Editing IPCC:AR6/WGIII/Chapter-4 (section)

== 4.4 How to Shift Development Pathways and Accelerate the Pace and Scale of Mitigation ==

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=== 4.4.1 Approaches, Enabling Conditions and Examples ===

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==== 4.4.1.1 Framing the Problem ====

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What have we learned so far? As highlighted above, despite 30 years of UNFCCC and growing contributions by non-state actors, the emissions gap keeps growing (Sections 4.2.2 and 4.2.3). Mitigation conceived as incremental change is not enough. Meeting ambitious mitigation goals entails rapid, non-marginal changes in production and consumption patterns (Sections 4.2.4 and 4.2.5). Taking another approach, we have seen in [[#4.3|Section 4.3]] that shifting development pathways broadens the scope for mitigation (Sections 4.3.1 and 4.3.2) and offers more opportunities than mitigation alone to combine mitigation with the realisation of other SDGs ( [[#4.3.1|Section 4.3.1]] and Cross-Chapter Box 5 in this chapter).

A practical way forward is to combine shifting development pathways and accelerating mitigation ( ''medium evidence'' , ''high agreement'' ). This means introducing multi-objective policy packages and sequences with climate and development components that both target mitigation directly and create the conditions for shifts in development pathways that will help accelerate further mitigation down the line, and meet other development objectives. Since development pathways result from myriad decisions from multiple actors ( [[#4.3.1|Section 4.3.1]] ), coordination across countries and with non-state actors is essential.

The literature does not provide a handbook on how to accomplish the above. However, analysis of past experience as well as understanding of how societies function yield insights that the present section aims at presenting. Human history has seen multiple transformation of economies due to path-breaking innovations ( [[#Michaelowa--2018|Michaelowa et al. 2018]] ), like the transformation of the energy system from traditional biomass to fossil fuels or from steam to electricity ( [[#Fouquet--2010|Fouquet 2010]] , 2016a; [[#Sovacool--2016|Sovacool 2016]] ). [[#Fouquet--2016b|Fouquet (2016b)]] and [[#Smil--2016|Smil (2016)]] argue that even the most rapid global transformations have taken several decades. Enabling transformational change implies to create now the conditions that lead to that transformation ( [[#Díaz--2019|Díaz et al. 2019]] ). The starting point is that there is no single factor determining such a transformation. Rather a range of enabling conditions can combine in a co-evolutionary process. Amongst the conditions that have been cited in the literature are higher levels of innovation, multilevel governance, transformative policy regimes or profound behavioural transformation ( [[#Rockström--2017|Rockström et al. 2017]] ; [[#IPCC--2018a|IPCC 2018a]] ; [[#Geels--2018|Geels et al. 2018]] ; [[#Kriegler--2018|Kriegler et al. 2018]] ). It might be possible to put in place some of the above conditions rapidly, while others may take longer, thereby requiring an early start.

The present chapter uses the set of enabling conditions identified in the IPCC SR1.5 report, namely policy, governance and institutional capacity, finance, behaviour and lifestyles and innovation and technology ( [[#de%20Coninck--2018|de Coninck et al. 2018]] ). As Figure 4.8 illustrates, ''public policies'' are required to foster both accelerating mitigation and shifting development pathways. They are also vital to guide and provide the other enabling conditions (compare Table 4.12). Improved governance and enhanced institutional capacity facilitate the adoption of policies that accelerate mitigation and shift development pathways, with the potential to achieve multiple mitigation and development objectives. Finance is required both to accelerate mitigation and to shift development pathways. [[IPCC:Wg3:Chapter:Chapter-15|Chapter 15]] argues that near term actions to shift the financial system over the next decade (2021–2030) are critically important and feasible, and that the immediate post-COVID recovery opens up opportunities to scale up financing from billions to trillions ( [[#Mawdsley--2018|Mawdsley 2018]] ) ( [[IPCC:Wg3:Chapter:Chapter-15#15.6.7|Section 15.6.7]] ). As discussed in [[#4.2.5|Section 4.2.5]] , accelerated mitigation pathways encompass both rapid deployment of new technologies such as CCS or electric vehicles, as well as changes in consumption patterns: rapid deployment of mitigation ''technology'' and ''behaviour change'' are thus two enabling conditions to accelerated mitigation. Dynamics of deployment of technologies are relatively well known, pointing to specific, short-term action to accelerate innovation and deployment (Cross-Chapter Box 12 in Chapter 16), whereas dynamics of collective behaviour change is less well understood. Arguably, the latter also facilitates shifting development pathways.

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[[File:79b6820e113b1c481b01733e9e221077 IPCC_AR6_WGIII_Figure_4_8.png]]

'''Figure 4.8 | Enabling conditions for accelerating mitigation and shifting development pathways towards''' '''sustainability.'''

Individual enabling conditions are discussed at length in [[IPCC:Wg3:Chapter:Chapter-5|Chapter 5]] (behaviour change), 13 (policies, governance and institutional capacity), 15 (finance) and 16 (innovation). The purpose of the discussion below is to draw operational implications from these chapters for action, taking into account the focus of the present Chapter on action at the national level in the near- and mid-term, and its special emphasis on shifting development pathways in addition to accelerated mitigation.

The rest of the Section is organised as follows. Policy packages that combine climate and development policies are first discussed ( [[#4.4.1.2|Section 4.4.1.2]] ). The next sections are dedicated to the conditions that facilitate shifts in development pathways and accelerated mitigation: governance and institutions ( [[#4.4.1.3|Section 4.4.1.3]] ), financial resources ( [[#4.4.1.4|Section 4.4.1.4]] ), behaviour change ( [[#4.4.1.5|Section 4.4.1.5]] ) and innovation ( [[#4.4.1.6|Section 4.4.1.6]] ). Four examples of how climate and development policies can be combined to shift pathways and accelerate mitigation are then presented (Sections 4.4.1.7, 4.4.1.8, 4.4.1.9 and 4.4.1.10). [[#4.4.2|Section 4.4.2]] focuses specifically on how shifts in development pathways can deliver both mitigation and adaptation. Finally, [[#4.4.3|Section 4.4.3]] discusses risks and uncertainties associated with combining shifting development pathways and accelerating mitigation.

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==== 4.4.1.2 Policy Packages That Include Climate and Development Policies ====

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Although many transformations in the past have been driven by the emergence and diffusion of an innovative technology, policy intervention was frequent, especially in the more rapid ones ( [[#Michaelowa--2018|Michaelowa et al. 2018]] ; [[#Grubb--2021|Grubb et al. 2021]] ). Likewise, it is not expected that spontaneous behaviour change or market evolution alone yield the type of transformations outlined in the accelerated mitigation pathways described in [[#4.2.5|Section 4.2.5]] , or in the shifts in development pathways described in [[#4.3.3|Section 4.3.3]] . On the contrary, stringent temperature targets imply bold policies in the short term ( [[#Rockström--2017|Rockström et al. 2017]] ; [[#Kriegler--2018|Kriegler et al. 2018]] ) to enforce effective existing policy instruments and regulations, as well as to reform or remove harmful existing policies and subsidies ( [[#Díaz--2019|Díaz et al. 2019]] ).

Policy integration, addressing multiple objectives, is an essential component of shifting development pathways and accelerating mitigation ( ''robust evidence'' , ''high agreement'' ). A shift in development pathways that fosters accelerated mitigation may best be achieved through integrated actions that comprise policies in support of the broader SDG agenda, based on country-specific priorities (Sections 4.3.2, 13.8 and 13.9). These may include for example, fiscal policies, or integrating industrial ( [[#Nilsson--2021|Nilsson et al. 2021]] ) and energy policies ( [[#Fragkos--2021|Fragkos et al. 2021]] ) with climate policies. Similarly, sectoral transitions that aspire to shifting development pathways towards sustainability often have multiple objectives, and deploy a diverse mix or package of policies and institutional measures (Cross-Chapter Box 5).

Because low-carbon transitions are political processes, analyses are needed ''of'' policy as well as ''for'' policy ( [[IPCC:Wg3:Chapter:Chapter-13#13.6|Section 13.6]] ). Political scientists have developed a number of theoretical models that both ''explain'' policy-making processes and provide useful insights for ''influencing'' those processes. Case studies of successes and failures in sustainable development and mitigation offer equally important insights. Both theoretical and empirical analysis reinforce the argument that single policy instruments are not sufficient ( ''robust evidence'' , ''high agreement'' ). Policymakers might rather mobilise a range of policies, such as financial instruments (taxes, subsidies, grants, loans), regulatory instruments (standards, laws, performance targets) and processual instruments (demonstration projects, network management, public debates, consultations, foresight exercises, roadmaps) ( [[#Voß--2007|Voß et al. 2007]] ). Policies can be designed to focus on limiting or phasing out high-carbon technology. The appropriate mix is likely to vary between countries and domains, depending on political cultures and stakeholder configurations ( [[#Rogge--2016|Rogge and Reichardt 2016]] ), but is likely to include a combination of: (i) standards, nudges and information to encourage low-carbon technology adoption and behavioural change; (ii) economic incentives to reward low-carbon investments; (iii) supply-side policy instruments including for fossil fuel production (to complement demand-side climate policies) and (iv) innovation support and strategic investment to encourage systemic change ( [[#Grubb--2014|Grubb 2014]] ). These approaches can be mutually reinforcing. For example, carbon pricing can incentivise low-carbon innovation, while targeted support for emerging niche technologies can make them more competitive encourage their diffusion and ultimately facilitate a higher level of carbon pricing. Similarly, the success of feed-in tariffs in Germany only worked as well as it did because it formed part of a broader policy mix including ‘supply-push’ mechanisms such as subsidies for research and ‘systemic measures’ such as collaborative research projects and systems of knowledge exchange ( [[#Rogge--2015|Rogge et al. 2015]] ).

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==== 4.4.1.3 Governance and Institutional Capacity ====

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Governance for climate mitigation and shifting development pathways is enhanced when tailored to national and local contexts. Improved institutions and governance enable ambitious climate action and help bridge implementation gaps ( ''medium evidence'' , ''high agreement'' ). Improving institutions involve a broad range of stakeholders and multiple regional and temporal scales. It necessitates a credible and trusted process for reconciling perspectives and balancing potential side-effects, managing winners and losers and adopting compensatory measures to ensure an inclusive and just transition ( [[#Newell--2013|Newell and Mulvaney 2013]] ; [[#Miller--2014|Miller and Richter 2014]] ; [[#Gambhir--2018|Gambhir et al. 2018]] ; [[#Diffenbaugh--2019|Diffenbaugh and Burke 2019]] ), managing the risk of inequitable or non-representative power dynamics and avoiding regulatory capture by special interests ( [[#Helsinki%20Design%20Lab--2011|Helsinki Design Lab 2011]] ; [[#Boulle--2015|Boulle et al. 2015]] ; [[#Kahane--2012|Kahane 2012]] ).

