Editing IPCC:AR6/WGIII/TS (section)

== TS.6 Implementation and Enabling Conditions ==

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Chapters 13 to 16 address the enabling conditions that can accelerate or impede rapid progress on mitigation. Chapters 13 and 14 focus on policy, governance and institutional capacity '','' and international cooperation, respectively taking a national and international perspective; [https://www.ipcc.ch/chapters/chapter-15 Chapter 15] focuses on investment and finance '';'' and [https://www.ipcc.ch/chapters/chapter-16 Chapter 16] focuses on innovation and technology ''.'' The assessment of social aspects of mitigation draws on material assessed in Chapter 5.

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=== TS.6.1 Policy and Institutions ===

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'''Long-term deep emission reductions, including the reduction of emissions to net zero, is best achieved through institutions and governance that nurture new mitigation policies, while at the same time reconsidering existing policies that support the continued emission of GHGs (''' '''''high confidence''''' ''').''' To do so effectively, the scope of climate governance needs to include both direct efforts to target GHG emissions and indirect opportunities to tackle GHG emissions that result from efforts directed towards other policy objectives. {13.2, 13.5, 13.6, 13.7, 13.9}

'''Institutions and governance underpin mitigation by providing the legal basis for action. This includes setting up implementing organisations and the frameworks through which diverse actors interact (''' '''''medium evidence, high agreement''''' ''').''' Institutions can create mitigation and sectoral policy instruments; policy packages for low-carbon system transition; and economy-wide measures for systemic restructuring. {13.2, 13.7, 13.9}

'''Policies have had a discernible impact on mitigation for specific countries, sectors, and technologies (''' '''''high confidence''''' '''), avoiding emissions of several GtCO''' 2 '''-eq yr''' –1 '''(''' '''''medium confidence''''' ''').''' Both market-based and regulatory policies have distinct but complementary roles. The share of global GHG emissions subject to mitigation policy has increased rapidly in recent years, but big gaps remain in policy coverage, and the stringency of many policies falls short of what is needed to achieve the desired mitigation outcomes. (Box TS.13) {13.6, Cross-Chapter Box 10 in Chapter 14}

'''Climate laws enable mitigation action by signalling the direction of travel, setting targets, mainstreaming mitigation into sector policies, enhancing regulatory certainty, creating law-backed agencies, creating focal points for social mobilisation, and attracting international finance (''' '''''medium evidence, high agreement''''' ''').''' By 2020, ‘direct’ climate laws primarily focused on GHG reductions were present in 56 countries covering 53% of global emissions (Figure TS.24). More than 690 laws, including ‘indirect’ laws, however, may also have an effect on mitigation. Among direct laws, ‘framework’ laws set an overarching legal basis for mitigation either by pursuing a target and implementation approach, or by seeking to mainstream climate objectives through sectoral plans and integrative institutions. (Figure TS.24) {13.2}

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'''Figure TS.24 |''' '''Prevalence of legislation and emissions targets across regions. Panel (a):''' shares of global GHG emissions under national climate change legislations – in 2010, 2015 and 2020. Climate legislation is defined as an act passed by a parliament that includes the reduction of GHGs in its title or objectives. '''Panel (b):''' shares of global GHG emissions under national climate emission targets – in 2010, 2015 and 2020. Emissions reductions targets were taken into account as a legislative target when they were defined in a law or as part of a country’s submission under the Kyoto Protocol, or as an executive target when they were included in a national policy or official submissions under the UNFCCC. Targets were included if they were economy-wide or included at least the energy sector. The proportion of national emissions covered are scaled to reflect coverage and whether targets are in GHG or CO 2 terms. Emissions data used are for 2019. 2020 data was excluded as emissions shares across regions deviated from past patterns due to COVID-19. AR6 regions: DEV = Developed countries; APC = Asia and Pacific; EEA = Eastern Europe and West Central Asia; AFR = Africa; LAM = Latin America and the Caribbean; ME = Middle East. {Figure 13.1 and 13.2}

'''Institutions can enable improved governance by coordinating across sectors, scales and actors, building consensus for action, and setting strategies (''' '''''medium evidence, high agreement''''' ''').''' Institutions are more stable and effective when they are congruent with national contexts, leading to mitigation-focused institutions in some countries and the pursuit of multiple objectives in others. Sub-national institutions play a complementary role to national institutions by developing locally relevant visions and plans, addressing policy gaps or limits in national institutions, building local administrative structures and convening actors for place-based decarbonisation. {13.2}

'''Mitigation strategies, instruments and policies that fit with dominant ideas, values and belief systems within a country or within a sector are more easily adopted and implemented (''' '''''medium confidence''''' ''').''' Ideas, values and beliefs may change over time. Policies that bring perceived direct benefits, such as subsidies, usually receive greater support. The awareness of co-benefits for the public increases support of climate policies ( ''high confidence'' ). {13.2, 13.3, 13.4}

'''Climate governance is constrained and enabled by domestic structural factors, but it is still possible for actors to make substantial changes (''' '''''medium evidence, high agreement''''' ''').''' Key structural factors are domestic material endowments (such as fossil fuels and land-based resources); domestic political systems; and prevalent ideas, values and belief systems. Developing Countries face additional material constraints in climate governance due to development challenges and scarce economic or natural resources. A broad group of actors influence how climate governance develop over time, including a range of civic organisations, encompassing both pro- and anti-climate action groups ''.'' {13.3, 13.4}

'''Sub-national actors are important for mitigation because municipalities and regional governments have jurisdiction over climate-relevant sectors such as land use, waste and urban policy. They are able to experiment with climate solutions and can forge partnerships with the private sector and internationally to leverage enhanced climate action (''' '''''high confidence''''' ''').''' More than 10,500 cities and nearly 250 regions representing more than 2 billion people have pledged largely voluntary action to reduce emissions. Indirect gains include innovation, establishing norms and developing capacity. However, sub-national actors often lack national support, funding, and capacity to mobilise finance and human resources, and create new institutional competences. {13.5}

'''Climate litigation is growing and can affect the outcome and ambition of climate governance (''' '''''medium evidence, high agreement''''' ''').''' Since 2015, at least 37 systemic cases have been initiated against states that challenge the overall effort of a state to mitigate or adapt to climate change. If successful, such cases can lead to an increase in a country’s overall ambition to tackle climate change. Climate litigation has also successfully challenged governments’ authorisations of high-emitting projects, setting precedents in favour of climate action. Climate litigation against private sector and financial institutions is also on the rise. {13.4}

'''The media shapes the public discourse about climate mitigation. This can usefully build public support to accelerate mitigation action but may also be used to impede decarbonisation (''' '''''medium evidence, high agreement''''' ''').''' Global media coverage (across a study of 59 countries) has been growing, from about 47,000 articles in 2016–17 to about 87,000 in 2020–21. Generally, the media representation of climate science has increased and become more accurate over time. On occasion, the propagation of scientifically misleading information by organised counter-movements has fuelled polarisation, with negative implications for climate policy. {13.4}

'''Explicit attention to equity and justice is salient to both social acceptance and fair and effective policymaking for mitigation (''' '''''high confidence''''' ''').''' Distributional implications of alternative climate policy choices can be usefully evaluated at city, local and national scales as an input to policymaking. It is anticipated that institutions and governance frameworks that enable consideration of justice and Just Transitions can build broader support for climate policymaking ''.'' {13.2, 13.6, 13.8, 13.9}

