Incentives to use more clean energy work best — study

By Benjamin Hulac | 09/16/2015 08:48 AM EDT

On paper, applying the stick to carbon emitters — charging greenhouse gas-generating parties, through either a direct tax or cap-and-trade scheme — is widely considered the most efficient technique to solve climate change.

Of course, both methods, despite support from economists of diverse political perspectives, often meet political or industrial resistance. Yet according to a new paper released last week, there seems to be a new theme among the cities, regions and nations that have successfully implemented vigorous carbon-pricing mechanisms: offering carrots.

"Policymakers need to build political support for emission cuts by pushing clean-energy industries rather than first penalizing polluters," said Jonas Meckling, the lead author of a study published Friday in Science. Penalizing heavy emitters can trigger a backlash, he said.


Meckling and his colleagues found that out of the 54 nations and subnational jurisdictions that implemented some type of carbon-pricing mechanism by 2013, the majority — about two-thirds — had deployed either a feed-in tariff (FIT), a renewable portfolio standard (RPS) or both policies beforehand.

Policies like these, either FIT or RPS methods, can build coalitions and provide incentives for renewable energy firms, the authors argue. "The more green industries form and grow as a result of government support, the stronger the coalitions for decarbonizing energy systems become," Meckling, an energy and environmental policy professor at the University of California, Berkeley, said in an email. The paper’s conclusion, he said, "runs counter to the prevalent notion that pricing carbon is the first-best choice in climate policymaking."

Develop strategic allies first

Asked what is new within this report, he said the work serves as a signpost for officials interested in passing climate change legislation. Meckling and his colleagues also suggest that "sector-specific policies," like rebates and subsidies for solar or wind energy, can lay the groundwork for carbon taxes or markets.

"The vast majority of climate leaders have taken that path," he said of the method of implementing FIT or RPS measures, and "we identify strategies for effective coalition-building."

Direct carbon prices are stronger than renewable energy standards, the authors write, but have less support. And green industrial policies have swelled from the 1980s and the recent financial crisis, the report reads.

"Such policies provide concentrated benefits to the few and well-organized, like renewable energy firms, low-carbon industries, and investors," it reads. "Green industries are political allies in the development of more stringent climate policy that subsequently penalizes incumbent polluters. Carrots buy sticks."

And a lack of strong local environmental policies may have underpinned the failure of robust emissions-cutting programs, Meckling said.

"We saw the plans for cap-and-trade in Australia and at the U.S. federal level fail," Nina Kelsey, the paper’s second author, said in an email. "In both cases, strong renewable energy policies such as they exist in California, Denmark or Germany were not previously in place."

Ultimately, Meckling said, sequence matters. As green industries develop and gain support, he said, "political discretion to regulate polluters through carbon prices increases."