Long experience of political management of change demonstrates that managing such risks is not easy, and requires sufficiently strong and competent institutions ( [[#Stiglitz--1998|Stiglitz 1998]] ). For example, shift away from fossil fuel-based energy economy could significantly disrupt the status quo, leading to a stranding of financial and capital assets and shifting of political-economic power. Ensuring the decision-making process is not unduly influenced by actors with much to lose is key to managing a transformation. Effective governance, as noted in Chapter 13, requires establishing strategic direction, coordination of policy responses, and mediation among divergent interests. Among varieties of climate governance, which institutions emerge is path-dependent, based on the interplay of national political institutions, international drivers, and bureaucratic structures ( [[#Dubash--2021|Dubash 2021]] ). Focused national climate institutions to address these challenges are more likely to emerge, persist and be effective when they are consistent with a framing of climate change that has broad national political support ( ''medium evidence'' , ''medium agreement'' ) (Sections 4.5, 13.2 and 13.5).

Innovative governance approaches can help meet these challenges ( [[#Clark--2018|Clark et al. 2018]] ; [[#Díaz--2019|Díaz et al. 2019]] ). ''Enabling multilevel governance'' – i.e., better alignment across governance scales – and coordination of international organisations and national governments can help accelerate a transition to sustainable development and deep decarbonisation ( [[#Tait--2017|Tait and Euston-Brown 2017]] ; [[#Michaelowa--2017|Michaelowa and Michaelowa 2017]] ; [[#Ringel--2017|Ringel 2017]] ; [[#Revi--2017|Revi 2017]] ; [[#Cheshmehzangi--2016|Cheshmehzangi 2016]] ; [[#IPCC--2018a|IPCC 2018a]] ). ''Participatory and inclusive governance'' – partnerships between state and non-state actors, and concerted effort across different stakeholders are crucial in supporting acceleration ( [[#Burch--2014|Burch et al. 2014]] ; [[#Hering--2014|Hering et al. 2014]] ; [[#Roberts--2016|Roberts 2016]] ; [[#Figueres--2017|Figueres et al. 2017]] ; [[#Clark--2018|Clark et al. 2018]] ; [[#Leal%20Filho--2018|Leal Filho et al. 2018]] ; [[#Lee--2018|Lee et al. 2018]] ). So do ''partnerships through transnational climate governance initiatives'' , which coordinate nation states and non-state actors on an international scale ( [[#Hsu--2018|Hsu et al. 2018]] ). Although they are unlikely to close the gap of the insufficient mitigation effort of national governments ( [[#Michaelowa--2017|Michaelowa and Michaelowa 2017]] ) (Section 4.2.3), they help building confidence in governments concerning climate policy and push for more ambitious national goals ( [[#UNEP--2018b|UNEP 2018b]] ).

Meeting these challenges also requires enhanced institutional capacity and enhanced institutional mechanisms to strengthen the coordination between multiple actors, improve complementarities and synergies between multiple objectives ( [[#Rasul--2016|Rasul 2016]] ; [[#Ringel--2017|Ringel 2017]] ; [[#Liu--2018|Liu et al. 2018]] ) and pursue climate action and other development objectives in an integrated and coherent way ( [[#Von%20Stechow--2016|Von Stechow et al. 2016]] ; [[#McCollum--2018|McCollum et al. 2018]] ; [[#Rogelj--2018b|Rogelj et al. 2018b]] ; [[#Roy--2018|Roy et al. 2018]] ; [[#Fuso%20Nerini--2019|Fuso Nerini et al. 2019]] ), particularly in developing countries (Adenle et al. 2017; [[#Rosenbloom--2017|Rosenbloom 2017]] ). Institutional capacities to be strengthened include vertical collaboration and interaction within nation states and horizontal collaboration (e.g., transnational city networks) for the development and implementation of plans, regulations and policies. More specifically capacities include: capacity for knowledge harnessing and integration (from multiple perspectives); for integrated policy design and implementation ( [[#Scott--2017|Scott 2017]] ); for long-term planning (Lecocq et al. 2021) for monitoring and review process; for coordinating multi-actor processes to create synergies and avoid trade-offs. As a result, institutions that enable and improve human capacities and capabilities are a major driver of transformation. To this extent, promoting education, health care and social safety, also are instrumental to undertake climate change mitigation and cope with environmental problems ( [[#Winkler--2007|Winkler et al. 2007]] ; [[#Sachs--2019|Sachs et al. 2019]] ). Given that strengthening institutions may be a long-term endeavour, it needs attention in the near term.

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==== 4.4.1.4 Channelling Financial Resources ====

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Accelerated mitigation and shifting development pathways necessitate both redirecting existing financial flows from high- to low-emissions technologies and systems and providing additional resources ( ''robust evidence'' , ''high agreement'' ). An example is changes in investments from fossil fuels to renewable energy, with pressures to disinvest in the former while increasing levels of ‘green finance’ (Sections 6.7.4 and 15.5). While some lower-carbon technologies have become competitive (Sections 1.4.3 and 2.5), support remains needed for the low-emissions options have higher costs per unit of service provided than high-emission ones. Lack of financial resources is identified as a major barrier to the implementation of accelerated mitigation and of shifts in development pathways. Overcoming this obstacle has two major components. One relates to private capital. The other to public finance.

There is substantial amount of research on the redirection of private financial flows towards low-carbon investment and the role of financial regulators and central banks, as detailed in Chapter 15. Financial systems are an indispensable element of a systemic transition ( [[#Fankhauser--2016|Fankhauser et al. 2016]] ; [[#Naidoo--2020|Naidoo 2020]] ). Policy frameworks can redirect financial resources towards low-emission assets and services ( [[#UNEP--2015|UNEP 2015]] ), mainstreaming climate finance within financial and banking system regulation, and reducing transaction costs for bankable mitigation technology projects ( [[#Mundaca--2013|Mundaca et al. 2013]] ; [[#Brunner--2014|Brunner and Enting 2014]] ; [[#Yeo--2019|Yeo 2019]] ). Shifts in the financial system to finance climate mitigation and other SDGs can be achieved by aligning incentives and investments with multiple objectives ( [[#UNEP%20Inquiry--2016|UNEP Inquiry 2016]] ).

Different approaches have been explored to improve such alignment ( [[IPCC:Wg3:Chapter:Chapter-15#15.6|Section 15.6]] ), from national credit policies to directly green mainstream financial regulations (e.g., through modifications in the Basel rules for banks). For all approaches, an essential precondition is to assess and monitor the contribution of financial flows to climate and sustainability goals, with better metrics that clearly link with financial activity ( [[#Chenet--2019|Chenet et al. 2019]] ). Enabling the alignment of investment decision-making with achieving climate and broader sustainability goals includes acknowledgment and disclosure of climate-change related risk and of risks associated with mitigation in financial portfolios. Current disclosures remain far from the scale the markets need to channel investment to sustainable and resilient solutions ( [[#UNEP%20-%20Finance%20Initiative--2020|UNEP - Finance Initiative 2020]] ; [[#Clark--2018|Clark et al. 2018]] ; [[#Task%20Force%20on%20Climate-Related%20Financial%20Disclosures--2019|Task Force on Climate-Related Financial Disclosures 2019]] ; [[#IPCC--2018b|IPCC 2018b]] ). Disclosure, however, is not enough (Ameli et al. 2020). In addition, climate targets can be translated into investment roadmaps and financing needs for financial institutions, both at national and international level. Financing needs are usable for financial institutions, to inform portfolio allocation decisions and financing priorities ( [[#Chenet--2019|Chenet et al. 2019]] ). At the international level, for example, technology roadmaps for key sectors can be translated into investment roadmaps and financing needs, as shown by existing experiences in energy and industrial sectors ( [[#IEA--2015|IEA 2015]] ; [[#IEA%20and%20WBSCD--2018|IEA and WBSCD 2018]] ; [[#Chenet--2019|Chenet et al. 2019]] ).

The transition from traditional public climate finance interventions to the market-based support of climate mitigation ( [[#Bodnar--2018|Bodnar et al. 2018]] ) demands innovative forms of financial cooperation and innovative financing mechanisms to help de-risk low-emission investments and support new business models. These financial innovations may involve sub-national actors like cities and regional governments in raising finance to achieve their commitments ( [[#Cartwright--2015|Cartwright 2015]] ; [[#CCFLA--2017|CCFLA 2017]] ). Moreover, public-private partnerships have proved to be an important vehicle for financing investments to meet the SDGs, including economic instruments for financing conservation ( [[#Sovacool--2013|Sovacool 2013]] ; [[#Díaz--2019|Díaz et al. 2019]] ).

Overall, early action is needed to overcome barriers and to adjust the existing incentive system to align national development strategies with climate and sustainable development goals in the medium-term. [[#Steckel--2017|Steckel et al. (2017)]] conclude that climate finance could become a central pillar of sustainable development by reconciling the global goal of cost-efficient mitigation with national policy priorities. Without a more rapid, scaled redeployment of financing, in development trajectories that hinder the realisation of the global goals will be locked in ( [[#Zadek--2016|Zadek and Robins 2016]] ). Investment might be designed to avoid trading off the Paris goals against other SDGs, as well as those that simultaneously reduce poverty, inequality, and emissions ( [[#Fuso%20Nerini--2019|Fuso Nerini et al. 2019]] ).

At the national level, it is also essential to create public fiscal space for actions promoting the SDG agenda and thereby broadening the scope of mitigation ( ''medium evidence'' , ''medium agreement'' ). To do so, pricing carbon – either through tax payments based on the level of emissions or cap-and-trade systems that limit total allowable emissions – is an efficient means of discouraging carbon emissions throughout an economy (both in consumption and production) while simultaneously encouraging a switch to non-carbon energy sources and generating revenues for prioritised actions ( [[IPCC:Wg3:Chapter:Chapter-13#13.6.3|Section 13.6.3]] ). Regarding to levels, the High-Level Commission on Carbon Prices concluded that ‘carbon-price level consistent with achieving the Paris temperature target is at least USD40–80 tCO 2 –1 by 2020 and USD50–100 tCO 2 –1 by 2030, provided a supportive policy environment is in place’ ( [[#CPLC--2017|CPLC 2017]] ; [[#Wall%20Street%20Journal--2019|Wall Street Journal 2019]] ). National level models yield median carbon values of carbon values of USD733 tCO 2 –1 in 2050 along accelerated mitigation pathways ( [[#4.2.6|Section 4.2.6]] ), while global models find a median value of USD578 tCO 2 –1 for pathways that reach net zero CO 2 between 2045 and 2055 [interquartile range USD405–708] ( [[IPCC:Wg3:Chapter:Chapter-3#3.6.1|Section 3.6.1]] ).

