IDEAS home Printed from https://ideas.repec.org/a/nat/natene/v6y2021i12d10.1038_s41560-021-00934-2.html
   My bibliography  Save this article

Reframing incentives for climate policy action

Author

Listed:
  • J.-F. Mercure

    (University of Exeter
    University of Cambridge
    Cambridge Econometrics)

  • P. Salas

    (University of Cambridge
    University of Cambridge Institute for Sustainability Leadership (CISL))

  • P. Vercoulen

    (University of Exeter
    Cambridge Econometrics)

  • G. Semieniuk

    (University of Massachusetts Amherst
    SOAS University of London)

  • A. Lam

    (University of Cambridge
    University of Macao)

  • H. Pollitt

    (University of Cambridge
    Cambridge Econometrics)

  • P. B. Holden

    (The Open University)

  • N. Vakilifard

    (The Open University)

  • U. Chewpreecha

    (Cambridge Econometrics)

  • N. R. Edwards

    (University of Cambridge
    The Open University)

  • J. E. Vinuales

    (University of Cambridge)

Abstract

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.

Suggested Citation

  • J.-F. Mercure & P. Salas & P. Vercoulen & G. Semieniuk & A. Lam & H. Pollitt & P. B. Holden & N. Vakilifard & U. Chewpreecha & N. R. Edwards & J. E. Vinuales, 2021. "Reframing incentives for climate policy action," Nature Energy, Nature, vol. 6(12), pages 1133-1143, December.
    • Handle: RePEc:nat:natene:v:6:y:2021:i:12:d:10.1038_s41560-021-00934-2
    DOI: 10.1038/s41560-021-00934-2
    as

