Policy Mix Research Articles

Can a Policy Mix Achieve a Collaborative Effect? Exploring the Nested Implementation Process of Urban Carbon Emission Reduction Policies

China’s government has adopted several carbon emission reduction policies to strive to achieve the dual carbon goal of “carbon peaking and carbon neutrality”. In practice, various multi-objective policy instruments are implemented in a staggered manner, which might lead to the overestimation or underestimation of single-policy effect evaluation. This paper evaluates the combined effect of the Low-carbon City Pilot (LCP) and Comprehensive Demonstration City of Energy Saving and Emission Reduction Fiscal Policy (CCEEFP), investigating whether their carbon emission reduction effects are complementary and achieve collaborative outcomes. The empirical results indicate that the LCP, the CCEEFP, and their nested implementation could all promote carbon emission reduction. Their collaborative policy effects are sustained, being more obvious in higher-grade cities. Furthermore, there is a greater adoption of the source treatment technology for carbon emissions. And the implementing order of these policies could affect governance performance because of the “path dependence” of local government’s attention towards multi-objective policy intentions. The empirical evidence demonstrates that policymakers should carefully design policy mix particulars towards a common purpose and carefully co-ordinate their implementation process.

Digital transformation management in Georgian business: Growth strategies and competitive advantages

Innovative development is one of the key factors in a company’s competitiveness. Ensuring a higher level of development and utilisation of the latest company technology is important and therefore the search for new methods is relevant. The study aimed to describe the current trends in digital business transformation in Georgia. The study analysed many different types of statistics describing both the state of digitalisation and innovative technologies in the country and the current describing the state of entrepreneurship. Based on the analysis, the study concluded that the situation with digital transformation in Georgia is improving, which correlates with the direction of development of enterprises. In Georgia, the government actively supports digital transformation through various initiatives aimed at developing digital infrastructure and offering e-services. This is evident in the level of existing projects in this area and the pace of change in the development of enterprises in the field of digitalisation. However, it is found that while the number of research and development institutions in the nation is rising, the expenditures (adjusted for inflation) are falling. New fintech businesses are starting to appear, providing cutting-edge services for online financing. Due to a mix of public policies, private funding, and international collaboration, Georgia is becoming progressively more digital. Nevertheless, the country needs to accelerate the pace of development of this area in companies, which indicates the need for more active stimulation of this area by the state. The findings of this study can be used to formulate both the company’s long-term development strategy and to create a state policy in this area

Designing a cost-effective policy mix for transition toward net-zero emissions: a case study of the mid-term plan by 2035 of Taiwan

This study explores the design of a cost-effective climate policy mix for transition toward net-zero emissions in the mid-term (by 2035). Its novelty lies in the methodological advancements through the development of a soft-linking procedure that integrates a top-down computable general equilibrium model with a bottom-up energy system model. The integrated assessment focuses on the climate policy mix under the framework of Taiwan’s Climate Change Response Act passed in 2023. The analysis shows that a policy mix combining investments in energy transition with user-pay hybrid pricing measures can facilitate cost-effective mitigation and enhance public acceptance. The proposed hybrid pricing includes cost-based electricity pricing and a two-step carbon pricing strategy that encourages early action (before 2030) for larger emitters. Finally, we demonstrate that accelerating the transition is crucial, as it reduces the economic costs of meeting emission targets by inducing further investments in energy efficiency improvement and lowering the carbon pricing levels required to close the abatement gap.

Green industrial policy can strengthen carbon pricing but not replace it

Carbon pricing has received prominent support as the key policy to reduce greenhouse gas emissions. Yet, in the context of heightened geopolitical tensions and risks of supply chain disruptions, policy makers are increasingly resorting to green industrial policies to support the deployment of clean energy technologies. This Perspective discusses whether this development represents a paradigm shift in the design of climate policies and assesses arguments for and against carbon pricing and green industrial policies. Our analysis addresses implications for economic efficiency, security of supply, distributional concerns and political economy issues. We find that green industrial policies can support carbon pricing by lowering market barriers for clean technology diffusion and strengthening political support for climate policy. Yet, we also emphasize that a carbon price should be an essential element in any effective climate mitigation policy mix and the key is to find the optimal policy mix for carbon pricing and green industrial policies for the unique context of each location. In the EU, green industrial policy should mainly be employed to complement carbon pricing and deal with additional market barriers. In the US, by contrast, green industrial policy could be used strategically to try to build political support for and reduce resistance to a carbon price.