'''Carbon pricing is effective in promoting implementation of low-cost emissions reductions (''' '''''high confidence''''' ''').''' While the coverage of emissions trading and carbon taxes has risen to over 20 percent of global CO ''2'' emissions, both coverage and price are lower than is needed for deep reductions. Market mechanisms ideally are designed to be effective as well as efficient, balance distributional goals and find social acceptance. Practical experience has driven progress in market mechanism design, especially of emissions trading schemes. Carbon pricing is limited in its effect on adoption of higher-cost mitigation options, and where decisions are often not sensitive to price incentives, such as in energy efficiency, urban planning, and infrastructure ( ''robust evidence'' , ''medium agreement'' ). Subsidies have been used to improve energy efficiency, encourage the uptake of renewable energy and other sector-specific emissions-saving options. {13.6}

'''Carbon pricing is most effective if revenues are redistributed or used impartially (''' '''''high confidence''''' ''').''' A carbon levy earmarked for green infrastructures or saliently returned to taxpayers corresponding to widely accepted notions of fairness increases the political acceptability of carbon pricing. {5.6, Box 5.11}

'''Removing fossil fuel subsidies would reduce emissions, improve public revenue and macroeconomic performance, and yield other environmental and sustainable development benefits.''' Subsidy removal may have adverse distributional impacts especially on the most economically vulnerable groups which, in some cases can be mitigated by measures such as redistributing revenue saved, all of which depend on national circumstances ( ''high confidence'' ); fossil fuel subsidy removal is projected by various studies (using alternative methodologies) to reduce global CO 2 emissions by 1–4%, and GHG emissions by up to 10% by 2030, varying across regions ( ''medium confidence'' ). {6.3, 13.6} {13.6}

'''Regulatory instruments play an important role in achieving specific mitigation outcomes in sectoral applications (''' '''''high confidence''''' ''').''' Regulation is effective in particular applications and often enjoys greater political support, but tends to be more economically costly than pricing instruments ( ''robust evidence'' , ''medium agreement'' ) ''.'' Flexible forms of regulation (e.g., performance standards) have achieved aggregate goals for renewable energy generation, vehicle efficiency and fuel standards, and energy efficiency in buildings and industry. Infrastructure investment decisions are significant for mitigation because they lock-in high- or low-emissions trajectories over long periods. Information and voluntary programs can contribute to overall mitigation outcomes ( ''medium evidence'' , ''high agreement'' ) ''.'' Designing for overlap and interactions among mitigation policies enhances their effectiveness. {13.6}

'''National mitigation policies interact internationally with effects that both support and hinder mitigation action (''' '''''medium evidence, high agreement''''' ''').''' Reductions in demand for fossil fuels tend to negatively affect fossil fuel-exporting countries. Creation of markets for emission reduction credits tends to benefit countries able to supply credits. Policies to support technology development and diffusion tend to have positive spillover effects. There is no consistent evidence of significant emissions leakage or competitiveness effects between countries, including for emissions-intensive trade-exposed industries covered by emission-trading systems ( ''medium confidence'' ). {13.6}

'''Policy packages are better able to support socio-technical transitions and shifts in development pathways toward low-carbon futures than are individual policies (''' '''''high confidence''''' ''').''' For best effect, they need to be harnessed to a clear vision for change and designed with attention to local governance context. Comprehensiveness in coverage, coherence to ensure complementarity, and consistency of policies with the overarching vision and its objectives are important design criteria. Integration across objectives occurs when a policy package is informed by a clear problem framing and identification of the full range of relevant policy subsystems. The climate policy landscape is outlined in Table TS.8, which maps framings of desired national policy outcomes to policymaking approaches. {13.7, Figure 13.6}

'''Table''' '''TS.8 |''' '''Mapping the landscape of climate policy.''' {Figure 13.6}

{| class="wikitable"
|-
| rowspan="2"| Approach to policymaking

| colspan="2"| '''Framing of outcome'''

|-
| '''Enhancing mitigation'''

| '''Addressing multiple objectives of mitigation and development'''

|-
| '''Shifting incentives'''

| ‘Direct mitigation focus’

''{2.8, 13.6}''

'''Objective:''' reduce GHG emissions now.

'''Literature:''' how to design and implement policy instruments, with attention to distributional and other concerns.

'''Examples:''' carbon tax, cap and trade, border carbon adjustment (BCA), disclosure policies.

| ‘Co-benefits’

''{5.6.2, 12.4.4, 17.3}''

'''Objective:''' synergies between mitigation and development.

'''Literature:''' scope for and policies to realise synergies and avoid trade-offs across climate and development objectives.

'''Examples:''' appliance standards, fuel taxes, community forest management, sustainable dietary guidelines, green building codes, packages for air pollution, packages for public transport.

|-
| '''Enabling transition'''

| ‘Socio-technical transitions’

''{1.7.3, 5.5, 6.7, 10.8, Cross-Chapter Box 12 in Chapter 16}''

'''Objective''' ''':''' accelerate low-carbon shifts in socio-technical systems.

'''Literature:''' understand socio-technical transition processes, integrated policies for different stages of a technology ‘S curve’ and explore structural, social and political elements of transitions.

'''Examples:''' packages for renewable-energy transition and coal phase-out; diffusion of electric vehicles, process and fuel switching in key industries.

| ‘System transitions to shift development pathways’

''{7.4.5, 11.6.6, 13.9, 17.3.3, Cross-Chapter Box 5 in Chapter 4, Cro&lt;/span&gt;&lt;span class=&quot;•-Condensed-italic&quot;&gt;ss-Cha&lt;/span&gt;&lt;span class=&quot;•-Condensed-italic&quot;&gt;pter Box 12 in Chapter 16}''

'''Objective:''' accelerate system transitions and shift development pathways to expand mitigation options and meet other development goals.

'''Literature:''' examines how structural development patterns and broad cross-sector and economy-wide measures drive ability to mitigate while achieving development goals through integrated policies and aligning enabling conditions.

'''Examples''' ''':''' packages for sustainable urbanisation, land-energy-water nexus approaches, green industrial policy, regional Just Transition plans.

|}

'''The co-benefits and trade-offs of integrating adaptation and mitigation are most usefully identified and assessed prior to policymaking rather than being accidentally discovered (''' '''''high confidence''''' ''').''' This requires strengthening relevant national institutions to reduce silos and overlaps, increasing knowledge exchange at the country and regional levels, and supporting engagement with bilateral and multilateral funding partners. Local governments are well placed to develop policies that generate social and environmental co-benefits but to do so require legal backing and adequate capacity and resources. {13.8}

'''Climate change mitigation is accelerated when attention is given to integrated policy and economy-wide approaches, and when enabling conditions (''' '''''governance, institutions, behaviour and lifestyle, innovation, policy,''''' '''and''' '''''finance''''' '''), are present (''' '''''robust evidence, medium agreement''''' ''').''' Accelerating climate mitigation includes simultaneously weakening high-carbon systems and encouraging low-carbon systems; ensuring interaction between adjacent systems (e.g., energy and agriculture); overcoming resistance to policies (e.g., from incumbents in high-carbon-emitting industries), including by providing transitional support to the vulnerable and negatively affected by distributional impacts; inducing changes in consumer practices and routines; providing transition support; and addressing coordination challenges in policy and governance. Table TS.9 elucidates the complexity of policymaking in driving sectoral transitions by summarising case studies of sectoral transitions from Chapters 5 to 12. These real-world sectoral transitions reinforce critical lessons on policy integration. (Table TS.9) {13.7, 13.9}

'''Table TS.''' '''9 |''' '''Case studies of integrated policymaking for sectoral transitions.''' Real-world sectoral transitions reinforce critical lessons on policy integration: a high-level strategic goal (column A), the need for a clear sectoral outcome framing (column B), a carefully coordinated mix of policy instruments and governance actions (column C), and the importance of context-specific governance factors (column D). Illustrative examples, drawn from sectors, help elucidate the complexity of policymaking in driving sectoral transitions. {Cross-Chapter Box 9 in Chapter 13, Table 1}