Carbon pricing, however, is designed to reduce its fiscal base. Fiscal space may therefore also need to stem from other sources, although fiscal reforms are complex endeavours ( [[#4.4.1.8|Section 4.4.1.8]] ). For countries at lower income levels, foreign aid can make an important contribution to the same agenda ( [[#Kharas--2019|Kharas and McArthur 2019]] ). It may also be noted that, according to estimates at the global level, military spending amounted to USD1.748 trillion in 2012 (the last year with data), a figure that corresponded to 2.3% of GDP, 55% of government spending in education, and was 13 times the level of net ODA ( [[#World%20Bank--2020|World Bank 2020]] ; [[#SIPRI--2020|SIPRI 2020]] ). Given this, moderate reductions in military spending (which may involve conflict resolution and cross-country agreements on arms limitations) could free up considerable resources for the SDG agenda, both in the countries that reduce spending and in the form of ODA. The resolution of conflicts within and between countries before they become violent would also reduce the need for public and private spending repairing human and physical damage. The fact that civil wars are common in the countries that face the severest SDG challenges underscores the importance of this issue ( [[#Collier--2007|Collier 2007]] , pp.17–37).

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==== 4.4.1.5 Changing Behaviour and Lifestyles ====

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Changes in behaviour and lifestyles are important to accelerated mitigation. Most global mitigation pathways that limit warming to 2°C (&gt;67%) or lower assume substantial behavioural and societal change and low-carbon lifestyles ( [[#de%20Coninck--2018|de Coninck et al. 2018]] ; [[#IPCC--2018a|IPCC 2018a]] ; [[#Luderer--2018a|Luderer et al. 2018a]] ) (see also [[IPCC:Wg3:Chapter:Chapter-3#3.3.1|Section 3.3.1]] in this report; and Table 4.9 and Figure 4.3 in IPCC SR1.5). [[IPCC:Wg3:Chapter:Chapter-5|Chapter 5]] concludes that behavioural changes within transition pathways offer Gigaton-scale CO 2 savings potential at the global level, an often overlooked strategy in traditional mitigation scenarios.

Individual motivation and capacity are impacted by different factors that go beyond traditional social, demographic and economic predictors. However, it is unclear to what extent behavioural factors (i.e., cognitive, motivational and contextual aspects) are taken into account in policy design ( [[#Dubois--2019|Dubois et al. 2019]] ; [[#Mundaca--2019|Mundaca et al. 2019]] ). In fact, while economic policies play a significant role in influencing people’s decisions and behaviour, many drivers of human behaviour and values work largely outside the market system ( [[#Winkler--2015|Winkler et al. 2015]] ; [[#Díaz--2019|Díaz et al. 2019]] ) as actors in society, particularly individuals, do not respond in an economically ‘rational’ manner based on perfect-information cost-benefit analyses ( [[#Runge--1984|Runge 1984]] ; [[#Shiller--2019|Shiller 2019]] ). Rather, compelling narratives can drive individuals to adopt new norms and policies. And norms can be more quickly and more robustly shifted by proposing and framing policies designed with awareness of how framings interact with individual cognitive tendencies ( [[#van%20der%20Linden--2015|van der Linden et al. 2015]] ). Transformative policies are thus much more likely to be successfully adopted and lead to long-term behavioural change if designed in accordance with principles of cognitive psychology ( [[#van%20der%20Linden--2015|van der Linden et al. 2015]] ), and with the deep understanding of decision-making offered by behavioural science ( [[#UNEP--2017b|UNEP 2017b]] ). Similarly, given that present bias – being motivated by costs and benefits that take effect immediately than those delivered later – significantly shapes behaviour, schemes that bring forward distant costs into the present or that upfront incentives have proved to be more effective ( [[#Zauberman--2009|Zauberman et al. 2009]] ; [[#van%20den%20Broek--2017|van den Broek et al. 2017]] ; [[#Safarzyńska--2018|Safarzyńska 2018]] ). Overall, transformational strategies that align mitigation with subjective life satisfaction, and build societal support by positive discourses about economic, social, and cultural benefits of low-carbon innovations, promises far more success than targeting mitigation alone ( [[#WBGU--2011|WBGU 2011]] ; [[#Asensio,%C2%A0O.I.--2016|Asensio and Delmas 2016]] ; [[#Geels--2017|Geels et al. 2017]] ).

Climate actions are related to knowledge but even strongly to motivational factors ( [[#Hornsey--2016|Hornsey et al. 2016]] ; [[#Bolderdijk--2013|Bolderdijk et al. 2013]] ; [[#Boomsma--2014|Boomsma and Steg 2014]] ), which explains the gap between awareness and action ( [[#Ünal--2018|Ünal et al. 2018]] ). Social influences, particularly from peers, affect people’s engagement in climate action ( [[#Schelly--2014|Schelly 2014]] ). Role models appear to have a solid basis in people’s everyday preferences ( [[#WBGU--2011|WBGU 2011]] ). Social norms can reinforce individuals’ underlying motivations and be effective in encouraging sustainable consumption patterns, as many examples offered by behavioural science illustrate. Social networks also influence and spread behaviours ( [[#Service--2014|Service et al. 2014]] ; [[#Clayton--2015|Clayton et al. 2015]] ; [[#Farrow--2017|Farrow et al. 2017]] ; [[#Shah--2019|Shah et al. 2019]] ). These social influences can be harnessed by climate policy.

Collective action by individuals as part of formal social movements or informal lifestyle movements underpins system change ( ''robust evidence'' , ''high agreement'' ) (Sections 5.4 and 5.5). Organisations are comprised of individuals, but also become actors in their own right. Recent literature has considered the role of coalitions and social movements in energy democracy and energy transitions towards sustainability ( [[#Hess--2018|Hess 2018]] ). Other scholars have examined the role of women in redistributing power, both in the sense of energy transition and in terms of gender relations (Allen et al. 2019; [[#Routledge--2018|Routledge et al. 2018]] ). Mitigation and broader sustainable development policies that facilitate active participation by stakeholders can build trust, forge new social contracts, and contribute to a positive cycle building climate governance capacity ( [[IPCC:Wg3:Chapter:Chapter-5#5.2.3|Section 5.2.3]] ).

However, behavioural change not embedded in structural change will contribute little to climate change mitigation, suggesting that behavioural change is not only a function of individual agency but also depends on other enabling factors, such as the provision of infrastructure and institutions ( [[IPCC:Wg3:Chapter:Chapter-5#5.4|Section 5.4]] ). Successful shifts towards public transport, for example, involve technologies (buses, trams), infrastructure (light rail, dedicated bus lanes), regulations (operational licenses, performance contracts), institutions (new organisations, responsibilities, oversight), and high-enough density, which in turn depends on such choices as housing or planning policies ( [[#4.4.1.9|Section 4.4.1.9]] ).

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==== 4.4.1.6 Fostering Technological Innovation ====

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As outlined in [[#4.2.5|Section 4.2.5]] , rapid, large-scale deployment of improved low-carbon technology is a critical component of accelerated mitigation pathways. As part of its key role in technological change, R&amp;D can make a crucial contribution to accelerated mitigation up to 2030 and beyond, among other things by focusing on closing technology gaps that stand in the way of decarbonising today’s high emitting sectors. Such sectors include shipping, trucking, aviation and heavy industries like steel, cement and chemicals. More broadly, it is increasingly clear that digital changes are becoming a key driving force in societal transformation ( [[#Tegmark--2017|Tegmark 2017]] ). Digitalisation is not only an ‘instrument’ for resolving sustainability challenges, it is also a fundamental driver of disruptive, multiscalar change ( [[#Sachs--2019|Sachs et al. 2019]] ) that amounts to a shift in development pathway. Information and communication technologies, artificial intelligence, the internet of things, nanotechnologies, biotechnologies, robotics, are not usually categorised as climate technologies, but have a potential impact on GHG emissions ( [[#OECD--2017b|OECD 2017b]] ) (Cross-Chapter Box 11 in Chapter 16).

The direction of innovation matters ( ''robust evidence'' , ''high agreement'' ). The research community has called for more ‘responsible innovation’ ( [[#Pandza--2013|Pandza and Ellwood 2013]] ), ‘open innovation’ ( [[#Rauter--2019|Rauter et al. 2019]] ), ‘mission-oriented’ innovation ( [[#Mazzucato--2017|Mazzucato and Semieniuk 2017]] ), ‘holistic innovation’ ( [[#Chen--2018b|Chen et al. 2018b]] ), ‘next-generation innovation policy’ ( [[#Kuhlmann--2018|Kuhlmann and Rip 2018]] ) or ‘transformative innovation’ ( [[#Schot--2018|Schot and Steinmueller 2018]] ) so that innovation patterns and processes are commensurate to our growing sustainability challenges. There is a growing recognition that new forms of innovation can be harnessed and coupled to climate objectives ( [[#Fagerberg--2016|Fagerberg et al. 2016]] ; [[#Wang--2018|Wang et al. 2018]] ). As such, innovation and socio-technical change can be channelled to intensify mitigation via ‘deliberate acceleration’ ( [[#Roberts--2018a|Roberts et al. 2018a]] ) and ‘coalition building’ ( [[#Hess--2018|Hess 2018]] ).

Innovation goes beyond technology. For example, decarbonisation in sectors with long lived capital stock (such as heavy industry, buildings, transport infrastructure) entail technology, policy and financing innovations (Bataille 2020). Similarly, expanding the deployment of photovoltaics can draw upon policies that support specific technical innovations (e.g., to improve photovoltaics efficiency), or innovations in regulatory and market regimes (e.g., net-metering), to innovations in social organisation (e.g., community-ownership). System innovation is a core focus of the transitions literature ( [[#Grin--2010|Grin et al. 2010]] ; [[#Markard--2012|Markard et al. 2012]] ; [[#Geels--2017|Geels et al. 2017]] ). Accelerating low-carbon transitions not only involves a shift of system elements but also underlying routines and rules, and hence transitions shift the directionality of innovation. They hence concern the development of a new paradigm or regime that is more focused on solving sustainability challenges that cannot be solved within the dominant regime they substitute (Cross-Chapter Box 12 in Chapter 16).