EU emissions trading in the buildings sector – an ex-ante assessment

ABSTRACT The EU ETS is one of the first emissions trading schemes in the world and has contributed to the reduction of greenhouse gas emissions in the sectors covered by the scheme in recent years. The EU has adopted the introduction of a new, separate emissions trading scheme (ETS 2) for the buildings and transport sectors as well additional sectors. In our paper we estimate the impact of the new ETS 2 on the buildings sector. We calculate the greenhouse gas emission reduction in the year 2030 using an approach based on price elasticities. We further discuss the impact of the ETS 2 on cost-effectiveness of heat pump deployment in the EU Member States to outline an example of longer-term effects on investments. The results show that with a carbon price of 45 Euro per ton the impact ranges between three and seven Million tons of greenhouse gas emission reductions. Even with optimistic assumptions on the reaction of building owners, the overall contribution of the ETS 2 to meeting the EU target for reducing greenhouse gas emissions in the year 2030 is limited. The results furthermore show that the carbon price needed to make heat pumps competitive in the use phase differs largely between the Member States, where in three Member States the required level exceeds 100€/t CO2eq. We conclude that in addition to carbon pricing under the ETS 2, a strong policy framework is needed for the transition of the buildings sector. Key policy insights The new carbon pricing scheme in ETS 2 contributes to the reduction of greenhouse gas emissions in buildings in the EU, however its impact on the EU energy and climate targets for the year 2030 is limited. Carbon pricing supports the diffusion of heat pumps, however a price of 45 €/t is insufficient to make heat pumps competitive even in the operation phase in several countries. Due to the low price elasticities and the long investment cycles in the buildings sector, a strong policy mix is needed in addition to carbon pricing.

Transition policy mixes and business model adaptation: Incumbent firms' response to zero‐carbon policy in the housing sector

AbstractThis paper provides a firm‐level perspective on sustainability transitions by analysing how government can use transition policy mixes to entice industry incumbents to adapt their business model to integrate sustainable technologies. It examines firm‐level barriers to policy implementation, why these exist, and how government can use transition policy mixes to overcome them. The empirical analysis provides an in‐depth case study of the UK Zero Carbon Homes (ZCH) as a transition policy mix and considers the point of view of policymakers and incumbent housebuilders. The paper sheds light on the question of how transition policy mix designs can support incumbents' business model adaptation to bring about transformational change for sustainability. The results show that the interaction between various policy shortcomings and business model adaptation barriers led to a failure of government to move the housebuilding sector towards a stronger integration of sustainable technologies. The paper concludes by arguing that decarbonising housing in the UK was a system failure, rather than a market or policy failure, as the government failed to address the underlying reasons of incumbents' resistance to changing their business model. The findings suggest that taking incumbents' business models into consideration while designing policies for sustainability transitions is necessary to entice established firms to actively take part in the process of transitions and adapt to new sustainable norms.

Determinants of Business Freedom in Developing Countries: The Role of Institutional Development and Policy Mix

Smooth and stable commercial/business activities are the prime concern of every nation, as these activities decide the developmental routes of the economy. This study has examined the role of institutional development and policy mix in determining business freedom in developing countries. Institutional development has been measured with the help of government effectiveness and political stability. Policy mix have been measured with the help of monetary freedom and fiscal freedom. To examine the impact of explanatory variables on the explained variable, this study has used panel least squares, random effect model, and generalized method of moments. The estimated results show that fiscal freedom has a negative and significant impact on business freedom, whereas, monetary freedom has an insignificant impact on business freedom in the case of developing countries. The results show that government effectiveness, political stability, and tread freedom are encouraging business freedom in developing countries. The corporate tax has a negative and significant impact on business freedom. Empirical show that developing countries are more inclined towards non-developmental expenditures, thus to control the negative impacts of fiscal freedom developing countries needs rationalization in government expenditures. Developing countries should promote government effectiveness, political stability, and trade freedom to enhance business freedom. To control the negative impacts of corporate taxes, developing countries should rationalize tax policies to promote business freedom.

From manure to megawatts: Navigating the sustainable innovation solution through biogas production from livestock waste for harnessing green energy for green economy

This article aims to provide a systematic review of the literature on animal biomass and biogas plants through an analysis of externalities and benefits in economic, social, and environmental terms. In recent years, the spread of biogas plants has played an important role, especially in rural areas, generating benefits not only for the individual farm but for entire communities, contributing to the reduction of energy poverty and, at the same time, promoting the production of energy and organic manure. In light of the findings, the study argues that: (a) more public subsidies are needed; (b) the deployment of an appropriate policy mix would encourage the spread of small and medium-sized plants, with a reduction in road transport; and (c) targeted and diversified investments are needed on a geographic-by-geographic basis.

