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Mercure, Jean-Francois, Salas, Pablo, Vercoulen, Pim, Semieniuk, Gregor, Lam, Aileen, Pollitt, Hector, Holden, Philip B., Vakilifard, Negar, Chewpreecha, Unnada, Edwards, Neil R. and Viñuales, Jorge E. (2021) 'Reframing incentives for climate policy action.' Nature Energy, 6. pp. 1133-1143.

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A key aim of climate policy is to progressively substitute renewables and energy efficiency for fossil fuel use. The associated rapid depreciation and replacement of fossil-fuel-related physical and natural capital entail a profound reorganization of industry value chains, international trade and geopolitics. Here we present evidence confirming that the transformation of energy systems is well under way, and we explore the economic and strategic implications of the emerging energy geography. We show specifically that, given the economic implications of the ongoing energy transformation, the framing of climate policy as economically detrimental to those pursuing it is a poor description of strategic incentives. Instead, a new climate policy incentives configuration emerges in which fossil fuel importers are better off decarbonizing, competitive fossil fuel exporters are better off flooding markets and uncompetitive fossil fuel producers—rather than benefitting from ‘free-riding’—suffer from their exposure to stranded assets and lack of investment in decarbonization technologies.

Item Type: Journal Article
SOAS Departments & Centres: Departments and Subunits > Department of Economics
ISSN: 20587546
Copyright Statement: This is the version of the article accepted for publication in Nature Energy, 6. pp. 1133-1143 2021, published by Springer, Re-use is subject to the publisher’s terms and conditions and is limited to non-commercial use only
DOI (Digital Object Identifier):
Date Deposited: 28 Jan 2022 20:00
Funders: Natural Environment Research Council

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