Briefing Note 10 – What Policy Developments and Financial Incentives Are Required to Achieve Net Zero?

How Should Policymakers Think About Carbon Taxes?

 

The latest developments in Integrated Assessment Models (IAMs) continue to show that a carbon tax can be a simple and effective tool for policy makers. Setting a price on carbon opens policy pathways that can be tuned to reach model temperature goals, such as the 1.5C target set under the Paris Agreement. 

 

Setting an optimal policy pathway for carbon pricing allows decision makers to select for a peak global temperature. Future reductions and eventual declines in global temperatures are strongly influenced by the financial incentives generated from a strong carbon tax. Very simple policies such as a carbon tax can be highly effective and easy to communicate to stakeholders and to the public.

 

This policy can be made simple to communicate due to recent modeling exercises, which show that a carbon price that increases by a set amount annually can reduce climate risk, compared to a price set by a more complicated equation or set of rules. 

 

Setting clear and predictable financial incentives with a linearly increasing carbon tax reduces the potential to overshoot temperature targets, ultimately reducing the risk to society and decreasing the need to deploy CO2 removal (CDR) technologies at scale.

 

How Should Policymakers Think About Complex or Expensive CDR Technologies?

 

Climate suffering exists here and now. Real human beings, tens of thousands, face a variety of impacts from climate change across the world today. CO2 in the atmosphere represents a legacy of suffering that should strongly influence and frame the policy process and change how decision makers view developing CDR technologies such as direct air capture (DAC) and carbon capture and storage (CCS).

 

Policies designed to enhance energy efficiency and reduce emissions should remain the first priority for policymakers as these are the cheapest and most effective methods currently available to achieve net zero. 

 

However, several IPCC scenarios in the 1.5C report utilise CDR technologies to balance remaining emissions. Policymakers should therefore also investigate and utilise CDR strategies alongside energy efficiency and emissions reductions in order to increase impact, because even 1.5C represents a substantial increase in climate related damages and impacts.

 

Governments have several policy options available, including funding research and development, providing limited subsidies, using government procurement or competitive prizes, and regulation designed to create market demand for CDR technologies.

 

An example is Norway’s ongoing demonstration projects with CCS. The government has partnered with key industry stakeholders on test projects designed to capture a third of emissions in sectors such as cement production and waste management. 

 

By shouldering some of the financial risk, the government is enabling CCS technology to enter a testing phase earlier and potentially become viable on a faster timeline.

 

How Can We Effectively Engage with the Public on Climate Policies?

 

Engaging the public is critical for socially robust and enduring policy decisions. Designing and implementing public communication infrastructure can accelerate the deployment of climate policy and incentivise market changes. Today’s communication on climate policy is often technical and political, an exclusionary way of communicating one of the most important policy issues today.

 

New policies and market changes surrounding climate change will be needed for net zero, and the public will have a large role in determining whether these changes succeed or fail. Under the UNFCCC treaty, decision makers have an obligation to educate and engage citizens.

 

Climate change policies often have a high degree of support from the public, but bringing the public into dialogue with industry and political decision makers is often difficult because they are speaking different languages.

 

To better engage with the public, climate communication should focus on values rather than numbers. Different messages can be deployed to reach across diverse audiences across the identity and political spectrums. 

 

Focusing on human stories and benefits to local communities using real world language and trusted messengers can revolutionize climate change communication. Benefits to people strike to the heart of the issue and encourage people to share what is most important to them.

 

What Does Achieving Net Zero Conclude and Recommend?

 

  • A linear carbon tax is perhaps the simplest policy available and reduces climate risk compared to more complicated emissions trading schemes or other pricing equations 

 

  • Climate communication is currently inadequate and risks a lack of public support for climate policy; this could be improved through focusing on values and using simple language

 

  • Integrate a communications strategy into the heart of the policy making process, not just an addition at the end of it

 

  • Use policy innovation and financial incentives to foster a wide range of climate policies, including targeted interventions in increasing energy efficiency and reducing emissions while fostering longer term CDR technologies