{| class="wikitable"
|-
! rowspan="2"| '''A. Illustrative case'''

! rowspan="2"| '''B. Objective'''

! rowspan="2"| '''C. Policy mix'''

! colspan="2"| '''D. Governance context'''

|-
! '''Enablers'''

! '''Barriers'''

|-
| Shift in mobility service provision in Kolkata, India {Box 5.8}

| –Improve system efficiency, sustainability and comfort

–Shift public perceptions of public transport

| –Strengthen coordination between modes

–Formalise and green auto-rickshaws

–Procure fuel-efficient, comfortable low-floor AC buses

–Ban cycling on busy roads

–Deploy policy actors as change-agents, mediating between interest groups

| –Cultural norms around informal transport-sharing, linked to high levels of social trust

–Historically crucial role of buses in transit

–App-cab companies shifting norms and formalising mobility-sharing

–Digitalisation and safety on board

| –Complexity: multiple modes with separate networks and meanings

–Accommodating and addressing legitimate concerns from social movements about the exclusionary effects of ‘premium’ fares, cycling bans on busy roads

|-
| LPG subsidy (‘Zero Kero’) programme, Indonesia {Box 6.3}

| –Decrease fiscal expenditures on kerosene subsidies for cooking

| –Subsidise provision of liquefied petroleum gas (LPG) cylinders and initial equipment

–Convert existing kerosene suppliers to LPG suppliers

| –Provincial government and industry support in targeting beneficiaries and implementation

–Synergies in kerosene and LPG distribution infrastructures

| –Continued user preference for traditional solid fuels

–Reduced GHG benefits as subsidy shifted between fossil fuels

|-
| Action Plan for Prevention and Control of Deforestation in the Legal Amazon, Brazil {Box 7.9}

| –Control deforestation and promote sustainable development

| –Expand protected areas; homologation of indigenous lands

–Improve inspections, satellite-based monitoring

–Restrict public credit for enterprises and municipalities with high deforestation rates

–Set up a REDD+ mechanism (Amazon Fund)

| –Participatory agenda-setting process

–Cross-sectoral consultations on conservation guidelines

–Mainstreaming of deforestation in government programmes and projects

| –Political polarisation leading to erosion of environmental governance

–Reduced representation and independence of civil society in decision-making bodies

–Lack of clarity around land ownership

|-
| Climate smart cocoa (CSC) production, Ghana {Box 7.12}

| –Promote sustainable intensification of cocoa production

–Reduce deforestation

–Enhance incomes and adaptive capacities

| –Distribute shade tree seedlings

–Provide access to agronomic information and agrochemical inputs

–Design a multi-stakeholder program including MNCs, farmers and NGOs

| –Local resource governance mechanisms ensuring voice for smallholders

–Community governance allowed adapting to local context

–Private-sector role in popularising CSC

| –Lack of secure tenure (tree rights)

–Bureaucratic and legal hurdles to register trees

–State monopoly on cocoa marketing, export

|-
| Coordination mechanism for joining fragmented urban policymaking in Shanghai, China {Box 8.3}

| –Integrate policymaking across objectives, towards low-carbon urban development

| –Combine central targets and evaluation with local flexibility for initiating varied policy experiments

–Establish a local leadership team for coordinating cross-sectoral policies involving multiple institutions

–Create a direct programme fund for implementation and capacity-building

| –Strong vertical linkages between central and local levels

–Mandate for policy learning to inform national policy

–Experience with mainstreaming mitigation in related areas (e.g., air pollution)

| –Challenging starting point – low share of renewable energy, high dependency on fossil fuels

–Continued need for high investments in a developing context

|-
| Policy package for building energy efficiency, EU {Box SM.9.1}

| –Reduce energy consumption, integrating renewable energy and mitigating GHG emissions from buildings

| –Energy performance standards, set at nearly zero energy for new buildings

–Energy performance standards for appliances

–Energy performance certificates shown during sale

–Long-term renovation strategies

| –Binding EU-level targets, directives and sectoral effort-sharing regulations

–Supportive urban policies, coordinated through city partnerships

–Funds raised from allowances auctioned under the Emissions Trading Scheme (ETS)

| –Inadequate local technical capacity to implement multiple instruments

–Complex governance structure leading to uneven stringency

|-
| African electromobility – trackless trams with solar in Bulawayo and e-motorbikes in Kampala {Box 10.4}

| –Leapfrog into a decarbonised transport future

–Achieve multiple social benefits beyond mobility provision

| –Develop urban centres with solar at station precincts

–Public-private partnerships for financing

–Sanction demonstration projects for new electric transit and new electric motorbikes (for freight)

| –‘Achieving SDGs’ was an enabling policy framing

–Multi-objective policy process for mobility, mitigation and manufacturing

–Potential for funding through climate finance

–Co-benefits such as local employment generation

| –Economic decline in the first decade of the 21st century

–Limited fiscal capacity for public funding of infrastructure

–Inadequate charging infrastructure for e-motorbikes

|-
| Initiative for a climate-friendly industry in North Rhine Westphalia (NRW), Germany {Box 11.3}

| –Collaboratively develop innovative strategies towards a net zero GHG industrial sector, while securing competitiveness

| –Build platform to bring together industry, scientists and government in self-organised innovation teams

–Intensive cross-branch cooperation to articulate policy/infrastructure needs

| –NRW is Germany’s industrial heartland, with an export-oriented industrial base

–Established government-industry ties

–Active discourse between industry and public

| –Compliance rules preventing in-depth co-operation

|-
| Food2030 strategy, Finland {Box 12.2}

| –Local, organic and climate-friendly food production

–Responsible and healthy food consumption

–A competitive food supply chain

| –Target funding and knowledge support for innovations

–Apply administrative means (legislation, guidance) to increase organic food production and procurement

–Use education and information instruments to shift behaviour (media campaigns, websites)

| –Year-long deliberative stakeholder engagement process across sectors

–Institutional structures for agenda-setting, guiding policy implementation and reflexive discussions

| –Weak role of integrated impact assessments (IAMs) to inform agenda-setting

–Monitoring and evaluation close to ministry in charge

–Lack of standardised indicators of food system sustainability

|}

'''Economy-wide packages, including economic-stimulus packages, can contribute to shifting sustainable development pathways and achieving net zero outcomes whilst meeting short-term economic goals (''' '''''medium evidence, high agreement''''' ''').''' The 2008–9 global recession showed that policies for sustained economic recovery go beyond short-term fiscal stimulus to include long-term commitments of public spending on the low-carbon economy, pricing reform, addressing affordability, and minimising distributional impacts. COVID-19 spurred stimulus packages and multi-objective recovery policies may also have potential to meet short-term economic goals while enabling longer-term sustainability goals. (Table TS.8) {13.9}

'''Box TS.13 | Policy Attribution: Methodologies For – and Estimations of – the Macro-level Impact of Mitigation Policies on Indices of GHG Mitigation'''

Policy attribution examines the extent to which ''GHG emission reductions'' , the ''proximate drivers of emissions'' , and the deployment of ''technologies that reduce emissions'' may be reasonably attributed to policies implemented prior to the observed changes. Such policies include regulatory instruments such as energy-efficiency programmes or technical standards and codes, carbon pricing, financial support for low-carbon energy technologies and efficiency, voluntary agreements, and regulation of land-use practices.