    Download full text from publisher

    File URL: https://www.nature.com/articles/s41560-021-00934-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1038/s41560-021-00934-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. P. B. Holden & N. R. Edwards & A. Ridgwell & R. D. Wilkinson & K. Fraedrich & F. Lunkeit & H. Pollitt & J.-F. Mercure & P. Salas & A. Lam & F. Knobloch & U. Chewpreecha & J. E. Viñuales, 2018. "Author Correction: Climate–carbon cycle uncertainties and the Paris Agreement," Nature Climate Change, Nature, vol. 8(10), pages 921-921, October.
    2. David L. McCollum & Wenji Zhou & Christoph Bertram & Harmen-Sytze Boer & Valentina Bosetti & Sebastian Busch & Jacques Després & Laurent Drouet & Johannes Emmerling & Marianne Fay & Oliver Fricko & Sh, 2018. "Energy investment needs for fulfilling the Paris Agreement and achieving the Sustainable Development Goals," Nature Energy, Nature, vol. 3(7), pages 589-599, July.
    3. Detlef P. van Vuuren & Elke Stehfest & David E. H. J. Gernaat & Maarten Berg & David L. Bijl & Harmen Sytze Boer & Vassilis Daioglou & Jonathan C. Doelman & Oreane Y. Edelenbosch & Mathijs Harmsen & A, 2018. "Alternative pathways to the 1.5 °C target reduce the need for negative emission technologies," Nature Climate Change, Nature, vol. 8(5), pages 391-397, May.
    4. D. P. van Vuuren & Kaj-Ivar Wijst & Stijn Marsman & Maarten Berg & Andries F. Hof & Chris D. Jones, 2020. "The costs of achieving climate targets and the sources of uncertainty," Nature Climate Change, Nature, vol. 10(4), pages 329-334, April.
    5. Joeri Rogelj & Alexander Popp & Katherine V. Calvin & Gunnar Luderer & Johannes Emmerling & David Gernaat & Shinichiro Fujimori & Jessica Strefler & Tomoko Hasegawa & Giacomo Marangoni & Volker Krey &, 2018. "Scenarios towards limiting global mean temperature increase below 1.5 °C," Nature Climate Change, Nature, vol. 8(4), pages 325-332, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yang Ou & Christopher Roney & Jameel Alsalam & Katherine Calvin & Jared Creason & Jae Edmonds & Allen A. Fawcett & Page Kyle & Kanishka Narayan & Patrick O’Rourke & Pralit Patel & Shaun Ragnauth & Ste, 2021. "Deep mitigation of CO2 and non-CO2 greenhouse gases toward 1.5 °C and 2 °C futures," Nature Communications, Nature, vol. 12(1), pages 1-9, December.
    2. Gregor Semieniuk & Emanuele Campiglio & Jean‐Francois Mercure & Ulrich Volz & Neil R. Edwards, 2021. "Low‐carbon transition risks for finance," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 12(1), January.
    3. Ángel Galán-Martín & Daniel Vázquez & Selene Cobo & Niall Dowell & José Antonio Caballero & Gonzalo Guillén-Gosálbez, 2021. "Delaying carbon dioxide removal in the European Union puts climate targets at risk," Nature Communications, Nature, vol. 12(1), pages 1-12, December.
    4. Liu, Haifeng & Ampah, Jeffrey Dankwa & Afrane, Sandylove & Adun, Humphrey & Jin, Chao & Yao, Mingfa, 2023. "Deployment of hydrogen in hard-to-abate transport sectors under limited carbon dioxide removal (CDR): Implications on global energy-land-water system," Renewable and Sustainable Energy Reviews, Elsevier, vol. 184(C).
    5. Zhuang, Yuan & Zhou, Haiwei & Wang, Teng & Zhang, Lina & Cheng, Changgao, 2025. "Local and spillover effects of net-zero actions on SDG 7," Energy, Elsevier, vol. 327(C).
    6. Fei Guo & Bas J. Ruijven & Behnam Zakeri & Shining Zhang & Xing Chen & Changyi Liu & Fang Yang & Volker Krey & Keywan Riahi & Han Huang & Yuanbing Zhou, 2022. "Implications of intercontinental renewable electricity trade for energy systems and emissions," Nature Energy, Nature, vol. 7(12), pages 1144-1156, December.
    7. Kan, Xiaoming & Hedenus, Fredrik & Reichenberg, Lina, 2025. "Chasing the eternal sun: Does a global super grid favor the deployment of solar power?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 211(C).
    8. Keiner, Dominik & Gulagi, Ashish & Breyer, Christian, 2023. "Energy demand estimation using a pre-processing macro-economic modelling tool for 21st century transition analyses," Energy, Elsevier, vol. 272(C).
    9. Panos, Evangelos & Glynn, James & Kypreos, Socrates & Lehtilä, Antti & Yue, Xiufeng & Ó Gallachóir, Brian & Daniels, David & Dai, Hancheng, 2023. "Deep decarbonisation pathways of the energy system in times of unprecedented uncertainty in the energy sector," Energy Policy, Elsevier, vol. 180(C).
    10. Stefan Frank & Petr Havlík & Elke Stehfest & Hans Meijl & Peter Witzke & Ignacio Pérez-Domínguez & Michiel Dijk & Jonathan C. Doelman & Thomas Fellmann & Jason F. L. Koopman & Andrzej Tabeau & Hugo Va, 2019. "Agricultural non-CO2 emission reduction potential in the context of the 1.5 °C target," Nature Climate Change, Nature, vol. 9(1), pages 66-72, January.
    11. Liu, Zipeng & Zhang, Meixi & Bauer, Christian & McKenna, Russell, 2025. "The role of low carbon fuels towards net-zero in integrated assessment models and energy system models: A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 215(C).
    12. Larissa Nogueira & Francesco Dalla Longa & Lara Aleluia Reis & Laurent Drouet & Zoi Vrontisi & Kostas Fragkiadakis & Evangelos Panos & Bob Zwaan, 2023. "A multi-model framework to assess the role of R&D towards a decarbonized energy system," Climatic Change, Springer, vol. 176(7), pages 1-22, July.
    13. Ayami Hayashi & Fuminori Sano & Takashi Homma & Keigo Akimoto, 2023. "Mitigating trade-offs between global food access and net-zero emissions: the potential contribution of direct air carbon capture and storage," Climatic Change, Springer, vol. 176(5), pages 1-19, May.
    14. Gumber, Anurag & Zana, Riccardo & Steffen, Bjarne, 2024. "A global analysis of renewable energy project commissioning timelines," Applied Energy, Elsevier, vol. 358(C).
    15. Yang, Lin & Hou, Huiyun & Lv, Haodong & Wu, Guanqi & Xu, Bang & Li, Yiming, 2025. "Exploring the development path of bioenergy carbon capture and storage for achieving carbon neutrality in China: A systematic review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 216(C).
    16. Polzin, Friedemann & Sanders, Mark & Serebriakova, Alexandra, 2021. "Finance in global transition scenarios: Mapping investments by technology into finance needs by source," Energy Economics, Elsevier, vol. 99(C).
    17. Chao Wang & Chuyan Shan & Lidong Wang, 2024. "Stranded Asset Impairment Estimates of Thermal Power Companies Under Low-Carbon Transition Scenarios," Sustainability, MDPI, vol. 16(21), pages 1-14, October.
    18. Hsing-Hsuan Chen & Andries F. Hof & Vassilis Daioglou & Harmen Sytze de Boer & Oreane Y. Edelenbosch & Maarten van den Berg & Kaj-Ivar van der Wijst & Detlef P. van Vuuren, 2021. "Using Decomposition Analysis to Determine the Main Contributing Factors to Carbon Neutrality across Sectors," Energies, MDPI, vol. 15(1), pages 1-18, December.
    19. Coppens, Léo & Venmans, Frank, 2025. "The welfare properties of climate targets," Ecological Economics, Elsevier, vol. 228(C).
    20. Kate Dooley & Ellycia Harrould‐Kolieb & Anita Talberg, 2021. "Carbon‐dioxide Removal and Biodiversity: A Threat Identification Framework," Global Policy, London School of Economics and Political Science, vol. 12(S1), pages 34-44, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nat:natene:v:6:y:2021:i:12:d:10.1038_s41560-021-00934-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.nature.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.