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Context factors enabling effective sectoral climate policies

Instrumentalists rely on liberal market structure and mature financial markets for economic and regulatory instruments. Economies leveraging existing financial markets, taxation and regulatory instruments for streamlined and efficient renewable energy deployment.

Central Policy Strategy:
Strategies center on utilizing advanced policy instruments, such as renewable portfolio standards (RPS), renewable certificates and tax credits for producers enabled by a liberal market structure and advanced financial markets.

Policy examples:

California (2002): California Renewables Portfolio Standard
USA (2006): Investment Tax Credit (ITC)
UK (2002): Renewables Obligation (RO)
UK (2010): Feed-in Tariffs (FIT)

Economies employing long-term, carefully planned policy incentives and investments to enhance renewable energy uptake through coordinated stakeholder collaboration and institutional capacity building. The approach is horizontal and multipronged, with an emphasis on institutional capacity.

Central Policy Strategy:
Policies feature a balanced approach that utilizes a combination of subsidies, R&D investments, and coordinated policy interventions. Enabled by interest group support, distributional effects, and robust fiscal strategies.

Policy examples:

Germany (2000): Erneuerbare-Energien-Gesetz (Renewable Energy Sources Act)
Philippines (2008): Renewable Energy Act
Portugal (2001): Energy Efficiency and Endogenous Energies (E4)

Political systems with substantial sub-national control, focusing on empowering regional actors and fostering localized renewable energy solutions.

Central Policy Strategy:
Policy approach emphasizes local decision-making with regional subsidies, localized grid integration, and community-based energy projects. Supports renewable deployment through regional regulatory autonomy and tailored energy initiatives.

Policy examples:

Scotland (2009): Climate Change (Scotland) Act
Sweden (2003): Electricity Certificate System

Centrally planned or coordinated economies employing a top-down framework to drive renewable deployment through consolidated planning and state-backed investment, often led by public sectors.

Central Policy Strategy:
Features strong government-led initiatives, involving direct state ownership of energy assets, extensive use of public sector utilities, and integrated multi-year planning for renewable targets. Utilizes government-linked financial institutions to mobilize funding.

Policy examples:

China (2006): Renewable Energy Law
China (2013): Feed-in tariff support for solar PV
Vietnam (2015): Renewable Energy Development Strategy
South Korea (2012): Renewable Portfolio Standards (RPS)

Emerging markets employing flexible and innovative policy tools to implement renewable energy solutions while prioritizing cost reduction and overcoming limited institutional frameworks.

Central Policy Strategy: Employs auction-based renewable energy tenders, risk-sharing mechanisms, and ad-hoc policy experimentation. Prioritizes minimizing costs through competitive bidding processes and leveraging partnerships to offset institutional limitations.

Policy examples:

Chile (2008): Non-Conventional Renewable Energy Law
India (2008): National Action Plan for Climate Change, India (2010): Jawaharlal Nehru National Solar Mission
South Africa (2011): Renewable Energy Independent Power Producer Procurement Program
Brazil (2002): PROINFA, Brazil (2009): National Climate Change Policy

Special cases where financial sector expertise predominantly drives renewable energy investment through structured capital flow, risk mitigation, and cost efficiency.

Central Policy Strategy:

Relies heavily on financial intermediaries, such as national development banks, to structure capital flows. Employs risk mitigation instruments like guarantees, transnational financial partnerships, and green finance to reduce capital costs for renewable projects.

Developed economies with a high share of coal in their energy mix and strong commitments to international climate goals.

Central Policy Strategy:
Policy pledges are driven by environmental impact and proactive climate goals, with institutional capacity strengthened through stakeholder commissions.

Policy examples:

Germany (2020): Coal Exit Law (Kohleausstiegsgesetz)

Regions with a high share of EV sales combined with the absence of a strong conventional automotive industry and a high renewable share in the electricity-mix.

Central Policy Strategy:Enabled by the absence of a strong opposition and the presence of support coalitions and skill spillovers, policies include robust ZEV deployment strategies, such as ICEV sales bans, driven by emission reduction and economic growth opportunities.

Policy examples:

Quebec, CA (1973): EV Working Group; Quebec, CA (2012): Roulez Verte Program
California, USA (1990): Low Emission Vehicle Program; California, USA (2012): Advanced Clean Cars I
Norway (1990): EV Registration Tax Exemption; Norway (2009):Transnova Program

Planned economy, characterized by the world’s highest absolute EV sales and a strong conventional automotive industry.

Central Policy Strategy:

Driven by energy security, pollution concerns, and economic opportunities. Policies focus on subsidies, R&D, and non-financial demand-side incentives, including exemption from license plate lotteries.

Policy examples:

China (2009): Ten Cities, One Thousand Vehicles Project
China (2017): New Energy Vehicle (NEV) Mandate