The vast majority of literature reviewed for this report examines the effect of particular instruments in particular contexts {13.6, 14.3, 16.4} , and only a small number directly or plausibly infer global impacts of policies. Policies also differ in design, scope, and stringency, may change over time as they require amendments or new laws, and often partially overlap with other instruments. These factors complicate analysis, because they give rise to the potential for double counting emissions reductions that have been observed. These lines of evidence on the impact of polices include:

* '''GHG Emissions.''' Evidence from econometric assessments of the impact of policies in countries which took on Kyoto Protocol targets; decomposition analyses that identify policy-related, absolute reductions from historical levels in particular countries. {13.6.2, 14.3.3, Cross-Chapter Box 10 in Chapter 14}
* '''Proximate''' '''emission drivers.''' Trends in the factors that drive emissions including reduced rates of deforestation {7.6.2} , industrial energy efficiency {Box 16.3} , buildings energy efficiency {Figure 2.22} , and the policy-driven displacement of fossil fuel combustion by renewable energy. (Box TS.13, Table 1; Box TS.13, Figure 1) {Chapters 2 and 6, Cross-Chapter Box 10 in Chapter 14}
* '''Technologies.''' The literature indicates unambiguously that the rapid expansion of low-carbon energy technologies is substantially attributable to policy. {6.7.5, 16.5}

As illustrated in Box TS.13, Figure 1, these multiple lines of evidence point to policies having had a discernible impact on mitigation for specific countries, sectors, and technologies ( ''high confidence'' ), avoiding emissions of several GtCO 2 -eq yr –1 globally ( ''medium confidence'' ).

'''Box TS.13, Table 1''' '''|''' '''The effects of policy on GHG emissions, drivers of emissions, and technology deployment.'''

{| class="wikitable"
|-
| '''Sector'''

| '''Effects on emissions'''

| '''Effects on immediate drivers'''

| '''Effects on low-carbon technology'''

|-
| Energy supply

{Chapter 6}

| Carbon pricing, emissions standards, and technology support have led to declining emissions associated with the supply of energy.

| Carbon pricing and technology support have led to improvements in the efficiency of energy conversion.

| A variety of market-based instruments, especially technology-support policies have led to high diffusion rates and cost reductions for renewable energy technologies.

|-
| AFOLU

{Chapter 7}

| Regulation of land-use rights and practices have led to falling aggregate AFOLU-sector emissions.

| Regulation of land-use rights and practices, payments for ecosystem service, and offsets, have led to decreasing rates of deforestation ( ''medium confidence'' ).

|
|-
| Buildings

{Chapter 9}

| Regulatory standards have led to reduced emissions from new buildings.

| Regulatory standards, financial support for building renovation and market-based instruments have led to improvements in building and building-system efficiencies.

| Technology support and regulatory standards have led to adoption of low-carbon heating systems and high-efficiency appliances.

|-
| Transport

{Chapter 10}

| Vehicle standards, land-use planning, and carbon pricing have led to avoided emissions in ground transportation.

| Vehicle standard, carbon pricing, and support for electrification have led to automobile efficiency improvements.

| Technology support and emissions standards have increased diffusion rates and cost reductions for electric vehicles.

|-
| Industry

{Chapter 11}

|
| Carbon pricing has led to efficiency improvements in industrial facilities.

|
|}

Note: statements describe the effects of policies across those countries where policies are in place. Unless otherwise noted, all findings are of ''high confidence'' .

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'''Box TS.13, Figure 1 |''' '''Policy impacts on key outcome indices: GHG emissions, proximate emission drivers, and technologies, including several lines of evidence on GHG abatement attributable to policies.''' {Cross-Chapter Box 10, Figure 1 in Chapter 14}

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=== TS.6.2 International Cooperation ===

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'''International cooperation is having positive and measurable results (''' '''''high confidence''''' ''').''' The Kyoto Protocol led to measurable and substantial avoided emissions, including in 20 countries with Kyoto first-commitment period targets that have experienced a decade of declining absolute emissions. It also built national capacity for GHG accounting, catalysed the creation of GHG markets, and increased investments in low-carbon technologies. Other international agreements and institutions have led to avoided CO 2 emissions from land-use practices, as well as avoided emissions of some non-CO 2 greenhouse gases ( ''medium confidence'' ). {14.3, 14.5, 14.6}

'''New forms of international cooperation have emerged since AR5 in line with an evolving understanding of effective mitigation policies, processes, and institutions. Both new and pre-existing forms of cooperation are vital for achieving climate mitigation goals in the context of sustainable development (''' '''''high confidence''''' ''').''' While previous IPCC assessments have noted important synergies between the outcomes of climate mitigation and achieving sustainable development objectives, there now appear to be synergies between the two processes themselves ( ''medium confidence'' ). Since AR5, international cooperation has shifted towards facilitating national-level mitigation action through numerous channels, including though processes established under the UNFCCC regime and through regional and sectoral agreements and organisations. {14.2, 14.3, 14.5, 14.6}

'''Participation in international agreements and transboundary networks is associated with the adoption of climate policies at the national and sub-national levels, as well as by non-state actors (''' '''''high confidence''''' ''').''' International cooperation helps countries achieve long-term mitigation targets when it supports development and diffusion of low-carbon technologies, often at the level of individual sectors, which can simultaneously lead to significant benefits in the areas of sustainable development and equity ( ''medium confidence'' ). {14.2, 14.3, 14.5, 14.6}

'''International cooperation under the UN climate regime took an important new direction with the entry into force of the 2015 Paris Agreement, which strengthened the objective of the UN climate regime, including its long-term temperature goal, while adopting a different architecture to that of the Kyoto Protocol (''' '''''high confidence''''' ''').''' The core national commitments under the Kyoto Protocol were legally binding quantified emission targets for developed countries tied to well-defined mechanisms for monitoring and enforcement. By contrast, the commitments under the Paris Agreement are primarily procedural, extend to all parties, and are designed to trigger domestic policies and measures, enhance transparency, and stimulate climate investments, particularly in developing countries, and to lead iteratively to rising levels of ambition across all countries. Issues of equity remain of central importance in the UN climate regime, notwithstanding shifts in the operationalisation of ‘common but differentiated responsibilities and respective capabilities’ from Kyoto to Paris. {14.3}

'''There are conflicting views on whether the Paris Agreement’s commitments and mechanisms will lead to the attainment of its stated goals (''' '''''medium confidence''''' ''').''' Arguments in support of the Paris Agreement are that the processes it initiates and supports will in multiple ways lead, and indeed have already led, to rising levels of ambition over time. The recent proliferation of national mid-century net zero GHG targets can be attributed in part to the Paris Agreement. Moreover, its processes and commitments will enhance countries’ abilities to achieve their stated level of ambition, particularly among developing countries. Arguments against the Paris Agreement are that it lacks a mechanism to review the adequacy of individual Parties’ Nationally Determined Contributions (NDCs), that collectively current NDCs are inconsistent in their level of ambition with achieving the Paris Agreement’s long-term temperature goal, that its processes will not lead to sufficiently rising levels of ambition in the NDCs, and that NDCs will not be achieved because the targets, policies and measures they contain are not legally binding at the international level. To some extent, arguments on both sides are aligned with different analytic frameworks, including assumptions about the main barriers to mitigation that international cooperation can help overcome. The extent to which countries increase the ambition of their NDCs and ensure they are effectively implemented will depend in part on the successful implementation of the support mechanisms in the Paris Agreement, and in turn will determine whether the goals of the Paris Agreement are met ( ''high confidence'' ). {14.2, 14.3, 14.4}

'''International cooperation outside the UNFCCC processes and agreements provides critical support for mitigation in particular regions, sectors and industries, for particular types of emissions, and at the sub- and trans-national levels (''' '''''high confidence''''' ''').''' Agreements addressing ozone depletion, transboundary air pollution, and release of mercury are all leading to reductions in the emissions of specific greenhouse gases. Cooperation is occurring at multiple governance levels including cities. Transnational partnerships and alliances involving non-state and sub-national actors are also playing a growing role in stimulating low-carbon technology diffusion and emissions reductions ( ''medium confidence'' ). Such transnational efforts include those focused on climate litigation; the impacts of these are unclear but promising. Climate change is being addressed in a growing number of international agreements operating at sectoral levels, as well as within the practices of many multilateral organisations and institutions. Sub-global and regional cooperation, often described as climate clubs, can play an important role in accelerating mitigation, including the potential for reducing mitigation costs through linking national carbon markets, although actual examples of these remain limited. {14.2, 14.4, 14.5, 14.6}

