Editing IPCC:AR6/WGIII/Chapter-13 (section)

=== 13.6.5 Other Policy Instruments ===

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A range of other mitigation policy instruments are in use, often playing a complementary role to pricing and standards.

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==== 13.6.5.1 Transition Support Policies ====

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Effective climate change mitigation can cause economic and social disruption where there is transformative change, such as changes in energy systems away from fossil fuels ( [[#13.9|Section 13.9]] ). Transitional assistance policies can be aimed to ameliorate effects on consumers, workers, communities, corporations or countries ( [[#Green--2020|Green and Gambhir 2020]] ) in order to create broad coalitions of supporters or to limit opposition ( [[#Vogt-Schilb--2017|Vogt-Schilb and Hallegatte 2017]] ).

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==== 13.6.5.2 Information Programmes ====

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Information programmes, including energy efficiency labels, energy audits, certification, carbon labelling and information disclosure, are in wide use in particular for energy consumption. They can reduce GHG emissions by promoting voluntary technology choices and behavioural changes by firms and households.

Energy efficiency labelling is in widespread use, including for buildings, and for end users products including cars and appliances. Carbon labelling is used for example for food ( [[#Camilleri--2019|Camilleri et al. 2019]] ) and tourism ( [[#Gössling--2016|Gössling and Buckley 2016]] ). Information measures also include specific information systems such as smart electricity meters (Zangheri et al. 2019). Chapters 5 and 9 provide detail.

Information programmes can correct for a range of market failures related to imperfect information and consumer perceptions ( [[#Allcott--2016|Allcott 2016]] ). Alongside mandatory standards (13.6.4), information programmes can nudge firms and consumers to focus on often overlooked operating cost reductions ( [[#Carroll--2022|Carroll et al. 2022]] ). For example, consumers who are shown energy efficiency labels on average buy more energy efficient appliances than those who are not ( [[#Stadelmann--2018|Stadelmann and Schubert 2018]] ). Information policies can also support the changing of social norms about consumption choices, which have been shown to raise public support for pricing and regulatory policy instruments ( [[#Gössling--2020|Gössling et al. 2020]] ).

Energy audits provide tailored information about potential energy savings and benchmarking of best practices through a network of peers. Typical examples include the United States Better Buildings Challenge that has provided energy audits to support USA commercial and industrial building owners, energy savings have been estimated at 18% to 30% ( [[#Asensio--2017|Asensio and Delmas 2017]] ); and Germany’s energy audit scheme for SMEs achieving reductions in energy consumption of 5–70% ( [[#Kluczek--2017|Kluczek and Olszewski 2017]] ).

Consumption-oriented policy instruments seek to reduce GHG emissions by changing consumer behaviour directly, via retailers or via the supply chain. Aspects that hold promise are technology lists, supply chain procurement by leading retailers or business associations, a carbon-intensive materials charge and selected infrastructure improvements ( [[#Grubb--2020|Grubb et al. 2020]] ).

The information provided to consumers in labelling programmes is often not detailed enough to yield best possible results ( [[#Davis--2016|Davis and Metcalf 2016]] ). Providing information about running costs tends to be more effective than providing data on energy use ( [[#Damigos--2020|Damigos et al. 2020]] ). Sound implementation of labelling programmes requires appropriate calculation methodology and tools, training and public awareness ( [[#Liang%20Wong--2017|Liang Wong and Krüger 2017]] ). In systems where manufacturers self-report performance of their products, there tends to be misreporting and skewed energy efficiency labelling ( [[#Goeschl--2019|Goeschl 2019]] ).

A new form of information programmes are financial accounting standards as frameworks to encourage or require companies to disclose how the transition risks from shifting to a low-carbon economy and physical climate change impacts may affect their business or asset values (Chapter 15). The most prominent such standard was issued in 2017 by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures. It has found rapid uptake among regulators and investors ( [[#O’Dwyer--2020|O’Dwyer and Unerman 2020]] ).

Traditionally, corporate reporting has treated climate risks in a highly varied and often minimal way ( [[#Foerster--2017|Foerster et al. 2017]] ). Disclosure of climate-related risks creates incentives for companies to improve their carbon and climate change exposure, and ultimately regulatory standards for climate risk ( [[#Eccles--2018|Eccles and Krzus 2018]] ). Disclosure can also reinforce calls for divestment in fossil fuel assets predominantly promoted by civil society organisations ( [[#Ayling--2017|Ayling and Gunningham 2017]] ), raising moral principles and arguments about the financial risks inherent in fossil fuel investments ( [[#Green--2018|Green 2018]] ; [[#Blondeel--2019|Blondeel et al. 2019]] ).