Several studies have pointed at the important possible contributions of grassroots innovators for the start-up of sustainability transitions ( [[#Seyfang--2007|Seyfang and Smith 2007]] ; [[#Seyfang--2014|Seyfang et al. 2014]] ; [[#Smith--2016|Smith et al. 2016]] ). In particular, a range of studies have shown that users can play a variety of roles in promoting system innovation: shielding, nurturing (including learning, networking and visioning) and empowering the niches in relation to the dominant system and regime ( [[#Schot--2016|Schot et al. 2016]] ; [[#Randelli--2017|Randelli and Rocchi 2017]] ; [[#Meelen--2019|Meelen et al. 2019]] ). More fundamentally, innovation regimes can be led and guided by markets driven by monetisable profits (as much of private sector led technological innovation of patentable intellectual property), or prioritise social returns (e.g., innovation structures such as innovation prizes, public sector innovation, investments in human capital, and socially-beneficial intellectual property regimes). In both cases, public policies can play a key role by providing resources and favourable incentives ( [[#IEA--2020|IEA 2020]] ). [[IPCC:Wg3:Chapter:Chapter-16|Chapter 16]] provides more details on ways to foster innovation.

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==== 4.4.1.7 Example: Structural Change Provides a Way to Keep Jobs and Mitigate ====

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Developing countries have experienced a period of rapid economic growth in the past two decades. Patterns of growth have differed markedly across regions, with newly emerging East Asian economies building on transition to manufacturing – as China has done in the past – while Latin American countries tend to transition directly from primary sector to services ( [[#Rodrik--2016|Rodrik 2016]] ), and African countries tend to rely on productivity improvements in the primary sectors ( [[#Diao--2019|Diao et al. 2019]] ). Yet many countries still face the challenge of getting out of the ‘middle-income trap’ ( [[#Agénor,%C2%A0P.-R.R.%20and%C2%A0O.%20Canuto--2015|Agénor and Canuto 2015]] ), as labour-saving technological change and globalisation have limited options to develop via the manufacturing sector ( [[#Altenburg,%C2%A0T.%20and%C2%A0D.%20Rodrik--2017|Altenburg and Rodrik 2017]] ).

Looking ahead, several studies have illustrated how structural change towards sustainability could lead to reduced emissions intensity and higher mitigative capacity. In China, for example, the shift away from heavy industry (to light industry and services) has already been identified as the most important force limiting emissions growth ( [[#Guan--2018|Guan et al. 2018]] ), and as a major factor for future emissions ( [[#Kwok--2018|Kwok et al. 2018]] ).

Overall, Altenburg et al. (2017) argue that reallocation of capital and labour from low- to high-productivity sectors – in other words, structural change – remains a necessity, and that it is possible to combine it with reduced environmental footprint (including, but not limited to, mitigation). They argue that this dual challenge calls for structural transformation policies different from those implemented in the past, most importantly through a ‘systematic steering of investment behaviour in a socially agreed direction’ and encompassing policy coordination ( ''limited evidence'' , ''med'' ''ium agreement'' ).

In order to permit progress on their SDG agendas, it is essential that countries develop visions of their future decarbonised sectoral production structure, including its ability to generate growth in incomes, employment and foreign exchange earnings. as well as the related spatial distribution of production, employment, and housing. To this extent, governance and institutional capacity matter, such as availability of tools to support long-term planning. A sectoral structure that permits strong growth is essential given strong associations between growth in per-capita incomes and progress on most SDGs (including those related to poverty; health; education; and access to water, sanitation, electricity, and roads; but not income equality), in part due to the fact that higher incomes provide both households and governments with resources that at least in part would be used to promote SDGs ( [[#Gable--2015|Gable et al. 2015]] ).

The future viability of sectors will depend on the extent to which they can remain profitable while relying on lower-carbon energy. The challenge to identify alternative sectors of growth is particularly acute for countries that today depend on oil and natural gas for most of their foreign exchange and government revenues ( [[#Mirzoev--2020|Mirzoev et al. 2020]] ). Changes in economic structure will also have gender implications since the roles of men and women vary across sectors. For example, in many developing countries, sectors in which women play a relatively important role, including agriculture and unpaid household services like collection of water and fuel wood, may be negatively affected by climate change (Roy 2018). It may thus be important to take complementary actions to address the gender implications of changes in economic structure.

Given strong complementarities between policies discussed above, an integrated policy approach is crucial. For example, as suggested, the actions that influence the pace at which GHG emissions can be cut with political support may depend on taxation (including carbon taxes), investments in infrastructure, spending on R&amp;D, changes in income distribution (influenced by transfers), and communication. In this light, it is important to consider the demands that alternative policy packages put on government policy-making efficiency and credibility as well as the roles of other enabling conditions. In fact, plans to undertake major reforms may provide governments with impetus to accelerate the enhancement of their capacities as part of the preparations ( [[#Karapin--2016|Karapin 2016]] ; Withana 2016; [[#Jakob--2019|Jakob et al. 2019]] ).

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==== 4.4.1.8 Example: Embedding Carbon Finance in Broader Fiscal Reforms Offers a Way to Mitigate and Rethink the Social Contract ====

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In many countries, fiscal systems are currently under stress to provide resources for the implementation of development priorities, such as, for example, providing universal health coverage and other social services ( [[#Meheus--2017|Meheus and McIntyre 2017]] ) or sustainably funding pension systems in the context of aging populations ( [[#Asher,%C2%A0M.G.%20and%C2%A0A.S.%20Bali--2017|Asher and Bali 2017]] ; [[#Cruz-Martinez--2018|Cruz-Martinez 2018]] ). Overall, Baum et al. (2017) argue that low-income countries are likely not to have the fiscal space to undertake the investment entailed in reaching the SDGs. To create additional fiscal space, major options include improving tax recovery, reducing subsidies and levying additional taxes.

Mitigation offers an opportunity to create additional fiscal space, and thus to serve the objectives outlined above, by creating a new source of revenue for the government via carbon taxation or emissions permit auctioning and by reducing existing expenditures via reduction in subsidies to fossil-fuel. The 1991 tax reform in Sweden is an early example in which environmental taxation (including, but not limited to, fossil fuel taxation) was introduced as part of a package primarily aimed at lowering the marginal tax rates (more than 80% at the time), at reducing other taxes, while keeping most of the welfare state. To do so, the tax base was broadened, including through environmental and carbon taxation ( [[#Sterner--2007|Sterner 2007]] ). Once in place, the carbon tax rate was substantially ramped up over time, and its base broadened ( [[#Criqui--2019|Criqui et al. 2019]] ).

The future potential for using carbon taxation as a way to provide space for fiscal reform has been highlighted in the so-called ‘green fiscal reform’ literature ( [[#Vogt-Schilb--2019|Vogt-Schilb et al. 2019]] ). The potential is large, since only 13% of global GHG emissions were covered by carbon pricing schemes in 2019 ( [[#Watts--2019|Watts et al. 2019]] ) and since many countries price carbon negatively by subsidising fossil fuel use, thus generating effects that are the opposite of those that positive carbon prices hope to promote. In 2018, the global subsidy value amounted to USD427 billion, some 10 times the payment for carbon use ( [[#Watts--2019|Watts et al. 2019]] ). However, the size of the potential for creating fiscal space varies strongly across countries given differences in terms of current carbon prices and fuel subsidies.

The limited adoption of and political support for carbon pricing may be explained by the fact that most of the gains occur in the future and depend on actions across the globe, making them seem abstract and unpredictable, whereas the costs in the form of higher carbon prices are immediate ( [[#Karapin--2016|Karapin 2016]] ). Furthermore, the links between carbon pricing and emissions may not be clear to the public who, in addition, may not trust that the government will use budgetary savings according to stated plans. The latter may be due to various factors, including a history of limited government commitment and corruption (Withana 2016; [[#Chadwick--2017|Chadwick 2017]] ; [[#Maestre-Andrés--2019|Maestre-Andrés et al. 2019]] ).

The literature reports limited systematic evidence based on ex post analysis of the performance of carbon pricing – carbon taxes and greenhouse gas (GHG) emissions trading systems (ETSs) ( [[#Haites--2018|Haites 2018]] ). Performance assessment is complicated by the effect of other policies and exogenous factors. [[#Haites--2018|Haites (2018)]] suggests that since 2008, other policies have probably contributed more to emission reductions than carbon taxes, and most tax rates are too low to achieve mitigation objectives. Emissions under ETSs have declined, with the exception of four systems without emissions caps (ibid). Every jurisdiction with an ETS and/or carbon tax also has other policies that affect its GHG emissions.

To help policymakers overcome obstacles, research has reviewed the international experience from carbon pricing reforms. Elimination of fossil fuel subsidies, equivalent to the elimination of negative carbon prices, have been more successful when they have included complementary and transparent measures that enjoy popular support, accompanied by a strong communications component that explains the measures and stresses their benefits (Withana 2016; [[#Rentschler--2017|Rentschler and Bazilian 2017]] ; [[#Maestre-Andrés--2019|Maestre-Andrés et al. 2019]] ).

Part of the losses (and related calls for compensation or exemptions) due to carbon pricing are related to the fact that it hurts the competitiveness of sectors that face imports from countries with lower carbon prices, leading to ‘carbon leakage’ if carbon-intensive production (and related jobs) migrates from countries with relatively high carbon prices. Some research suggests that evidence that a border carbon tax (or adjustment), set on the basis of the carbon content of the import, including a downward adjustment on the basis of any carbon payments (taxes or other) already made before entry, could reduce carbon leakage while also raising additional revenue and encouraging carbon pricing in the exporting country (Withana 2016; [[#Cosbey--2019|Cosbey et al. 2019]] ).

The timing of carbon pricing reforms is also important: they are more likely to succeed if they exploit windows of opportunity provided by events that raise awareness of the costs of carbon emissions (like bouts of elevated local air pollution or reports about the role of emissions in causing global warming), as well as momentum from climate actions by other countries and international climate agreements ( [[#Karapin--2016|Karapin 2016]] ; Jakob et al.2019). It is also important to consider the level of international prices of carbon energy: when they are low, consumer resistance would be smaller since prices will remain relatively low, though the tax may become more visible when energy prices increase again. As part of ongoing efforts to accelerate mitigation, such tax hikes may be crucial to avoid a slow down in the shift to renewable energy sources (Withana 2016; [[#Rentschler--2017|Rentschler and Bazilian 2017]] ). In countries that export carbon energy, carbon taxation may run into additional resistance from producers.

