Climate policy ambitions ramping up in clean energy arms race
Climate policy announcements in the last quarter of 2022 reached new levels of ambition in trying to slow global temperature rises, the Inevitable Policy Response (IPR) has found.
The body, which makes forecasts about the climate transition, said that climate objectives for the likes of the EU and US have taken “centre stage along with domestic economic and industrial needs”.
It recorded “significant developments” over the last quarter across clean power, industry, transport and buildings. Policies tackling methane from oil & gas operations and agricultural sources are also beginning to emerge.
In particular, it noted that negotiations on the EU’s Emissions Trading System and Carbon Border Adjustment Mechanism as well as bans to petrol cars have concluded. This is in addition to agreements fast-tracking renewables projects.
The US floated a carbon border adjustment tariff on steel and aluminium via cooperative climate clubs alongside approving a program scaling voluntary carbon markets amongst rural farmers and proposals to target federal emissions.
Meanwhile, Brazil has recommitted to forestry protection following the election of Luiz Inácio Lula da Silva and his new administration.
A COP27 initiative also aims to translate the Glasgow forests pledge into action. These, along with complementary policies from the EU such as targeting forest product imports, raise prospects for ending net deforestation by 2030, the IPR said. However, it noted that firmer policies and commitments still would be required if the goal had any chance of being achieved.
China also reaffirmed climate goals, despite facing economic headwinds as it relaxes its zero-Covid policies.
The country announced plans for performance standards to achieve carbon neutrality objectives and drafting a national strategy for reducing methane emissions. However, it also pushed back its target for peaking building sector emissions from 2025 to 2030.
Brian Hensley, a partner at KAYA Advisory which reported on the IPR analysis, said: “China’s own success in clean energy and critical raw materials leaves the rest of the developed world with production voids that need to be filled.
“The US has decided to decouple from China supply chains with the Inflation Reduction Act (IRA) which has initiated a chain reaction of similar measures by other countries. The EU is compelled to initiate its own industrial policy support and is finding it hard to be as flexible as the US. All of this has enormous significance for private investors.”
Mark Fulton, IPR project director, said: “The race to the top in clean energy unleashed by the US IRA and being followed up by the EU Green Industrial Plan, combined with other positive policy announcements since COP27, point to an acceleration in clean energy deployment relative to recent expectations.”
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