, 2009, Höhne et al., 2011).

Not related to energy are policies addressing landfills emissions, CH4 and CO2 from oil and gas production (given high importance by IEA, 2015), N2O from industrial processes (e.g. fertilizer production) and fluorinated gases (UNFCCC, 2014a, 2014d, McKinsey&Company, 2009, Fekete et al., 2015, IEA, 2015, Höhne et al., 2011, IPCC, 2014b). These are all areas where emissions can be significant and where policy solutions exist. Reducing non-energy emissions from industry can be done through, for instance, recovery (capture and use), improved infrastructure to limit leakage (especially in the case of methane), filters, integrated waste management, and reduced methane flaring (McKinsey&Company, 2009, UNFCCC, 2014d). Given the importance of this sector and the large number of possible measures, any policy addressing non-energy emissions was considered good practice.

Finally, it is good practice to include overarching measures in this sector such as carbon pricing schemes and/or tradable emission limits and energy taxes (UNFCCC, 2014a, UN Energy, 2009, The New Climate Economy, 2014, Höhne et al., 2011). Removal of fossil fuel subsidies is highly important to discourage inefficient energy consumption in the industry sector (UNFCCC, 2014a, The New Climate Economy, 2014, IEA, 2015, IEA, 2011)


Buildings

Deep decarbonisation requires urban planning that is compatible with limited energy use and transport needs and having such a strategy is considered good practice (UNFCCC, 2014d, BigEE, 2015, The New Climate Economy, 2014, Höhne et al., 2011). Urban strategies can cover aspects such as retrofitting old buildings, promotion of compact cities, improving infrastructure that promotes energy efficiency and use of renewable energy (e.g. improve accessibility to renewable sources of energy; renewable or energy efficient street lighting), energy efficient (city/district) spatial planning (BigEE, 2015). For energy efficiency in buildings, three different aspects need to be tackled: heating and cooling, hot water and cooking, and appliances. The main policy categories that can be implemented to address the first two aspects are building codes and standards (including individual building components), and fiscal or financial incentives to support energy efficiency in both existing and planned buildings (UNFCCC, 2014a, BigEE, 2015 UNFCCC, 2014c, Fekete et al., 2015, UNEP, 2013, IEA, 2011, Höhne et al., 2011). Additionally, appliances play an important role in saving energy efficiency in the buildings sector, requiring regulation of standards (including phase out of inefficient light bulbs) as good practice measure (BigEE, 2015, McKinsey&Company, 2009, Fekete et al., 2015, UNEP, 2013, IEA, 2011, Höhne et al., 2011). Although performance labels for appliances are also mentioned in the literature as good practice, they were excluded from the good practice policy menu due to their limited effect on mitigation. Support schemes for heating and cooling, as well as for hot water (e.g. solar heating) and cooking (e.g. biomass) from renewables is considered good practice (UNFCCC, 2014a, McKinsey&Company, 2009, Höhne et al., 2011). Furthermore, when biomass is used, its sustainable management must be considered (Höhne et al., 2011). Taking into account both renewable and energy efficiency in buildings, the aim is to reach net-zero energy consumption in this sector (IEA, 2011). Energy and emissions taxes are good practice, as they act as incentives for energy savings and energy efficiency improvements (BigEE, 2015). In addition, energy use subsidies should not exist as they create incentives for wasteful consumption (UNFCCC, 2014a, BigEE, 2015, The New Climate Economy, 2014, IEA, 2015).


Transport

Urban planning strategies to support the reduction in emissions from transport are considered good practice (UNFCCC, 2014d, Höhne et al., 2011). Such strategies could be ensuring investment in well-connected and frequent public transport options in areas of high population density, or investing in infrastructure for better connectivity and traffic fluidisation (UNEP, 2013).

On efficiency, vehicle fuel efficiency and emissions standards or fiscal/financial incentives for light and heavy duty vehicles have proven very effective and are widely implemented (UNFCCC, 2014a, UNFCCC, 2014c, McKinsey&Company, 2009, Fekete et al., 2015, UNEP, 2013, IEA, 2011, Höhne et al., 2011).

Biofuels can be supported by targets and specific support policies (e.g. tax relief, mandatory blending), but are only effective in reducing overall greenhouse gas emissions if they are produced in a sustainable manner (McKinsey&Company, 2009, Höhne et al., 2011).

Furthermore, good practice policies in the transport sector encourage modal share shift programmes, supporting low-carbon means of transport. Especially important is the support for hybrid and electro mobility (shift from internal combustion engines to electric cars) which can be incentivised through fiscal or financial incentives (McKinsey&Company, 2009, Fekete et al., 2015, Höhne et al., 2011). Moving to a net-zero economy requires the transition of means of transport to low- or zero- carbon engines.

Overarching good practice policies that reduce emissions from cars are fuel or carbon taxes, which lead to energy savings, modal share shift, and incentives to invest in highly efficient or zero-carbon vehicles (UNFCCC, 2014a). Removal of fossil fuels subsidies impact on the same aspects as carbon and fuel taxes (The New Climate Economy, 2014, IEA, 2015).


Agriculture

Standards and support for sustainable agricultural practices and use of agricultural products in general are necessary to incentivise a transition in the agriculture sector. In addition, incentives for the subsectors are necessary, including CO2 emissions from agricultural soils, CH4 emissions from animals, and N2O emissions from animals and soils. Policies addressing the inefficient use of nitrogen fertilizers, improved livestock production management, and land-use management (e.g. no-tillage practices), as well as a general increase in agricultural productivity accompanied by reductions in food loss and waste are considered good practice (UNFCCC, 2014d, The New Climate Economy, 2014, McKinsey&Company, 2009, UNEP, 2013, Höhne et al., 2011, IPCC, 2014b).

Finally, incentives to reduce deforestation and encourage good forestry management (including afforestation and reforestation) are necessary in countries where this is a large source of emissions. Possible policy approaches could be, for instance, regulatory measures (command-and-control instruments), protection of areas of forests, a or economic instruments (e.g. grants or subsidies to protect forest) (UNFCCC, 2014a, 2014d, The New Climate Economy, 2014, McKinsey&Company, 2009, Fekete et al., 2015, IPCC, 2014b).

Given the importance of the agricultural and forestry sector in reducing emissions and creating carbon sinks, and the various available approaches of good management in this area, for the individual sub-sectors (CO2, CH4, N2O, Forestry) any policy or measure was considered good practice.


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