There is also considerable literature providing insights on the political and social acceptability of carbon taxes, suggesting for example that political support may be boosted if the revenue is recycled to the tax payers or earmarked for areas with positive environmental effects (e.g., Bachus et al. (2019) for Belgium, and [[#Beiser-McGrath,%C2%A0L.F.%20and%C2%A0T.%20Bernauer--2019|Beiser-McGrath and Bernauer (2019)]] for Germany and the USA), as well as on the difficulties associated with political vagaries (and economic consequences thereof) associated with the introduction of such instruments ( [[#Pereira--2016|Pereira et al. 2016]] ). Similarly, ‘best practices’ have been drawn from past experience on fossil-fuel subsidy reforms ( [[#Rentschler--2017|Rentschler and Bazilian 2017]] ; [[#Sovacool--2017|Sovacool 2017]] ). Specific policies, however, depend on societal objectives, endowments, structure of production, employment, and trade, and institutional structure (including the functioning of markets and government capacity) ( [[#Kettner--2019|Kettner et al. 2019]] ). As noted in [[#4.2.6|Section 4.2.6]] , macroeconomic analysis finds that the overall economic implications of carbon pricing differ markedly depending on the way the proceeds from carbon pricing are used, and thus on the way the fiscal system is reformed, with potential for double dividend if the proceeds from the tax are used to repeal the most distortive taxes in the economy.

In the context of this section on development pathways, it is worth emphasising that potential revenues drawn from the climate mitigation component of the fiscal reform varies strongly with the context, and may not be sufficient to address the other objectives pursued. Even if the carbon price is high, the revenue it generates may be moderate as a share of GDP and eventually it will be zero if emissions are eliminated. For example, [[#Jakob--2016|Jakob et al. (2016)]] find that the carbon pricing revenues that most countries in Sub-Saharan Africa could expect to generate only would meet a small part of their infrastructure spending needs. In Sweden, the country with the highest carbon tax rate in the world, the tax has not been a significant part of total tax revenues. Moreover, emissions from sectors covered by the tax have shrunk and, as a result, the revenues from the tax, as a share of GDP, have also declined, from a peak of 0.93% in 2004, when the rate was USD109 per metric tonne of CO 2 , to 0.48% in 2018, when the rate had reached USD132 ( [[#Jonsson--2020|Jonsson et al. 2020]] ; [[#Statistics%20Sweden--2020|Statistics Sweden 2020]] ). This means that governments that want to avoid a decline in the GDP share for total tax revenues over time would have to raise the intake from other taxes. However, it is here important to note that domestic tax hikes are likely to involve trade-offs since, at the same time as the spending they fund may provide various benefits, they may also reduce the capacity of households and the private sector to consume and invest, something that may reduce growth over time and reduced resources for spending in support of human development ( [[#Lofgren--2013|Lofgren et al. 2013]] ). It is also worth emphasising that restructuring of the fiscal system amount to changes in the social contract of the society ( [[#Combet--2017|Combet and Hourcade 2017]] and 2014), and thus represents a major economic and social decision.

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==== 4.4.1.9 Example: Combining Housing Policies With Carbon Taxation Can Deliver Both Housing and Mitigation in the Transport Sector ====

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The spatial distribution of households and firms across urban and rural areas is a central characteristic of development pathways. Patterns of urbanisation, territorial development, and regional integration have wide-ranging implications for economic, social and environmental objectives ( [[#World%20Bank--2009|World Bank 2009]] ). Notably, choices regarding spatial forms of development have large-scale implications for demand for transportation and associated GHG emissions.

Exclusionary mechanisms such as decreasing accessibility and affordability of inner-urban neighbourhoods is a major cause of suburbanisation of low- to middle-income households (e.g., [[#Hochstenbach--2018|Hochstenbach and Musterd 2018]] ). Suburbanisation, in turn, is associated with higher transportation demand (Bento et al. 2005) and higher carbon footprints for households ( [[#Jones--2014|Jones and Kammen 2014]] ). Similarly, other studies find a significant positive link between housing prices and energy demand ( [[#Lampin--2013|Lampin et al. 2013]] ).

Reducing emissions from transport in cities through traditional climate policy instruments (e.g., through a carbon tax) is more difficult when inner-urban neighbourhoods are less accessible and less affordable, because exclusionary mechanisms act as a countervailing force to the rising transportation costs induced by the climate policy, pushing households outwards rather than inwards. Said differently, the costs of mitigating intra-city transportation emissions are higher when inner-urban housing prices are higher ( [[#Lampin--2013|Lampin et al. 2013]] ).

This suggests that policies making inner-urban neighbourhoods more accessible and more affordable can open up broader opportunities for suburban households to relocate in the face of increasing transportation costs. This is particularly important for low- and middle-income households, who spend a greater portion of their income on housing and transportation, and are more likely to be locked into locations that are distant from their jobs. Making inner-urban neighbourhoods more accessible and more affordable has the potential to reduce both the social costs (e.g., households feeling helpless in front of rising fuel prices) and the economic costs of mitigation policies – as a lower price of carbon is likely to achieve the same amount of emission reductions since households have more capacities to adjust.

Making inner-cities neighbourhoods more accessible and more affordable is a complex endeavour ( [[#Benner,%C2%A0C.%20and%C2%A0A.%20Karner--2016|Benner and Karner 2016]] ). At the same time, it is already a policy objective in its own right in many countries, independent of the climate mitigation motivation, for a range of social, health and economic reasons. Revenues derived from climate policies could provide additional resources to support such programs, as some climate policy already have provisions to use their revenues towards low-income groups ( [[#Karner--2018|Karner and Marcantonio 2018]] ). The mitigation benefits of keeping inner-cities more accessible and affordable for low- and middle-income households often remains out of, or is only emerging in the debates surrounding the planning of fast-developing cities in many developing countries ( [[#IADB--2012|IADB 2012]] ; [[#Grant--2015|Grant 2015]] ; [[#Khosla--2019|Khosla and Bhardwaj 2019]] ). Finally, from a political economy perspective, it is also interesting to note that (Bergquist et al. 2020) find higher support for climate policy packages in the USA when affordable housing programs are included.

In addition, investment in infrastructure is critical to the development of decarbonised economic structures that generate growth, employment, and universal access to a wide range of services that are central to the SDG agenda: transportation, water, sanitation, electricity, flood protection, and irrigation. For low- and middle-income countries, annual costs of reaching these goals by 2030 and putting their economies on a path toward decarbonisation may range between 2% and 8% of GDP, with the level depending on spending efficiency. Notably, these costs need not exceed those of more polluting alternatives ( [[#Rozenberg--2019|Rozenberg and Fay 2019]] ). For transportation, this involves a shift toward more public transportation (rail and bus), and decarbonised electricity for vehicles, combined with land-use policies that densify cities and reduce distances between homes and jobs. By influencing the spatial distribution of households and firms and the organisation of transportation, infrastructure has a strong bearing on GHG emissions and the costs of providing services to different populations. Depending on country context, the private sector may play a particularly important role in the financing of infrastructure ( [[#World%20Bank--2009|World Bank 2009]] ; [[#Klein--2015|Klein 2015]] ).

Many investments in infrastructure and sectoral capital stocks have long lifetimes. Given this, it may be important to make sure that today’s investments be fully decarbonised at the start or that they later can be converted to zero carbon. Today’s investments in electric vehicles in settings where electricity is produced with fossil fuels is an example of convertible investments – they will be decarbonised once electricity production has switched to renewable energies. For capital stocks that cannot be decarbonised, countries may face costs of decommissioning well before the end of their useful lifetimes, especially when it is needed to respect country commitments to future full decarbonisation.

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==== 4.4.1.10 Example: Changing Economic, Social and Spatial Patterns of Development of the Agriculture Sector Provide the Basis for Sustained Reductions in Emissions From Deforestation ====

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A growing literature assesses co-benefits of sectoral policies that lead to decarbonisation and simultaneously promote economic development, improve living standards, reduce inequality, and create job opportunities ( [[#Maroun--2012|Maroun and Schaeffer 2012]] ; Bataille et al. 2016b; [[#Pye--2016|Pye et al. 2016]] ; Bataille et al. 2018; [[#La%20Rovere--2018|La Rovere et al. 2018]] ; [[#Richter--2018|Richter et al. 2018]] ; [[#Waisman--2019|Waisman et al. 2019]] ). While this may be particularly challenging in developing countries, given large populations still lacking basic needs, previous development paths show that finding synergies in development and climate objectives in the AFOLU sector is possible. One example is Brazil, which has arguably shifted its development pathway to reduce emissions and make progress towards several SDGs, though progress is not linear. Over the past two decades, Brazil had made remarkable progress in implementing a sequence of policies across multiple sectors. This policy package simultaneously increased minimum wages of low income families, achieved universal energy access, and raised the quality of life and well-being for the large majority of the population ( [[#Da%20Silveira%20Bezerra--2017|Da Silveira Bezerra et al. 2017]] ; [[#Grottera--2017|Grottera et al. 2017]] , 2018; [[#La%20Rovere--2018|La Rovere et al. 2018]] ). This led to significant social benefits, reduction of income inequality and poverty eradication ( [[#Da%20Silveira%20Bezerra--2017|Da Silveira Bezerra et al. 2017]] ; [[#Grottera--2017|Grottera et al. 2017]] ), reflected in a decrease of the Gini coefficient and a rise in the human development index ( [[#La%20Rovere--2017|La Rovere 2017]] ).

Regulatory instruments were used to limit deforestation rates, together with implemented economic instruments that provided benefits to those protecting local ecosystems and enhancing land-based carbon sinks ( [[#Nunes--2017|Nunes et al. 2017]] ; [[#Bustamante--2018|Bustamante et al. 2018]] ; [[#Soterroni--2018|Soterroni et al. 2018]] , 2019). In parallel, public policies reinforced environmental regulation and command-and-control instruments to limit deforestation rates and implemented market-based mechanisms to provide benefits to those protecting local ecosystems and enhancing land-based carbon sinks ( [[#Sunderlin--2014|Sunderlin et al. 2014]] ; [[#Nunes--2017|Nunes et al. 2017]] ; [[#Hein--2018|Hein et al. 2018]] ; [[#Simonet--2019|Simonet et al. 2019]] ). The private sector, aligned with public policies and civil society, implemented the Amazon Soy Moratorium, a voluntary agreement that bans trading of soybeans from cropland associated with cleared Amazon rainforest and blacklists farmers using slave labour. This was achieved without undermining production of soybean commodities ( [[#Soterroni--2019|Soterroni et al. 2019]] ). As a result, between 2005 and 2012, the country halved its GHG emissions and reduced the rate of deforestation by 78% ( [[#INPE--2019a|INPE 2019a]] ,b). This example shows that development delivering well-being can be accompanied by significant mitigation. A long-term and strategic vision was important in guiding enabling policies and mechanisms.