Improving Urban Energy Efficiency Through the Collaborative Effect of Policy Mix – Urban Panel Analysis Based on China

Improving Urban Energy Efficiency Through the Collaborative Effect of Policy Mix – Urban Panel Analysis Based on China

Demand-pull and technology-push environmental innovation: a policy mix analysis on EU ETS and EU Cohesion Policy

ABSTRACT Existing literature on the sustainability transition towards a low-carbon economy provides conceptual frameworks for designing combinations of policy interventions but lacks empirical evidence regarding their application. This paper aims to test whether a mix of policy instruments represents a potential valid solution to manage carbon abatement effectively. We refer to the European Union Emissions Trading System (EU ETS) as an example of demand-pull environmental policy, while we include the Structural and Cohesion Funds (SCFs) and the Horizon 2020 funds as examples of technology-push policies. Through the application of a panel event study, we find that the EU ETS generates a positive impact on environmental patent applications in the light manufacturing sector during the period 2013–2020, while EU ETS participation and financial support contribute to environmental innovation and CO2 emission reduction in the energy sector. Hence, those sectors where market dynamics allow avoidance of complete internalization of the carbon price may benefit from financial support to re-direct the technological change towards the sustainability transition. We demonstrate that the analysed policy mix contributed to a reduction of about 2.2% of total emissions produced by energy firms in the EU ETS during Phase III, which is in line with EU climate targets. Overall, our work may support policymakers in understanding the relevant factors that affect the impact of the policy mix on the environmental transition.

System dynamics simulation of green innovation and policy optimization considering decision bias

Promoting the development of green innovation is crucial for achieving the green transformation of society. This paper considers the decision bias of different agents in policy implementation and presents a theoretical model that captures the structure of the green innovation system. The model includes six subsystems: government, technology, public, energy, environment, and population. The study examines the transmission effect of green innovation and the influence mechanism of multiple decision biases on policy combination effects using a combination of various policy tools. The results show that: Various policy tools and their implementation differences have distinct effects on the green innovation and environmental performance. In most cases, the synergistic policy mix effect, surpassing the impact of individual policies, is driven by the resource effect. However, the synergistic effect of policy combination may not be fully realized, leading to potential conflicts. Due to various decision biases, particularly the gap in the public's green behavior, the policy mix faces challenges in achieving immediate synergistic effects. Combining tax policies with other policy instruments increases the risk of incoherence and inconsistency. However, in the long term, the combination of policy tools can exert strong late-developing advantages. This study provides insights for green innovation policy improvement.

Global scenarios of anthropogenic mercury emissions

Abstract. Anthropogenic mercury (Hg) emissions to the atmosphere are a long-lived hazard to human and environmental health. The UN Minamata Convention on Mercury is seeking to lower anthropogenic mercury emissions through a mix of policies from banning certain Hg uses to reducing unintentional Hg release from different activities. In addition to independent Hg policy, strategies to mitigate greenhouse gases, particulate matter (PM) and SO2 may also lower Hg emissions as a co-benefit. This study uses the Greenhouse Gas–Air Pollution Interactions and Synergies (GAINS) model to examine the effect of different clean air and climate policies on future global Hg emissions. The baseline scenario assumes current trends for energy use and Hg emissions as well as current legislation for clean air, mercury and climate policy. In addition, we explore the impact of the Minamata Convention, the co-benefits of climate and stringent air pollution policies, and maximum feasible reduction measures for Hg. Hg emission projections until 2050 show noticeable reductions in combustion sectors for all scenarios due to a decrease in global fossil fuel and traditional biomass use, leading to emission reductions of 33 % at baseline and up to 90 % when combining stringent climate controls and the most efficient Hg controls. Cement and non-ferrous metal emissions increase in all scenarios with current air pollution policy but could be reduced by up to 72 % and 46 %, respectively, in 2050 with stringent Hg-specific measures. Other emissions (including waste) are a significant source of uncertainty in this study, and their projections range between a 22 % increase and a 54 % decrease in 2050, depending on both climate and clean air policy. The largest absolute reduction potential for Hg abatement but also the largest uncertainties regarding absolute emissions lie in small-scale and artisanal gold production, where abatement measures could eliminate annual Hg emissions in the range of 601–1371 t (95 % confidence interval), although the uncertainties in the estimate are so high that they might eclipse reduction efforts in all other sectors. In total, 90 % of Hg emissions are covered by provisions of the Minamata Convention. Overall, the findings emphasize the necessity to implement targeted Hg control policies in addition to stringent climate, PM and SO2 policies to achieve significant reductions in Hg emissions.