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==== 13.6.5.3 Public Procurement and Investment ====

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National, sub-national and local governments determine many aspects of infrastructure planning, fund investment in areas such as energy, transport and the built environment, and purchase goods and services, including for government administration and military provisioning.

Public procurement rules usually mandate cost effectiveness but only in some cases allow or mandate climate change consideration in public purchasing, for example in EU public purchasing guidelines ( [[#Martinez%20Romera--2017|Martinez Romera and Caranta 2017]] ). Green procurement for buildings has been undertaken in Malaysia ( [[#Bohari--2017|Bohari et al. 2017]] ). a paper cites Taiwan (province of China) green public procurement law, which has contributed to reduced emissions intensity ( [[#Tsai--2017|Tsai 2017]] ). In practice, awareness and knowledge of ‘green’ public procurement techniques and procedures is decisive for climate-friendly procurement ( [[#Testa--2016|Testa et al. 2016]] ). Experiences in low-carbon infrastructure procurement point to procedures being tailored to concerns about competition, transaction costs and innovation ( [[#Kadefors--2020|Kadefors et al. 2020]] ).

Infrastructure investment decisions lock-in high or low emissions trajectories over long periods. Low-emissions infrastructure can enable or increase productivity of private low-carbon investments ( [[#Jaumotte--2021|Jaumotte et al. 2021]] ) and is typically only a little more expensive over its lifetime, but faces additional barriers including higher upfront costs, lack of pricing of externalities, or lack of information or aversion to novel products ( [[#Granoff--2016|Granoff et al. 2016]] ). In low-income developing countries, where infrastructure has historically lagged developed countries, some of these hurdles can be exacerbated by overall more difficult conditions for public investment ( [[#Gurara--2018|Gurara et al. 2018]] ).

Governments can also promote low-emissions investments through public-private partnerships and government owned ‘green banks’ that provide loans on commercial or concessional basis for environmentally friendly private sector investments ( [[#David--2019|David and Venkatachalam 2019]] ; [[#Ziolo--2019|Ziolo et al. 2019]] ). Public funding or financial guarantees such as contracts-for-difference can alleviate financial risk in the early stages of technology deployment, creating pathways to commercial viability ( [[#Bataille--2020|Bataille 2020]] ).

Government provision can also play an important role in economic stimulus programs, including as implemented in response to the pandemic of 2020–2021. Such programmes can support low-emissions infrastructure and equipment, and industrial or business development ( [[#Elkerbout--2020|Elkerbout et al. 2020]] ; [[#Hainsch--2020|Hainsch et al. 2020]] ; [[#Barbier--2020|Barbier 2020]] ; [[#Hepburn--2020|Hepburn et al. 2020]] ).

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==== 13.6.5.4 Voluntary Agreements ====

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Voluntary Agreements result from negotiations between governments and industrial sectors that commit to achieve agreed goals ( [[#Mundaca--2016|Mundaca and Markandya 2016]] ). When used as part of a broader policy framework, they can enhance the cost effectiveness of individual firms in attaining emission reductions while pricing or regulations drive participation in the agreement ( [[#Dawson--2008|Dawson and Segerson 2008]] ).

Public voluntary programmes, where a government regulator develops programs to which industries and firms may choose to participate on a voluntary basis, have been implemented in numerous countries. For example, the United States Environmental Protection Agency introduced numerous voluntary programmes with industry to offer technical support in promoting energy efficiency and emissions reductions, among other initiatives ( [[#EPA--2017|EPA 2017]] ). a European example is the EU Ecolabel Award programme (European Commission 2020b). Agreements for industrial energy efficiency in Europe ( [[#Cornelis--2019|Cornelis 2019]] ) and Japan ( [[#Wakabayashi--2016|Wakabayashi and Arimura 2016]] ) have been particularly effective in addressing information barriers and for smaller companies. The International Civil Aviation Organization’s CORSIA scheme ( [[#Prussi--2021|Prussi et al. 2021]] ) is an example of an international industry-based public voluntary programme.

Voluntary agreements are often implemented in conjunction with economic or regulatory instruments, and sometimes are used to gain insights ahead of implementation of regulatory standards, as in the case of energy efficiency PVPs in South Korea ( [[#Seok--2021|Seok et al. 2021]] ). In some cases, industries use voluntary agreements as partial fulfilment of a regulation ( [[#Rezessy--2011|Rezessy and Bertoldi 2011]] ; [[#Langpap--2015|Langpap 2015]] ). For example, the Netherlands have permitted participating industries to be exempt from certain energy taxes and emissions regulations ( [[#Veum--2018|Veum 2018]] ).

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