In more recent years, some of these shifts in Brazil’s development pathways were undone. Political changes have redefined development priorities, with higher priority being given to agricultural development than climate change mitigation. The current administration has reduced the power of environmental agencies and forestry protection laws (including the forest code), while allowing the expansion of cropland to protected Amazon rainforest areas ( [[#Ferrante--2019|Ferrante and Fearnside 2019]] ; [[#Rochedo--2018|Rochedo et al. 2018]] ). As a result, in 2020, deforestation exceeded 11,000 km 2 , and reached the highest rate in the last 12 years ( [[#INPE--2020|INPE 2020]] ). The literature cautions that, if current policies and trends continue, the Amazon may reach an irreversible tipping point beyond which it will be impossible to remediate lost ecosystems and restore carbon sinks and indigenous people knowledge ( [[#Lovejoy--2018|Lovejoy and Nobre 2018]] ; [[#INPE--2019a|INPE 2019a]] ; [[#Nobre--2019|Nobre 2019]] ). In addition, fossil fuel subsidies and other fiscal support of increased exploitation of oil resources may create carbon lock-ins that further inhibit low-carbon investments ( [[#Lefèvre--2018|Lefèvre et al. 2018]] ).

Brazil’s progress in mitigation depended significantly on reduced deforestation in the past. If deforestation rates keep on rising, mitigation efforts would need to shift to the energy sector. However, according to [[#Rochedo--2018|Rochedo et al. (2018)]] , mitigation costs in the energy sector in Brazil are three times the costs of reducing deforestation and increasing land-based carbon sinks. Further mitigation strategies may depend on CCS in Brazil as elsewhere ( [[#Herreras%20Martínez--2015|Herreras Martínez et al. 2015]] ; [[#Nogueira%20de%20Oliveira--2016|Nogueira de Oliveira et al. 2016]] ), though the economic feasibility of deployment is not yet clear ( [[#4.2.5.4|Section 4.2.5.4]] ).

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=== 4.4.2 Adaptation, Development Pathways and Mitigation ===

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Mitigation actions are strongly linked to adaptation. These connections come about because mitigation actions can be adaptive (e.g., some agroforestry projects) but also through policy choices (e.g., climate finance is allocated among adaptation or mitigation projects) and even biophysical links (e.g., climate trajectories, themselves determined by mitigation, can influence the viability of adaptation projects). As development pathways shape the levers and enablers available to a society ( [[#4.3.1|Section 4.3.1]] , Figure 4.7), a broader set of enabling conditions also helps with adaptation ( ''medium evidence'' , ''h'' ''igh agreement'' ).

Previous assessments have consistently recognised this linkage. The Paris Agreement includes mitigation and adaptation as key areas of action, through NDCs and communicating adaptation actions and plans. The Agreement explicitly recognises that mitigation co-benefits resulting from adaptation can count towards NDC targets. The IPCC Fifth Assessment Report ( [[#IPCC--2014|IPCC 2014]] ) emphasised that sustainable development is helpful in going beyond a narrow focus on separate mitigation and adaptation options and their specific co-benefits. The IPCC Special Report on climate change and land addresses GHG emissions from land-based ecosystems with a focus on the vulnerability of land-based systems to climate change. The report identifies the potential of changes to land use and land management practices to mitigate and adapt to climate change, and to generate co-benefits that help meet other SDGs (Jian et al. 2019).

A substantial literature detailing trade-offs and synergies between mitigation and adaptation exists and is summarised in the IPCC SR1.5 including energy system transitions; land and ecosystem transitions (including addressing food system efficiency, sustainable agricultural intensification, ecosystem restoration); urban and infrastructure system transitions (including land use planning, transport systems, and improved infrastructure for delivering and using power); industrial system transitions (including energy efficiency, bio-based and circularity, electrification and hydrogen, and industrial carbon capture, utilisation and storage (CCUS); and carbon dioxide removal (including bioenergy with CCS, afforestation and reforestation, soil carbon sequestration, and enhanced weathering) (IPCC 2018: Table 4.SM.5.1). Careful design of policies to shift development pathways towards sustainability can increase synergies and manage trade-offs between mitigation and adaptation ( ''robust evidence'' , ''med'' ''ium agreement'' ).

This section examines how development pathways can build greater adaptive and mitigative capacity, and then turns to several examples of mitigation actions with implications for adaptation where there is a notable link to development pathways and policy choices. These examples are in the areas of agriculture, blue carbon and terrestrial ecosystem restoration.

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==== 4.4.2.1 Development Pathways can Build Greater Capacity for Both Adaptation and Mitigation ====

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Previous IPCC assessments have reflected on making development more sustainable (IPCC et al. 2001; [[#Sathaye--2007|Sathaye et al. 2007]] ; Fleurbaey et al. 2014). Other assessments have highlighted how ecosystem functions can support sustainable development and are critical to meeting the goals of the Paris Agreement ( [[#IPBES--2019b|IPBES 2019b]] ). IPCC SR1.5 found that sustainable development pathways to 1.5°C broadly support and often enable transformations and that ‘sustainable development has the potential to significantly reduce systemic vulnerability, enhance adaptive capacity, and promote livelihood security for poor and disadvantaged populations ( ''high confidence'' )’ ( [[#IPCC--2018b|IPCC 2018b]] : [[IPCC:Wg3:Chapter:Chapter-5#5.3.1|Section 5.3.1]] ). With careful management, shifting development pathways can build greater adaptive and mitigative capacity, as further confirmed in recent literature ( [[#Schramski--2018|Schramski et al. 2018]] ; [[#Harvey--2014|Harvey et al. 2014]] ; [[#Ebi--2014|Ebi et al. 2014]] ; [[#Rosenbloom--2018|Rosenbloom et al. 2018]] ; Antwi-Agyei et al. 2015; [[#Singh--2018|Singh 2018]] ; [[#IPBES--2019b|IPBES 2019b]] ). The literature points to the challenge of design of specific policies and shifts in development pathways to achieve both mitigation and adaptation goals.

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===== Governance and institutional capacity =====

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Governance and institutional capacity necessary for mitigation actions also enables effective adaptation actions. Implementation of mitigation and adaptation actions can, however, encounter different sets of challenges. Mitigation actions requiring a shift away from established sectors and resources (e.g., fossil fuels) entail governance challenges to overcome vested interests ( [[#Piggot--2020|Piggot et al. 2020]] ; [[#SEI--2020|SEI et al. 2020]] ). Mitigation-focused initiatives from non-state actors tend to attain greater completion than adaptation-focused initiatives ( [[#NewClimate%20Institute--2019|NewClimate Institute et al. 2019]] ).

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===== Behaviour and lifestyles =====

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On the level of individual entities, adaptation is reactive to current or anticipated environmental changes but mitigation is undertaken deliberately. [[IPCC:Wg3:Chapter:Chapter-5|Chapter 5]] considers behavioural change, including the reconsideration of values and what is meant by well-being, and reflecting on a range of actors addressing both adaptation and mitigation. Shifting development pathways may be disruptive (Cross-Chapter Box 5), and there may be limits to propensity to change. Some studies report that climate change deniers and sceptics can be induced to undertake pro-environmental action if those actions are framed in terms of societal welfare, not climate change (Bain et al. 2012; [[#Hornsey--2016|Hornsey et al. 2016]] ). Concrete initiatives to change behaviour and lifestyles include the Transition Town movement, which seeks to implement a just transition – both in relation to adaptation and mitigation – in specific localities ( [[#Roy--2018|Roy et al. 2018]] ).

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===== Finance =====

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Finance and investment of mitigation actions must be examined in conjunction with funding of adaptation actions, due to biophysical linkages and policy trade-offs (Box 15.1). Most climate funding supports mitigation efforts, not adaptation efforts ( [[#Buchner--2019|Buchner et al. 2019]] ) ( [[#Halimanjaya--2012|Halimanjaya and Papyrakis 2012]] ). Mitigation projects are often more attractive to private capital (Abadie et al. 2013; [[#Buchner--2019|Buchner et al. 2019]] ). Efforts to integrate adaptation and mitigation in climate change finance are limited ( [[#Kongsager--2016|Kongsager et al. 2016]] ; [[#Locatelli--2016|Locatelli et al. 2016]] ) There is a perception that integration of mitigation and adaptation projects would lead to competition for limited finance available for adaptation ( [[#Locatelli--2016|Locatelli et al. 2016]] ). Long-standing debates ( [[#Ayers,%C2%A0J.M.%20and%C2%A0S.%20Huq--2009|Ayers and Huq 2009]] ; [[#Smith--2011|Smith et al. 2011]] ) whether development finance counts as adaptation funding remain unresolved. See [[IPCC:Wg3:Chapter:Chapter-15|Chapter 15]] for more in-depth discussion relating investment in funding mitigation and adaptation actions.

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===== Innovation and technologies =====

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Systems transitions that address both adaptation and mitigation include the widespread adoption of new and possibly disruptive technologies and practices and enhanced climate-driven innovation ( [[#IPCC--2018a|IPCC 2018a]] ). See [[IPCC:Wg3:Chapter:Chapter-16|Chapter 16]] for an in-depth discussion of innovation and technology transfer. The literature points to trade-offs that developing countries face in investing limited resources in research and development, though finding synergies in relation to agriculture (Adenle et al. 2015). Other studies point to difference in technology transfers for adaptation and mitigation (Biagini et al. 2014). Adaptation projects tend to use existing technologies whereas mitigation climate actions are more likely to rely on novel technologies. Innovations for mitigation are typically technology transfers from developed to less-developed countries (Biagini et al. 2014), however this so-called North-South technology transfer pathway is not exclusive (Biagini et al. 2014), and is increasingly challenged by China’s global role in implementing mitigation actions ( [[#Chen--2018|Chen 2018]] ; [[#Urban--2018|Urban 2018]] ). Indigenous knowledge can be a unique source for techniques for adaptation ( [[#Nyong--2007|Nyong et al. 2007]] ) and may be favoured over externally generated knowledge ( [[#Tume--2019|Tume et al. 2019]] ).

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===== Policy =====

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Adaptation-focused pathways might reduce inequality, if adequate support is available and well-distributed ( [[#Pelling--2019|Pelling and Garschagen 2019]] ). Some studies suggest that cities might plan for possible synergies in adaptation and mitigation strategies, currently done independently ( [[#Grafakos--2019|Grafakos et al. 2019]] ). The literature suggests that cities might identify both mitigation and adaptation as co-benefits of interventions targeted at developmental goals ( [[#Dulal--2017|Dulal 2017]] ).