'''International cooperation will need to be strengthened in several key respects in order to support mitigation action consistent with limiting temperature rise to well below 2°C in the context of sustainable development and equity (''' '''''high confidence''''' ''').''' Many developing countries’ NDCs have components or additional actions that are conditional on receiving assistance with respect to finance, technology development and transfer, and capacity-building, greater than what has been provided to date. Sectoral and sub-global cooperation is providing critical support, and yet there is room for further progress. In some cases, notably with respect to aviation and shipping, sectoral agreements have adopted climate mitigation goals that fall far short of what would be required to achieve the long-term temperature goal of the Paris Agreement. Moreover, there are cases where international cooperation may be hindering mitigation efforts, namely evidence that trade and investment agreements, as well as agreements within the energy sector, impede national mitigation efforts ( ''medium confidence'' ). International cooperation is emerging but so far fails to fully address transboundary issues associated with solar radiation modification (SRM) and carbon dioxide removal (CDR). {14.2, 14.3, 14.4, 14.5, 14.6, Cross-Working Group Box 4 in Chapter 14}

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=== TS.6.3 Societal Aspects of Mitigation ===

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'''Social equity reinforces capacity and motivation for mitigating climate change (''' '''''medium confidence''''' ''').''' Impartial governance such as fair treatment by law-and-order institutions, fair treatment by gender, and income equity, increases social trust, thus enabling demand-side climate policies. High-status (often high-carbon) item consumption may be reduced by taxing absolute wealth without compromising well-being. {5.2, 5.4.2, 5.6}

'''Policies that increase the political access and participation of women, racialised, and marginalised groups, increase the democratic impetus for climate action (''' '''''high confidence''''' ''')''' '''.''' Including more differently situated knowledge and diverse perspectives makes climate mitigation policies more effective. {5.2, 5.6}

'''Greater contextualisation and granularity in policy approaches better addresses the challenges of rapid transitions towards zero-carbon systems (''' '''''high confidence''''' ''').''' Larger systems take more time to evolve, grow, and change compared to smaller ones. Creating and scaling up entirely new systems takes longer than replacing existing technologies and practices. Late adopters tend to adopt faster than early pioneers. Obstacles and feasibility barriers are high in the early transition phases. Barriers decrease as a result of technical and social learning processes, network building, scale economies, cultural debates, and institutional adjustments. {5.5, 5.6}

'''Mitigation policies that integrate and communicate with the values people hold are more successful (''' '''''high confidence''''' ''').''' Values differ between cultures. Measures that support autonomy, energy security and safety, equity and environmental protection, and fairness resonate well in many communities and social groups. Changing from a commercialised, individualised, entrepreneurial training model to an education cognisant of planetary health and human well-being can accelerate climate change awareness and action. {5.4.1, 5.4.2}

'''Changes in consumption choices that are supported by structural changes and political action enable the uptake of low-carbon choices (''' '''''high confidence''''' ''').''' Policy instruments applied in coordination can help to accelerate change in a consistent desired direction. Targeted technological change, regulation, and public policy can help in steering digitalisation, the sharing economy, and circular economy towards climate change mitigation. (Boxes TS.12 and TS.14) {5.3, 5.6}

'''Complementarity in policies helps in the design of an optimal demand-side policy mix (''' '''''medium confidence''''' ''').''' In the case of energy efficiency, for example, this may involve CO 2 pricing, standards and norms, and information feedback. {5.3, 5.4, 5.6}

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=== TS.6.4 Investment and Finance ===

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'''Finance to reduce net GHG emissions and enhance resilience to climate impacts is a critical enabling factor for the lo''' '''w-c''' '''arbon transition. Fundamental inequities in access to finance as well as finance terms and conditions, and countries’ exposure to physical impacts of climate change overall, result in a worsening outlook for a global Just Transition (''' '''''high confidence''''' ''').''' Decarbonising the economy requires global action to address fundamental economic inequities and overcome the climate investment trap that exists for many developing countries. For these countries the costs and risks of financing often represent a significant challenge for stakeholders at all levels. This challenge is exacerbated by these countries’ general economic vulnerability and indebtedness. The rising public fiscal costs of mitigation, and of adapting to climate shocks, is affecting many countries and worsening public indebtedness and country credit ratings at a time when there were already significant stresses on public finances. The COVID-19 pandemic has made these stresses worse and tightened public finances still further. Other major challenges for commercial climate finance include: the mismatch between capital and investment needs, home bias [[#footnote-002|31]] considerations, differences in risk perceptions for regions, as well as limited institutional capacity to ensure safeguards are effective ( ''high confidence'' ). {15.2, 15.6.3}

'''Investors, central banks, and financial regulators are driving increased awareness of climate risk. This increased awareness can support climate policy development and implementation (''' '''''high confidence''''' ''') {15.2, 15.6} .''' Climate-related financial risks arise from physical impacts of climate change (already relevant in the short term), and from a disorderly transition to a low-carbon economy. Awareness of these risks is increasing, leading also to concerns about financial stability. Financial regulators and institutions have responded with multiple regulatory and voluntary initiatives to assess and address these risks. Yet despite these initiatives, climate-related financial risks remain greatly underestimated by financial institutions and markets, limiting the capital reallocation needed for the low-carbon transition. Moreover, risks relating to national and international inequity – which act as a barrier to the transformation – are not yet reflected in decisions by the financial community. Stronger steering by regulators and policymakers has the potential to close this gap. Despite the increasing attention of investors to climate change, there is limited evidence that this attention has directly impacted emission reductions. This leaves high uncertainty, both near term (2021–30) and longer term (2021–50), on the feasibility of an alignment of financial flows with the Paris Agreement goals ( ''high confidence'' ). {15.2, 15.6}

'''Progress on the alignment of financial flows with low-GHG emissions pathways remains slow. There is a climate financing gap which reflects a persistent misallocation of global capital (''' '''''high confidence''''' ''') {15.2, 15.3} .''' Persistently high levels of both public and private fossil fuel-related financing continue to be of major concern despite promising recent commitments. This reflects policy misalignment, the current perceived risk-return profile of fossil fuel-related investments, and political economy constraints ( ''high confidence'' ). Estimates of climate finance flows [[#footnote-001|32]] exhibit highly divergent patterns across regions and sectors and a slowing growth {15.3} . When the perceived risks are too high, the misallocation of abundant savings persists and investors refrain from investing in infrastructure and industry in search of safer financial assets, even earning low or negative real returns ( ''high confidence'' ). {15.2, 15.3}

'''Global climate finance is heavily focused on mitigation (more than 90% on average between 2017–2020) (''' '''''high confidence''''' ''') {15.4, 15.5} .''' This is despite the significant economic effects of climate change’s expected physical impacts, and the increasing awareness of these effects on financial stability. To meet the needs for rapid deployment of mitigation options, global mitigation investments are expected to need to increase by the factor of three to six ( ''high confidence'' ). The gaps represent a major challenge for developing countries, especially Least-Developed Countries (LDCs), where flows have to increase by the factor of four to seven for specific sectors such as AFOLU, and for specific groups with limited access to, and high costs of, climate finance ( ''high confidence'' ) (Figure TS.25) {15.4, 15.5} . The actual size of sectoral and regional climate financing gaps is only one component driving the magnitude of the challenge. Financial and economic viability, access to capital markets, appropriate regulatory frameworks, and institutional capacity to attract and facilitate investments and ensure safeguards are decisive to scaling-up funding. Soft costs for regulatory environment and institutional capacity, upstream funding needs as well as R&amp;D and venture capital for development of new technologies and business models are often overlooked despite their critical role to facilitate the deployment of scaled-up climate finance ( ''high confidence'' ). {15.4.1, 15.5.2}

