Green premiums are a challenge and an opportunity for climate policy design
Green premiums are a challenge and an opportunity for climate policy design | Nature Climate Change
Adjusting green public support programmes to green premiums can reduce public spending, yet this is challenged by uncertainty. Underfunding green technologies can delay the green transition, and overfunding them can increase transition costs. Both risks of under- and overfunding can be reduced using responsive adjustments.
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Data availability
Source data, code and the complete list of references for Fig. 1 are available under an open-source license (MIT) on Zenodo https://doi.org/10.5281/zenodo.7848415(ref. 15).
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Acknowledgements
Ideas reflected in this article were discussed with colleagues and draw on previous work under multiple projects. Funding of J.C.R. for supportive underlying analysis is gratefully acknowledged under research grant 29.4293 from the German Federal Ministry for Economic Affairs and Climate Action. We thank P. Stein for research assistance. Furthermore, we thank A. Lederer for English proofreading of the final version. We also used Grammarly, DeepL Write and ChatGPT for English proofreading of earlier versions.
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Köveker, T., Chiappinelli, O., Kröger, M. et al. Green premiums are a challenge and an opportunity for climate policy design. Nat. Clim. Chang. (2023). https://doi.org/10.1038/s41558-023-01689-2
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DOI: https://doi.org/10.1038/s41558-023-01689-2
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”