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==== 4.4.2.2 Specific Links Between Mitigation and Adaptation ====

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Mitigation actions can be adaptive and vice-versa. In particular, many nature-based solutions (NBS) for climate mitigation are adaptive ( ''medium evidence'' , ''medium agreement'' ). Multiple NBS are being pursued under current development pathways (Chapter 7), but shifting to sustainable development pathways may enable a wider set of nature-based mitigation solutions with adaptation benefits. An example of this would be a shift to more sustainable diets through guidelines, carbon taxes, or investment in R&amp;D of animal product substitutes (Figure 13.2) which could reduce pressure on land and allow for implementation of multiple NBS. Many of these solutions are consistent with meeting other societal goals, including biodiversity conservation and other sustainable development goals ( [[#Griscom--2017|Griscom et al. 2017]] ; [[#Fargione--2018|Fargione et al. 2018]] ; [[#Tallis--2018|Tallis et al. 2018]] ). However, there can be synergies and trade-offs in meeting a complex set of sustainability goals (e.g., biodiversity, [[IPCC:Wg3:Chapter:Chapter-7#7.6.5|Section 7.6.5]] and 3.1.5).

Development is a key factor leading to land degradation in many parts of the world ( [[#IPBES--2019b|IPBES 2019b]] ). Shifting development pathways to sustainability can include restoration and protection of ecosystems, which can enhance capacity for both mitigation and adaptation actions ( [[#IPBES--2019b|IPBES 2019b]] ).

In this section, we explore mitigation actions related to sustainable agriculture, coastal ecosystems (‘blue carbon’), and restoration and protection of some terrestrial ecosystems. These mitigation actions are exemplary of trade-offs and synergies with adaptation, sensitivity to biophysical coupling, and linkages to development pathways. Other specific examples can be found in Chapters 6 to 11.

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===== Farming system approaches can benefit mitigation and adaptation =====

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Farming system approaches can be a significant contributor to mitigation pathways. These practices (which are not mutually exclusive) include agroecology, conservation agriculture, integrated production systems and organic farming (Box 7.5). Such methods have potential to sequester significant amounts of soil carbon ( [[IPCC:Wg3:Chapter:Chapter-7#7.4.3.1|Section 7.4.3.1]] ) as well as reduce emissions from on-field practices such as rice cultivation, fertilizer management, and manure management ( [[IPCC:Wg3:Chapter:Chapter-7#7.4.3|Section 7.4.3]] ) with total mitigation potential of 3.9 ± 0.2 GtCO 2 -eq yr –1 (Chapter 7). Critically, these approaches may have significant benefits in terms of adaptation and other development goals.

Farming system approaches to agricultural mitigation have a wide variety of co-benefits and trade-offs. Indeed, there are conceptual formulations for these practices in which the co-benefits are more of a focus, such as climate-smart agriculture (CSA) which ties mitigation to adaptation through its three pillars of increased productivity, mitigation, and adaptation ( [[#Lipper--2014|Lipper et al. 2014]] ). The ‘4 per 1000’ goal to increase soil carbon by 0.4% per year ( [[#Soussana--2019|Soussana et al. 2019]] ) is compatible with the three pillars of CSA. Sustainable intensification, a framework which centers around a need for increased agricultural production within environmental constraints also complements CSA ( [[#Campbell--2014|Campbell et al. 2014]] ). The literature reports examples of mitigation co-benefits of adaptation actions, with evidence from various regions ( [[#Thornton--2015|Thornton and Herrero 2015]] ; [[#Thornton--2018|Thornton et al. 2018]] ) (Chapter 7).

Conservation agriculture, promoted for improving agricultural soils and crop diversity ( [[#Powlson--2016|Powlson et al. 2016]] ) can help build adaptive capacity ( [[#Smith--2017|Smith et al. 2017]] ; [[#Pradhan--2018a|Pradhan et al. 2018a]] ) and yield mitigation co-benefits through improved fertiliser use or efficient use of machinery and fossil fuels ( [[#Harvey--2014|Harvey et al. 2014]] ; [[#Cui--2018|Cui et al. 2018]] ; [[#Pradhan--2018a|Pradhan et al. 2018a]] ).

There is a complex set of barriers to implementation of farming-system approaches for climate mitigation ( [[IPCC:Wg3:Chapter:Chapter-7#7.6.4|Section 7.6.4]] ), suggesting a need for deliberate shifts in development pathways to achieve significant progress in this sector. The link between NDCs and mitigation in the land use sector can provide impetus for such policies. For example, there are multiple agricultural mitigation options that southeast Asian countries could use to meet NDCs that would have an important adaptive impact (Amjath-Babu et al. 2019).

Some agricultural practices considered sustainable have trade-offs, and their implementation can have negative effects on adaptation or other ecosystem services. Fast-growing tree monocultures or biofuel crops may enhance carbon stocks but reduce downstream water availability and decrease availability of agricultural land ( [[#Windham-Myers--2018|Windham-Myers et al. 2018]] ; [[#Kuwae--2019|Kuwae and Hori 2019]] ). In some dry environments similarly, agroforestry can increase competition with crops and pastures, decreasing productivity, and reduce catchment water yield ( [[#Schrobback--2011|Schrobback et al. 2011]] ).

Agricultural practices can adapt to climate change while decreasing CO 2 emissions on the farm field. However, if such a practice leads to lower yields, interconnections of the global agricultural system can lead to land use change elsewhere and a net increase in GHG emissions ( [[#Erb--2016|Erb et al. 2016]] ). Implementation of sustainable agriculture can increase or decrease yields depending on context ( [[#Pretty--2006|Pretty et al. 2006]] ).

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===== Blue carbon and mitigation co-benefits of adaptation actions =====

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The Paris Agreement recognises that mitigation co-benefits resulting from Parties’ adaptation actions and/or economic diversification plans can contribute to mitigation outcomes ( [[#UNFCCC--2015a|UNFCCC 2015a]] : Article 4.7). Blue carbon refers to biologically-driven carbon flux or storage in coastal ecosystems such as seagrasses, salt marshes, and mangroves ( [[#Wylie--2016|Wylie et al. 2016]] ; [[#Fennessy--2019|Fennessy et al. 2019]] ; [[#Fourqurean--2012|Fourqurean et al. 2012]] ; [[#Tokoro--2014|Tokoro et al. 2014]] ) (see Cross-Chapter Box 8 on blue carbon as a storage medium and removal process).

Restoring or protecting coastal ecosystems is a mitigation action with synergies with adaptation and development. Such restoration has been described as a ‘no regrets’ mitigation option in the Special Report on the Ocean and Cryosphere in a Changing Climate ( [[#Bindoff--2019|Bindoff et al. 2019]] ) and advocated as a climate solution at national scales ( [[#Bindoff--2019|Bindoff et al. 2019]] ; [[#Taillardat--2018|Taillardat et al. 2018]] ; [[#Fargione--2018|Fargione et al. 2018]] ) and global scales ( [[#Howard--2017|Howard et al. 2017]] ). On a per-area basis, carbon stocks in coastal ecosystems can be higher than in terrestrial forests ( [[#Howard--2017|Howard et al. 2017]] ), with below-ground carbon storage up to 1000 tC ha –1 ( [[#McLeod--2011|McLeod et al. 2011]] ; [[#Crooks--2018|Crooks et al. 2018]] ; [[#Bindoff--2019|Bindoff et al. 2019]] ). Overall, coastal vegetated systems have a mitigation potential of around 0.5% of current global emissions, with an upper limit of less than 2% ( [[#Bindoff--2019|Bindoff et al. 2019]] ).

Restoration or protection of coastal ecosystems is an important adaptation action with multiple benefits, with bounded global mitigation benefits ( [[#Gattuso--2018|Gattuso et al. 2018]] ; [[#Bindoff--2019|Bindoff et al. 2019]] ). Such restoration/preservation reduces coastal erosion and protects from storm surges, and otherwise mitigates impacts of sea level rise and extreme weather along the coast line ( [[#Siikamäki--2012|Siikamäki et al. 2012]] ; [[#Romañach--2018|Romañach et al. 2018]] ; Alongi 2008). Restoration of tidal flow to coastal wetlands inhibits methane emissions which occur in fresh and brackish water ( [[#Kroeger--2017|Kroeger et al. 2017]] ) ( [[IPCC:Wg3:Chapter:Chapter-7#7.4.2.8|Section 7.4.2.8]] describes a more inclusive set of ecosystem services provided by coastal wetlands). Coastal habitat restoration projects can also provide significant social benefits in the form of job creation (through tourism and recreation opportunities), as well as ecological benefits through habitat preservation ( [[#Edwards--2013|Edwards et al. 2013]] ; [[#Sutton-Grier--2015|Sutton-Grier et al. 2015]] ; [[#Sutton-Grier--2016|Sutton-Grier and Moore 2016]] ; [[#Wylie--2016|Wylie et al. 2016]] ; [[#Kairo--2018|Kairo et al. 2018]] ; [[#Bindoff--2019|Bindoff et al. 2019]] ).

Coastal ecosystem-based mitigation can be cost-effective, but interventions should be designed with care. One concern is to assure that actions remain effective at higher levels of climate change (Alongi 2015; [[#Bindoff--2019|Bindoff et al. 2019]] ). Also, methane emissions from ecosystems may partially reduce the benefit of the carbon sequestration ( [[#Rosentreter--2018|Rosentreter et al. 2018]] ) depending on the salinity ( [[#Poffenbarger--2011|Poffenbarger et al. 2011]] ; [[#Kroeger--2017|Kroeger et al. 2017]] ). As the main driver of mangrove forest loss is aquaculture/agriculture ( [[#Thomas--2017|Thomas et al. 2017]] ), there may be entrenched interests opposing restoration and protection actions.

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===== Restoration and protection of terrestrial ecosystems =====

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Restoration of terrestrial landscapes can be a direct outcome of development pathways, and can be critical to achieving a variety of SDGs (especially 1, 2, 6, 8, 13, 15) ( [[#Vergara--2016|Vergara et al. 2016]] ; [[#Lapola--2018|Lapola et al. 2018]] ) although it also presents risks and can have trade-offs with other SDGs ( [[#Cao--2010|Cao et al. 2010]] ; [[#Dooley--2018|Dooley and Kartha 2018]] ). Landscape restoration is nearly always a mitigation action, and can also provide adaptive capacity. While policy in Brazil has tended to focus on the Amazon as a carbon sink, the mitigation co-benefits of ecosystem-based adaptation actions have been highlighted in the literature ( [[#Locatelli--2011|Locatelli et al. 2011]] ; [[#Di%20Gregorio--2016|Di Gregorio et al. 2016]] ). A study of potential restoration of degraded lands in Latin America ( [[#Vergara--2016|Vergara et al. 2016]] ) indicates that substantial benefits for mitigation, adaptation, and economic development accrue after several years, underscoring a reliance on deliberate development choices. In agricultural contexts, restoration is a development choice that can enhance adaptive and mitigative capacity via impact on farmer livelihoods.