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[[File:c7f569d3095768fe37f4483d6eadf29b IPCC_AR6_WGIII_Figure_TS_25.png]]

'''Figure TS.25 | Breakdown of recent average (downstream) mitigation investments and model-based investment requirements for 2020–2030 (USD billion) in scenarios that likely limit warming to 2°C or lower.''' Mitigation investment flows and model-based investment requirements by sector / segment (energy efficiency in buildings and industry, transport including efficiency, electricity generation, transmission and distribution including electrification, and agriculture, forestry and other land use), by type of economy, and by region (see Annex II Part I Section 1: By region is based on intermediate level (R10) classification scheme. By type of economy is based on intermediate level (R10) classification scheme, which considers ‘North America’, ‘Europe’, and ’Australia, Japan and New Zealand’ as developed countries, and the other seven regions as developing countries). Breakdown by sector / segment may differ slightly from sectoral analysis in other contexts due to the availability of investment needs data. The granularity of the models assessed in Chapter 3, and other studies, do not allow for a robust assessment of the specific investment needs of LDCs or SIDSs. Investment requirements in developing countries might be underestimated due to missing data points as well as underestimated technology costs. In modelled pathways, regional investments are projected to occur when and where they are cost cost-effective to limit global warming. The model quantifications help to identify high-priority areas for cost-effective investments, but do not provide any indication on who would finance the regional investments. Investment requirements and flows covering downstream / mitigation technology deployment only. Data includes investments with a direct mitigation effect, and in the case of electricity, additional transmission and distribution investments. See section 15.4.2 Quantitative assessment of financing needs for detailed data on investment requirements. Data on mitigation investment flows are based on a single series of reports (Climate Policy Initiative, CPI) which assembles data from multiple sources. Investment flows for energy efficiency are adjusted based on data from the International Energy Agency (IEA). Data on mitigation investments do not include technical assistance (i.e., policy and national budget support or capacity building), other non-technology deployment financing. Adaptation only flows are also excluded. Data on mitigation investment requirements for electricity are based on emission pathways C1, C2 and C3 (Table SPM.1). For electricity investment requirements, the upper end refers to the mean of C1 pathways and the lower end to the mean of C3 pathways. Data points for energy efficiency, transport and AFOLU cannot always be linked to C1–C3 scenarios. Data do not include needs for adaptation or general infrastructure investment or investment related to meeting the SDGs other than mitigation, which may be at least partially required to facilitate mitigation. The multiplication factors show the ratio of average annual model-based mitigation investment requirements (2020–2030) and most recent annual mitigation investments (averaged for 2017–2020). The lower and upper multiplication factors refer to the lower and upper ends of the range of investment needs.

Given the multiple sources and lack of harmonised methodologies, the data can only be indicative of the size and pattern of investment gaps. The gap between most recent flows and required investments is only a single indicator. A more comprehensive (and qualitative) assessment is required in order to understand the magnitude of the challenge of scaling up investment in sectors and regions. The analysis also does not consider the effects of misaligned flows. {15.3, 15.4, 15.5, Table 15.2, Table 15.3, Table 15.4}

'''The relatively slow implementation of commitments by countries and stakeholders in the financial sector to scale up climate finance reflects neither the urgent need for ambitious climate action, nor the economic rationale for ambitious climate action (''' '''''high confidence''''' ''')''' '''.''' Delayed climate investments and financing – and limited alignment of investment activity with the Paris Agreement – will result in significant carbon lock-ins, stranded assets, and other additional costs. This will particularly impact urban infrastructure and the energy and transport sectors ( ''high confidence'' ). A common understanding of debt sustainability and debt transparency, including negative implications of deferred climate investments on future GDP, and how stranded assets and resources may be compensated, has not yet been developed ( ''medium confidence'' ). {15.6}

'''There is a mismatch between capital availability in the developed world and the future emissions expected in developing countries (''' '''''high confidence''''' ''').''' This emphasises the need to recognise the explicit and positive social value of global cross-border mitigation financing. A significant push for international climate finance access for vulnerable and poor countries is particularly important given these countries’ high costs of financing, debt stress and the impacts of ongoing climate change ( ''high confidence'' ) ''.'' {15.2, 15.3.2.3, 15.5.2, 15.6.1, 15.6.7}

'''Innovative financing approaches could help reduce the systemic under-pricing of climate risk in markets and foster demand for investment opportunities aligned with the Paris Agreement goals. Approaches include de-risking investments, robust ‘green’ labelling and disclosure schemes, in addition to a regulatory focus on transparency and reforming international monetary system financial sector regulations (''' '''''medium confidence''''' ''').''' Green bond markets and markets for sustainable finance products have grown significantly since AR5 and the landscape continues to evolve. Underpinning this evolution is investors’ preference for scalable and identifiable low-carbon investment opportunities. These relatively new labelled financial products will help by allowing a smooth integration into existing asset allocation models ( ''high confidence'' ). Green bond markets and markets for sustainable finance products have also increased significantly since AR5, but challenges nevertheless remain, in particular, there are concerns about ‘greenwashing’ and the limited application of these markets to developing countries ( ''high confidence'' ). {15.6.2, 15.6.6}

'''New business models (e.g., pay-as-you-go) can facilitate the aggregation of small-scale financing needs and provide scalable investment opportunities with more attractive risk-return profiles (''' '''''high confidence''''' ''').''' Support and guidance for enhancing transparency can promote capital markets’ climate financing by providing quality information to price climate risks and opportunities. Examples include SDG and environmental, social and governance (ESG) disclosure, scenario analysis and climate risk assessments, including the Task Force on Climate-related Financial Disclosures (TCFD). The outcome of these market-correcting approaches on capital flows cannot be taken for granted, however, without appropriate fiscal, monetary and financial policies. Mitigation policies will be required to enhance the risk-weighted return of low-emission and climate-resilient options, accelerate the emergence and support for financial products based on real projects, such as green bonds, and phase-out fossil fuel subsidies. Greater public-private cooperation can also encourage the private sector to increase and broaden investments, within a context of safeguards and standards, and this can be integrated into national climate change policies and plans ( ''high confidence'' ). {15.1, 15.2.4, 15.3.1, 15.3.2, 15.3.3, 15.5.2, 15.6.1, 15.6.2, 15.6.6, 15.6.7, 15.6.8}

'''Ambitious global climate policy coordination and stepped-up public climate financing over the next decade (2021–2030) can help redirect capital markets and overcome challenges relating to the need for parallel investments in mitigation. It can also help address macroeconomic uncertainty and alleviate developing countries’ debt burden post-COVID-19 (''' '''''high confidence''''' ''').''' Providing strong climate policy signals helps guide investment decisions. Credible signalling by governments and the international community can reduce uncertainty for financial decision-makers and help reduce transition risk. In addition to indirect and direct subsidies, the public sector’s role in addressing market failures, barriers, provision of information, and risk-sharing can encourage the efficient mobilisation of private sector finance ( ''high confidence'' ) {15.2, 15.6.1, 15.6.2} . The mutual benefits of coordinated support for climate mitigation and adaptation in the next decade for both developed and developing regions could potentially be very high in the post-COVID era. Climate-compatible stimulus packages could significantly reduce the macro-financial uncertainty generated by the pandemic and increase the sustainability of the world economic recovery {15.2, 15.3.2.3, 15.5.2, 15.6.1, 15.6.7} . Political leadership and intervention remain central to addressing uncertainty, which is a fundamental barrier for the redirection of financial flows. Existing policy misalignments – for example, in fossil fuel subsidies – undermine the credibility of public commitments, reduce perceived transition risks and limit financial sector action ( ''high confidence'' ) ''.'' {15.2, 15.3.3, 15.6.1, 15.6.2, 15.6.3}

