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Renewables
…and wind – are rapidly transforming power systems worldwide. However, reforms to power market design and policy frameworks will be needed to ensure investment at scale both in new renewable capacity and in power system flexibility to integrate high shares of variable renewables in a reliable and cost-effective manner. As the share of variable renewable energy increases, policies ensuring investment in all forms of flexibility become crucial. Solutions include enhancing power plant flexibility, unlocking demand-side management, supporting energy storage and improving grid infrastructure.
Address technology-specific challenges
Some renewable technologies are still relatively expensive and/or face specific technology…
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Electricity
…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, especially for solar PV and wind. The success of such policies in achieving deployment and development objectives relies on their design and consequent ability to attract…
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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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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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Low-Emissions Fuels
Develop certification and standards to ensure that low-emissions fuels are sustainable
The development of standards and certification schemes ensuring a sustainable supply chain will be critical for scaling up the production 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…
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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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Carbon Capture Utilisation and Storage
…are equipped with sufficient funding, staff and expertise to oversee the implementation of CCUS regulations.
Implement a portfolio of policies to stimulate investment
Well-targeted policies and a portfolio of measures can help ensure government efforts to support CCUS deployment are effective and successful in the long term. Governments can signal their strategic interest in CCUS 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…
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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…