Preventing degradation of landscapes can support both mitigation and adaptation ( [[#IPCC--2019|IPCC 2019]] ). Restoration of ecosystems is associated with improved water filtration, groundwater recharge and flood control and multiple other ecosystem services ( [[#Ouyang--2016|Ouyang et al. 2016]] ).

Restoration projects must be designed with care. There can be trade-offs in addition to the synergies noted above ( [[IPCC:Wg3:Chapter:Chapter-7#7.6.4.3|Section 7.6.4.3]] ). Restorations may be unsuccessful if not considered in their socio-economic context ( [[#Lengefeld--2020|Lengefeld et al. 2020]] ; [[#Iftekhar--2017|Iftekhar et al. 2017]] ; [[#Jellinek--2019|Jellinek et al. 2019]] ). Restoration projects for mitigation purposes can be more effective if done with adaptation in mind ( [[#Gray--2011|Gray et al. 2011]] ) as a changing climate may render some mitigation actions biophysically infeasible (Arneth et al. 2021). Landscape restoration projects intended for CDR may underperform due to future release of stored carbon, or deferral of storage until after irreversible climate change effects (e.g. extinctions) ( [[#Dooley--2018|Dooley and Kartha 2018]] ).

Afforestation plans have received substantial attention as a climate mitigation action, with ongoing unresolved debate on the feasibility and trade-offs of such plans. Such afforestation programs can fail for biophysical reasons ( [[#Fleischman--2020|Fleischman et al. 2020]] ) ( [[IPCC:Wg3:Chapter:Chapter-7#7.4.2.2|Section 7.4.2.2]] ) but also lack of consideration of socioeconomic and development contexts ( [[#Fleischman--2020|Fleischman et al. 2020]] ).

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=== 4.4.3 Risks and Uncertainties ===

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Shifting development pathways and accelerating mitigation are complex endeavours that carry risks. Some of these risks can be easily captured by quantitative models. Others are better understood via qualitative approaches, such as qualitative narrative storylines (told in words) and methods mixing qualitative and quantitative models ( [[#Kemp-Benedict--2012|Kemp-Benedict 2012]] ; [[#Hanger-Kopp--2019|Hanger-Kopp et al. 2019]] ). The following outline key risks and relevant hedging strategies identified in the literature.

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==== 4.4.3.1 Actions by Others Not Consistent With Domestic efforts ====

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The international context is a major source of uncertainty for national-level planning, especially for small- or medium-sized open economies, because the outcome of domestic choices may significantly depend on decisions made by other countries and actor, over which national governments have limited or no control ( [[#Lachapelle--2013|Lachapelle and Paterson 2013]] ). Availability of foreign financial resources in countries with limited domestic savings (Baum et al. 2017) and availability of technology transfers ( [[#Glachant--2017|Glachant and Dechezleprêtre 2017]] ) are some examples. Other external decisions with significant bearing on domestic action include mitigation policies in other countries ( [[#Dai--2017|Dai et al. 2017]] ), and especially in major trading partners, the lack of which can result in competitive disadvantage for sectors exposed to international competition (Alton et al. 2014). The international prices of the key commodities (notably energy), goods and services are important, notably when shifting development pathway is based on structural change (e.g., [[#Willenbockel--2017|Willenbockel et al. 2017]] for Ghana and Kenya).

Remedies include first devising policy packages that are, to the extent possible, robust to uncertainty regarding external decisions. For example, mitigation in the building sector is considered less problematic for competitiveness since the construction sector is less exposed to international competition. Remedies also include securing international cooperation to reduce the uncertainty that domestic decision-makers face about the international context. Shifting investments towards low-GHG solutions requires a combination of conducive public policies, attractive investment opportunities and financing of transitions ( [[IPCC:Wg3:Chapter:Chapter-15#15.6|Section 15.6]] ), which can enable shifting development pathways. Cooperation can generate positive spill overs through technology diffusion ( [[IPCC:Wg3:Chapter:Chapter-13#13.6.6|Section 13.6.6]] ). Third, cooperation is not limited to governments. As discussed in Section 4.2.3, international cooperative initiatives among non-state actors (cities, economic branches, etc.) can also provide know-how, resources and stable cooperative frameworks that reduce uncertainty for individual actors ( [[IPCC:Wg3:Chapter:Chapter-14#14.5.5|Section 14.5.5]] ).

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==== 4.4.3.2 Parts of Complex Policy Packages Fail ====

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As outlined in the examples in [[#4.4.1|Section 4.4.1]] above, shifting development pathways and accelerating mitigation are complex endeavours, on which there is limited experience and know-how from the past. An uncertainty is that parts of these policy packages may fail, in other words, under-deliver relative to the amount of mitigation and of transformations initially expected. For example, France has failed to meet its 2015–2018 carbon budget as housing retrofitting programs, in particular, have failed to deliver the expected amount of emission reductions ( [[#Haut%20Conseil%20pour%20le%20Climat--2019|Haut Conseil pour le Climat 2019]] ). There are two main options to tackle this risk. The first is to build in redundancy. The second is to anticipate that some parts of the policies will inevitably fail, and build-in monitoring and corrective mechanisms in a sequential decision-making process. To this regard, building institutions that can properly monitor, learn from and improve over time is critical ( [[#Nair--2017|Nair and Howlett 2017]] ).

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==== 4.4.3.3 New Information Becomes Available ====

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The science on climate change, its impacts and the opportunities to mitigate is continuously being updated. Even though decisions are no longer made ‘in a sea of uncertainty’ ( [[#Lave--1991|Lave 1991]] ), we know that new information will come over time, that may have significant bearing on the design and objectives of policies to shift development pathways and accelerate mitigation. New information may come from climate sciences (e.g., updated GWP values or available carbon budgets) ( [[#Quéré--2018|Quéré et al. 2018]] ), impact sciences (e.g., re-evaluation of climate impacts associated with given emission pathways) ( [[#Ricke--2018|Ricke et al. 2018]] ) or mitigation sciences (e.g., on availability of given technologies) ( [[#Lenzi--2018|Lenzi et al. 2018]] ; [[#Giannousakis--2020|Giannousakis et al. 2020]] ).

At the same time, economic and social systems are characterised by high degree of inertia, via long-lived capital stock or urban forms ( [[#Lecocq--2014|Lecocq and Shalizi 2014]] ), or more broadly mutually reinforcing physical, economic, and social constraints ( [[#Seto--2016|Seto et al. 2016]] ) that may lead to carbon lock-ins ( [[#Erickson--2015|Erickson et al. 2015]] ). Risks associated with long-lasting fossil-fuel power plants have been the object of particular attention. For example, [[#Pfeiffer--2018|Pfeiffer et al. (2018)]] estimate that even if the current pipeline of power plants was cancelled, about 20% of the existing capacity might be stranded to remain compatible with 1.5°C or 2°C pathways – implying that additional capital accumulation would lead to higher sunk costs associated with stranded assets (Ansar et al. 2013; [[#Johnson--2015|Johnson et al. 2015]] ; [[#Kriegler--2018|Kriegler et al. 2018]] ; [[#Luderer--2018b|Luderer et al. 2018b]] ).

In the presence of uncertainty and inertia (or irreversibilities), hedging strategies may be considered, that include selection of risk-hedging strategies and processes to adjust decisions as new information becomes available. The notion of hedging against risks is also prominent in the adaptation literature, as exemplified by the terminology of ‘climate resilient development’ ( [[#Fankhauser--2016|Fankhauser and McDermott 2016]] ) (AR6 WGII, Chapter18). There is also a growing literature on hedging strategies for individual actors (e.g., firms or investors) in the face of the uncertainties associated with mitigation (e.g., policy uncertainty or the associated carbon price uncertainty; e.g., Andersson et al. 2016 or [[#Morris--2018|Morris et al. 2018]] ). On the other hand, there is often limited discussion of uncertainty and of its implication for hedging strategies in the accelerated mitigation pathway literature. Exceptions include ( [[#Capros--2019|Capros et al. 2019]] ), who elicit ‘no-regret’ and ‘disruptive’ mitigation options for the EU through a detailed sensitivity analysis, and ( [[#Watson--2015|Watson et al. 2015]] ) who discuss flexible strategies for the UK energy sector transition in the face of multiple uncertainties.

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==== 4.4.3.4 Black Swans (Such as the COVID-19 Crisis) ====

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As the current COVID-19 crisis demonstrates, events happen that can derail the best-laid plans. Unexpected events beyond the range of human experience until then are called ‘black swans’, given the expectation that all swans are white. The only point to note here is that such events may also provide opportunities. In the COVID-19 case, for example, the experience of conducting many activities on-line, which reduces emissions from transport, may leave an imprint on how some of these activities are carried out in the post-COVID-19 world. Similarly, reduced air pollution seen during the pandemics may increase support for mitigation and strengthen the case for climate action. However, the emissions implications of recovery packages depend on choosing policies that support climate action while addressing the socio-economic implications of COVID-19 ( [[#Hepburn--2020|Hepburn et al. 2020]] ). Governments may be in a stronger position to do so due to their pivotal role in assuring the survival of many businesses during the pandemics. Given the magnitude of recovery packages and their implications ( [[#Pollitt--2021|Pollitt et al. 2021]] ), choosing the direction of recovery packages amounts to choosing a development pathway (Cross-Chapter Box 1 in Chapter 1).

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==== 4.4.3.5 Transformations Run Into Oppositions ====

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As noted above, shifting development pathways and accelerating mitigation involve a broad range of stakeholders and decision-makers, at multiple geographical and temporal scales. They require a credible and trusted process for reconciling perspectives and balancing potential side-effects, managing winners and losers and implementing compensatory measures to ensure an inclusive just transition ( [[#Newell--2013|Newell and Mulvaney 2013]] ; [[#Miller--2014|Miller and Richter 2014]] ; [[#Gambhir--2018|Gambhir et al. 2018]] ; [[#Diffenbaugh--2019|Diffenbaugh and Burke 2019]] ). Such processes are designed to manage the risk of inequitable or non-representative power dynamics ( [[#Helsinki%20Design%20Lab--2011|Helsinki Design Lab 2011]] ; [[#Boulle--2015|Boulle et al. 2015]] ; [[#Kahane--2012|Kahane 2012]] ). More generally, stakeholder processes can be subject to regulatory capture by special interests, or outright opposition from a variety of stakeholders. Information asymmetry between government and business may shape the results of consultative processes. Long experience of political management of change demonstrates that managing such risks is not easy, and requires sufficiently strong and competent institutions ( [[#Stiglitz--1998|Stiglitz 1998]] ). The next section on Just Transition ( [[#4.5|Section 4.5]] ) addresses this issue.

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