'''The greater the urgency of action to remain on a 1.5°C pathway, the greater need for parallel investment decisions in upstream and downstream parts of the value chain (''' '''''high confidence''''' ''').''' Greater urgency also reduces the lead times to build trust in regulatory frameworks. Consequently, many investment decisions will need to be made based on the long-term global goals. This highlights the importance of trust in political leadership which, in turn, affects risk perception and ultimately financing costs ( ''high confidence'' ) ''.'' {15.6.1, 15.6.2}

'''Accelerated international cooperation on finance is a critical enabler of a low-carbon and Just Transition (''' '''''very high confidence''''' ''').''' Scaled-up public grants for adaptation and mitigation, and funding for low-income and vulnerable regions, especially in Sub-Saharan Africa, may have the highest returns. Key options include: increased public finance flows from developed to developing countries beyond USD100 billion a year; shifting from a direct lending modality towards public guarantees to reduce risks and greatly leverage private flows at lower cost; local capital markets development; and, changing the enabling operational definitions. A coordinated effort to green the post-pandemic recovery is also essential in countries facing much higher debt costs ( ''high confidence'' ). {15.2, 15.6}

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=== TS.6.5 Innovation, Technology Development and Transfer ===

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'''Innovation in climate mitigation technologies has seen enormous activity and significant progress in recent years. Innovation has also led to, and exacerbated, trade-offs in relation to sustainable development.''' Innovation can leverage action to mitigate climate change by reinforcing other interventions. In conjunction with other enabling conditions, innovation can support system transitions to limit warming and help shift development pathways. The currently widespread implementation of solar PV and LED lighting, for instance, could not have happened without technological innovation ''.'' Technological innovation can also bring about new and improved ways of delivering services that are essential to human well-being ( ''high confidence'' ) {16.1, 16.3, 16.4, 16.6} . At the same time as delivering benefits, innovation can result in trade-offs that undermine both progress on mitigation and progress towards other Sustainable Development Goals (SDGs). Trade-offs include negative externalities’ – for instance, greater environmental pollution and social inequalities – rebound effects leading to lower net emission reductions or even increases in emissions, and increased dependency on foreign knowledge and providers ( ''high confidence'' ). Effective governance and policy have the potential to avoid and minimise such misalignments ( ''medium evidence'' , ''high agreement'' ). {16.2, 16.3, 16.4, 16.5.1, 16.6}

'''A systemic view of innovation to direct and organise the processes has grown over the last decade. This systemic view of innovation takes into account the role of actors, institutions, and their interactions, and can inform how innovation systems that vary across technologies, sectors and countries, can be strengthened (''' '''''high confidence''''' ''') {16.2, 16.3, 16.5} .''' Where a systemic view of innovation has been taken, it has enabled the development and implementation of indicators that are better able to provide insights in innovation processes. This, in turn, has enabled the analysis and strengthening of innovation systems. Traditional quantitative innovation indicators mainly include R&amp;D investments and patents. Figure TS.26 illustrates that energy-related research, development and demonstration (RD&amp;D) has risen slowly in the last two decades, and that there has been a reorientation of the portfolio of funded energy technologies. Systemic indicators of innovation, however, go well beyond these approaches. They include structural innovation system elements including actors and networks, as well as indicators for how innovation systems function, such as access to finance, employment in relevant sectors, and lobbying activities {16.3.4, Table 16.7} . For example, in Latin America, monitoring systemic innovation indicators for the effectiveness of agroecological mitigation approaches has provided insights on the appropriateness and social alignment of new technologies and practices {Box 16.5} . Climate-energy-economy models, including integrated assessment models (IAMs), generally employ a stylised and necessarily incomplete view of innovation, and have yet to incorporate a systemic representation of innovation systems. {16.2.4, Box 16.1}

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[[File:fa0e44bcbcfea84a507164b23a042e78 IPCC_AR6_WGIII_Figure_TS_26.png]]

'''Figure TS.26 |''' '''Fraction of public energy research, development and demonstration (RD&amp;D) spending by technology over time for IEA (largely OECD) countries between 1974 and 2018.''' {Box 16.3, Figure 1}

'''A systemic perspective on technological change can provide insights to policymakers supporting their selection of effective innovation policy instruments (''' '''''high confidence''''' ''') {16.4, 16.5} .''' A combination of scaled-up innovation investments with demand-pull interventions can achieve faster technology unit cost reductions and more rapid scale-up than either approach in isolation ''.'' These innovation policy instruments would nonetheless have to be tailored to local development priorities, to the specific context of different countries, and to the technology being supported. The timing of interventions and any trade-offs with sustainable development also need to be addressed. Public R&amp;D funding and support, as well as innovation procurement, have shown to be valuable for fostering innovation in small-to-medium clean-tech firms (Figure TS.27) {16.4.4.3} . Innovation outcomes of policy instruments not necessarily aimed at innovation, such as feed-in tariffs, auctions, emissions trading schemes, taxes and renewable portfolio standards, vary from negligible to positive for climate change mitigation. Some specific designs of environmental taxation can also result in negative distributional outcomes {16.4.4} . Most of the available literature and evidence on innovation systems come from industrialised countries and larger developing countries. However, there is a growing body of evidence from developing countries and Small Island Developing States (SIDS). {16.4, 16.5, 16.7}

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'''Figure TS.27''' '''|''' '''Technology innovation process and the (illustrative) roles of different public policy instruments (on the right-hand side).''' {Figure 16.1} Note that demand-pull instruments in the regulatory instrument category, for instance, can also shape the early stages of the innovation process. Their position in the latter stages is highlighted in this figure because typically these instruments have been introduced in latter stages of the development of the technology. {16.4.4}

'''Experience and analyses show that technological change is inhibited if technological innovation system functions are not adequately fulfilled; this inhibition occurs more often in developing countries (''' '''''high confidence''''' ''').''' Examples of such functions are knowledge development, resource mobilisation, and activities that shape the needs, requirements and expectations of actors within the innovation system (guidance of the search). Capabilities play a key role in these functions, the buildup of which can be enhanced by domestic measures, but also by international cooperation. For instance, innovation cooperation on wind energy has contributed to the accelerated global spread of this technology. As another example, the policy guidance by the Indian government, which also promoted development of data, testing capabilities and knowledge within the private sector, has been a key determinant of the success of an energy-efficiency programme for air conditioners and refrigerators in India. {16.3, 16.5, 16.6, Cross-Chapter Box 12 in Chapter 16, Box 16.3}

'''Consistent with innovation system approaches, the sharing of knowledge and experiences between developed and developing countries can contribute to addressing global climate and the SDGs. The effectiveness of such international cooperation arrangements, however, depends on the way they are developed and implemented (''' '''''high confidence''''' ''').''' The effectiveness and sustainable development benefits of technology sharing under market conditions appears to be determined primarily by the complexity of technologies, local capabilities and the policy regime. This suggests that the development of planning and innovation capabilities remains necessary, especially in Least-Developed Countries (LDCs) and SIDS. International diffusion of low-emission technologies is also facilitated by knowledge spillovers from regions engaged in clean R&amp;D ( ''medium confidence'' ). {16.2}

'''The evidence on the role of intellectual property rights (IPR) in innovation is mixed. Some literature suggests that it is a barrier while other sources suggests that it is an enabler to the diffusion of climate-related technologies (''' '''''medium confidence''''' ''').''' There is agreement that countries with well-developed institutional capacity may benefit from a strengthened IPR regime, but that countries with limited capabilities might face greater barriers to innovation as a consequence. This enhances the continued need for capacity-building. Ideas to improve the alignment of the global IPR regime and addressing climate change include specific arrangements for LDCs, case-by-case decision-making and patent-pooling institutions. {16.2.3, 16.5, Box 16.10}

