Major Meta-Study Confirms the Effectiveness of Carbon Pricing

Carbon pricing systems have empirically reduced emissions by 5 to 21% in their initial years of operation. A research team has compiled findings from 17 real-world climate policies worldwide, offering a more comprehensive understanding than ever before. They employed artificial intelligence to consolidate existing surveys and made them comparable through a new calculation method.

The Berlin-based MCC (Mercator Research Institute on Global Commons and Climate Change) led the major meta-study and published it in Nature Communications.

Clarifying Climate Policy

“This research can clarify the debate on the fundamental orientation of climate policy,” says Ottmar Edenhofer, Director of MCC and co-author of the study. “Politicians have repeatedly questioned the efficiency of reducing greenhouse gas emissions through pricing, often focusing excessively on bans and regulations. While a policy mix is necessary, the conflict over the optimal core instrument of climate policy can be resolved with facts.”

The meta-study begins with a question akin to a laboratory experiment: how did emissions change after the introduction of carbon pricing, compared to a simulated business-as-usual scenario?

The research team conducted a keyword search in literature databases, identifying nearly 17,000 potentially useful studies. With the aid of machine learning methods, they meticulously narrowed these down to 80 studies that were genuinely relevant to their question.

Covering Studies from China, the EU, Canada, the U.S., and More

These included 35 studies on pilot systems in China, 13 on EU emissions trading, 7 on the pilot system in British Columbia, Canada, and 5 on the U.S. “Regional Greenhouse Gas Initiative.”

Additional studies focused on systems in Australia, Canada, Finland, Japan, Sweden, Switzerland, South Korea, the UK, and the U.S. Previously, the largest meta-study included just under half as many studies.

In a subsequent step, the research team extracted key data from the surveys, including statistical indicators on the impact of carbon pricing, the implementation method (tax or emissions trading), the scope and timing of introduction, and the observation period, which varied by survey. They standardized these measurements in the meta-study to ensure comparability.

The research team also adjusted the results for weaknesses in the primary surveys, such as deviations from standard laboratory settings or the tendency to publish only statistically significant effects while ignoring minor ones.

The research team has made their specially developed calculation concept publicly available, noting it can serve as a framework for future studies to continuously update the impact of more extensive and higher carbon pricing.

Empirical data to date show that the introduction of carbon pricing in some Chinese provinces has had an above-average impact on emissions. Generally, the effect is particularly amplified by proactive policy design (“announcement effect“) and favorable conditions (low CO2 avoidance costs).

Less Significant than Political Debate Suggests

Conversely, the study found that the significance of whether carbon pricing is implemented through emissions trading or a tax is less than what the political debate suggests.

The meta-study also underscores the need for further empirical research on this topic. Niklas Döbbeling-Hildebrandt, a Ph.D. student in MCC’s Applied Sustainability Science working group and lead author, states, “Scientific evaluation of the emissions impacts of over 50 additional carbon pricing systems has yet to be conducted.”

Moreover, the recent substantial increase in carbon prices has not yet been considered. Our systematic literature review also highlights the potential for methodological improvements for precise and unbiased surveys.

“New standards and further fieldwork are thus essential. Comprehensive and meaningful research syntheses, including on the effectiveness of other policy instruments, are needed so that climate policymakers know what works.”

Read the original article on: Phys Org

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