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Electricity
…emission electricity sector by providing investors with the stability and long-term investment signals required to cost-effectively deploy capital-intensive low-emission technologies like renewables, nuclear and CCUS.
Establish carbon pricing and regulations
Carbon pricing, carbon taxes and the regulation of plant emissions can encourage coal-to-gas switching and provide an important long-term investment signal for low-emission technologies.
Shift policy to competitive auctions
Auctions for the centralised competitive procurement of renewables have become increasingly widespread in recent years and have been instrumental in discovering renewable energy prices and containing policy costs in many countries…
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Renewables
…integrated approach, connecting the utilisation of all renewable energy technologies. Policy makers should focus on implementing long-term plans for whole-economy decarbonisation and implement incentives reflecting the requirements of all economic sectors.
Shift policy to competitive auctions
Policy instruments used to support renewable power include administratively set feed-in tariffs or premiums, renewable portfolio standards, quotas and tradeable green certificate schemes, net metering, tax rebates and capital grants. Recently, auctions for the centralised competitive procurement of renewables have become increasingly widespread and have been instrumental in discovering renewable energy prices and containing policy costs in many countries, especially…
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Energy Efficiency and Demand
Energy Efficiency and Demand
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Buildings
…best-in-class products
Financing and market mechanisms are needed to accelerate the clean energy transition. Governments can enact policy interventions to improve access to financing and de-risk clean energy investment to enhance the attractiveness of buildings sector investment. They can also broaden the availability of market-based instruments that reduce barriers to the transition, for example via means-tested subsidies for household to retrofits or weatherisation, or installation of lower-carbon and more efficient appliances and equipment. Public competitions to stimulate innovation, such as the Buildings Upgrade Prize developed by the US Department of Energy Building Technologies Office…
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Industry
…if the strength of international action differs, measures such as carbon border adjustments could be considered in order to help prevent carbon leakage. Further participation in multilateral fora is needed to negotiate sectoral agreements and provide international finance to assist the transition in developing economies.
Manage existing assets and near-term investments in order to create a smooth energy transition
The next investment cycle could have an enormous impact on the trajectory of emissions from industry in the next three decades, and action today is needed to lay the groundwork for a smooth transition. Policy makers should consider mandating retrofit…
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Low-Emissions Fuels
…of both biofuels and hydrogen, while avoiding potentially harmful environmental, economic and social impacts. The development of international markets and trade in these fuels will also depend on internationally agreed methods and certification processes to guarantee the sustainability of traded fuels.
Create support programmes for the use of low-emissions fuels
With the use of low-emissions fuels still in most cases being more expensive than unabated fossil fuels, policy measures will be needed to close this cost gap and support the use of low-emissions fuels. Policy instruments can include penalties for unabated fossil fuels, such as CO2 prices…
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Carbon Capture Utilisation and Storage
…through the inclusion of CCUS in national energy and climate strategies – for example, the EU Net Zero Industry Act identifies CCUS as a key strategic net zero technology – or in their Nationally Determined Contributions under the Paris Agreement. The creation of national or regional CCUS targets can help signal strategic interest. Governments can also create an enabling environment for CCUS projects, such as through the establishment of a carbon pricing system; capital grants to reduce up-front costs; loans and loan guarantees to provide access to debt capital; and tax credits to address capital and operating costs. Importantly for higher…
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Transport
Plan for compact urban development with improved public transport and infrastructure for micromobility and active travel
More than half of the world’s population lives in cities. With urbanisation on the rise, urban governance should encompass transport strategies that can induce modal shift towards low-emission transport in order to get in step with the NZE Scenario. The resurgence in active modes of transport during and following the pandemic has provided governments with a policy window to improve and expand infrastructure (e.g. bicycle lanes and car-free zones) and make road re-allocation measures permanent. Transit-oriented development that…
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Fossil Fuels
Adopt policies and regulations to reduce emissions from oil and gas supply
Policies should encourage operators to maximise abatement opportunities at the early stages of project planning and development, in addition to incentivising better management of existing facilities. Regulatory measures to prevent methane emissions from oil and gas operations include requiring leak detection and repair programmes, the installation of emission control devices, and the replacement of components and devices that emit methane in their normal operations. Major oil- and gas-producing countries can add commitments to reduce methane emissions to their nationally determined contributions. Government and industry should not delay…