'''Although some initiatives''' '''have mobilised investments in developing countries, gaps in innovation cooperation remain, including in the Paris Agreement instruments. These gaps could be filled by enhancing financial support for international technology cooperation, by strengthening cooperative approaches, and by helping build suitable capacity in developing countries across all technological innovation system functions (''' '''''high confidence''''' ''').''' The implementation of current arrangements of international cooperation for technology development and transfer, as well as capacity-building, are insufficient to meet climate objectives and contribute to sustainable development. For example, despite building a large market for mitigation technologies in developing countries, the lack of a systemic perspective in the implementation of the Clean Development Mechanism (CDM), operational since the mid-2000s, has only led to some technology transfer, especially to larger developing countries, but limited capacity building and minimal technology development ( ''medium confidence'' ). In the current climate regime, a more systemic approach to innovation cooperation could be introduced by linking technology institutions, such as the Technology Mechanism, and financial actors, such as the Financial Mechanism. {16.5.3}

'''Countries are exposed to sustainable development challenges in parallel with the challenges that relate to climate change. Addressing both sets of challenges simultaneously presents multiple and recurrent obstacles that systemic approaches to technological change could help resolve, provided they are well managed (''' '''''high confidence''''' ''').''' Obstacles include both entrenched power relations dominated by vested interests that control and benefit from existing technologies, and governance structures that continue to reproduce unsustainable patterns of production and consumption ( ''medium confidence'' ). Studies also highlight the potential of cultural factors to strongly influence the pace and direction of technological change. Sustainable solutions require adoption and mainstreaming of locally novel technologies that can meet local needs, and simultaneously address the SDGs. Acknowledging the systemic nature of technological innovation – which involve many levels of actors, stages of innovation and scales – can lead to new opportunities to shift development pathways towards sustainability. {16.4, 16.5, 16.6}

'''Strategies for climate change mitigation can be most effective in accelerating transformative change when actions taken to strengthen one set of enabling conditions also reinforce and strengthen the effectiveness of other enabling conditions (''' '''''medium confidence''''' ''').''' Applying transition or system dynamics to decisions can help policymakers take advantage of such high-leverage intervention points, address the specific characteristics of technological stages, and respond to societal dynamics. Inspiration can be drawn from the global unit-cost reductions of solar PV, which were accelerated by a combination of factors interacting in a mutually reinforcing way across a limited group of countries ( ''high confidence'' ) {Box 16.2, Cross-Chapter Box 12 in Chapter 16} . Transitions can be accelerated by policies appropriately targeted, which may be grouped in different ‘pillars of policy’. The relative importance of different ‘pillars’ differs according to the stage of the transition. (Figure TS.28) {1.2.3}

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'''Figure TS.''' '''28 |''' '''Transition dynamics: levels, policies and processes.''' {Figure 1.7} The relative importance of different ‘pillars of policy’ differs according to the stage of the transition. The lower panel illustrates growth of innovative technologies or practices, which if successful, emerge from niches into an S-shaped dynamic of exponential growth. The diffusion stage often involves new infrastructure and reconfiguration of existing market and regulatory structures. During the phase of more widespread diffusion, growth levels off to linear, then slows as the industry and market matures. The processes displace incumbent technologies/practices which decline, initially slowly, but then at an accelerating pace. Many related literatures identify three main levels with different characteristics, most generally termed ''micro, meso'' and ''macro'' .

'''Better and more comprehensive data on innovation indicators can provide timely insights for policymakers and policy design locally, nationally and internationally, especially for developing countries, where such insights are often missing.''' Data needed include those that can show the strength of technological, sectoral and national innovation systems. It is also necessary to validate current results and generate insights from theoretical frameworks and empirical studies for developing countries’ contexts. Innovation studies on adaptation and mitigation other than energy and ''ex-pos'' ''t'' assessments of the effectiveness of various innovation-related policies and interventions, including R&amp;D, would also provide benefits. Furthermore, methodological developments to improve the ability of IAMs to capture energy innovation system dynamics and the relevant institutions and policies (including design and implementation), would allow for more realistic assessment. {16.2, 16.3, 16.7}

'''Box TS.14 | Digitalisation'''

Digital technologies can promote large increases in energy efficiency through coordination and an economic shift to services, but they can also greatly increase energy demand because of the energy used in digital devices ( ''high confidence'' ). {Cross-Chapter Box 11 in Chapter 16, 16.2}

Digital devices, including servers, increase pressure on the environment due to the demand for rare metals and end-of-life disposal. The absence of adequate governance in many countries can lead to harsh working conditions and unregulated disposal of electronic waste. Digitalisation also affects firms’ competitiveness, the demand for skills, and the distribution of, and access to resources. The existing digital divide, especially in developing countries, and the lack of appropriate governance of the digital revolution can hamper the role that digitalisation could play in supporting the achievement of stringent mitigation targets. At present, the understanding of both the direct and indirect impacts of digitalisation on energy use, carbon emissions and potential mitigation is limited ( ''medium confidence'' ).

The digital transformation is a megatrend that is fundamentally changing all economies and societies, albeit in very different ways depending on the level of development of a given country and on the nature of its economic system. Digital technologies have significant potential to contribute to decarbonisation due to their ability to increase energy and material efficiency, make transport and building systems less wasteful, and improve the access to services for consumers and citizens. Yet, if left unmanaged, the digital transformation will probably increase energy demand, exacerbate inequities and the concentration of power, leaving developing economies with less access to digital technologies behind, raise ethical issues, reduce labour demand and compromise citizens’ welfare. Appropriate governance of the digital transformation can ensure that digitalisation works as an enabler, rather than as a barrier and further strain in decarbonisation pathways. Governance can ensure that digitalisation not only reduces GHG emissions intensity but also contributes to reducing absolute GHG emission, constraining run-away consumption. {Cross-Chapter Box 11 in Chapter 16, 16.2}

Digital technologies have the potential to reduce energy demand in all end-use sectors through steep improvements in energy efficiency. This includes material input savings and increased coordination as they allow the use of fewer inputs to perform a given task. Smart appliances and energy management, supported by choice architectures, economic incentives and social norms, effectively reduce energy demand and associated GHG emissions by 5–10% while maintaining equal service levels. Data centres can also play a role in energy-system management, for example by waste-heat utilisation where district heat systems are close by; temporal and spatial scheduling of electricity demand can provide about 6% of the total potential demand response. {5.5, Cross-Chapter Box 11, Table 1 in Chapter 16}

Digital technologies, analytics and connectivity consume large amounts of energy, implying higher direct energy demand and related carbon emissions. Global energy demand from digital appliances reached 7.14 EJ in 2018. The demand for computing services increased by 550% between 2010 and 2018 and is now estimated at 1% of global electricity consumption. Due to efficiency improvements, the associated energy demand increased only modestly, by about 6% from 2000 to 2018. {Box 9.5}

System-wide effects endanger energy and GHG-emission savings. Rising demand can diminish energy savings, and also produce run-away effects associated with additional consumption and GHG emissions if left unregulated. Savings are varied in smart and shared mobility systems, as ride-hailing increases GHG emissions due to deadheading, whereas shared pooled mobility and shared cycling reduce GHG emissions, as occupancy levels and/or weight per person kilometre transported improve. Systemic effects have wider boundaries of analysis and are more difficult to quantify and investigate but are nonetheless very relevant. Systemic effects tend to have negative impacts, but policies and adequate infrastructures and choice architectures can help manage and contain these. {5.3, 5.4, 5.6}

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