Capital Flow Management Within Macroeconomics Stability Framework in Indonesia (2008 – 2022)

Indonesia is an EMDEs (Emerging Market and Developing Economies) country, and adopting an open economy causes foreign capital flow, especially FDI (Foreign Direct Investment) and PI (Portfolio Investment) can be free flows, and its movements are unpredictable. The movement of capital flows will affect the money supply transmitted to monetary and macroeconomic variables. This study aims to determine the response and contribution of macroeconomic variables to FDI and PI, as well as examining the causality between macroeconomic variables, FDI and PI. This research used the Vector Error Correction Model Granger Causality. The results show that exchange rate and inflation shocks significantly impact FDI and PI. While the results of Granger causality, changes in macroeconomic variables cause changes in FDI and PI. This research recommends that stakeholders continue implementing policy mix and monetary policy to improve exchange rates and inflation stability. In addition, the management of capital flows is still considered because the potential risks posed to the economy are quite large

Implications of risk-averse manufacturer on coordination of green supply chain with mixed carbon policies

PurposeThis paper intends to address the decision-making and coordination of green supply chain (GSC) considering risk-averse manufacturers under mixed carbon policy.Design/methodology/approachThis paper focuses on a GSC consisting of a manufacturer and a retailer, in which the manufacturer is risk-averse (R-A). This paper employs Stackelberg game theory and mean variance analysis to assess the pricing decision-making process under various scenarios. Furthermore, cost-sharing contracts are introduced to coordinate the GSC.FindingsThe research results suggest that the green level of the product and the profit of the GSC under a centralized scenario are higher than those under a decentralized scenario, while the retail price is lower. Under the decentralized scenario, the green level of product, wholesale price and manufacturer’s profit in the R-A scenario are lower than the values in the risk-neutrality scenario, while retailer's profit is higher. In addition, when a cost-sharing contract is utilized for coordination in the GSC, it can lead to Pareto improvement, regardless of whether the manufacturer makes risk-neutrality or R-A decisions.Originality/valueThis research provides a deeper understanding of GSC decision-making and coordination strategy under mixed carbon policy with consideration of R-A from a theoretical perspective and provides decision support for enterprises to choose strategies in practice.

Assessment of Economic and Environmental Impacts of using Green Hydrogen Gas for Generating Electricity in the KSA

The energy sector in the Kingdom of Saudi Arabia (KSA) faces serious challenges regarding its current energy mix and energy policies. These challenges are even more complex in the sphere of electricity generation. Where on one side, these challenges are attributed to the fast-growing domestic demand for electricity. While on the other side, KSA depends extensively on traditional fossil fuels for generating electricity and hence facing high rates of carbon dioxide (CO2) emissions. To address these challenges, the Kingdom’s 2030 vision opted for economic diversification and decarbonization by encouraging the transition towards using green hydrogen gas for electricity generation as a clean energy source. This attempt has been associated with measures addressing rationalization of the demand side for electricity. The objective of this paper is to explore the economic and environmental viability of using green hydrogen gas for generating electricity in KSA. Working toward this objective, an economic assessment has been applied to five hypothetical cases or scenarios to identify the most cost-effective (least expensive) to run the turbine generator at net zero CO2 emission. In addition, an assessment of the environmental impact has been applied to the same five hypothetical cases or scenarios to identify the most environmentally friendly i.e., help effectively to reduce or minimize the CO2 emissions. The findings of this assessment reject the economic viability of the transition towards using green hydrogen gas for electricity generation in the KSA, where the calculations of the five cases registered an inverse relation between the NPV and the use of green hydrogen gas in electricity generation. These findings confirm the environmental variability of this transition, where the calculations of the five cases registered a positive relation between decarburization and the use of green hydrogen gas in electricity generation. Based on these findings, the economic ramifications and viability of this transition require a thorough investigation addressing economic and non-economic aspects.

Reflective Appraisal of Transformative Innovation Policy: Development of the Sustainability Transition and Innovation Review (STIR) Approach and Application to Canada

In the context of governing innovation systems for low-carbon transitions, learning is paramount. In this article, we look specifically at the issue of learning through innovation policy review processes. We begin by reviewing the academic literature on innovation policy reviews as well as the emerging literature on transformative innovation policy (TIP) in the contexts of major challenges such as climate change. Drawing from this review, we argue that traditional policy review frameworks fail to provide the kind of learning required to assess challenge-oriented innovation policies and that new, more reflexive approaches are required. We then propose a novel evaluative framework, the Sustainability Transition and Innovation Review (STIR), which incorporates insights from the TIP literature in order to address this gap. The basis for the proposed STIR framework in the theoretical literature is reviewed, and we then describe the results of a test of the STIR framework to evaluate Canada’s policy mix for driving a socio-technical transition from fossil-powered to electric vehicles. Insights from the test application show that the STIR approach helped uncover key explanatory dynamics around incremental vs. transformative change in Canada’s innovation policy performance, and highlighted the interplay between governance and substantive weaknesses in the policy mix. We conclude by arguing that these findings demonstrate the importance of updating policy review frameworks with the insights of the recent TIP literature.

Policy design for biodiversity: How problem conception drift undermines “fit-for-purpose” Peatland conservation

Abstract For over two decades, scientists have documented the alarming decline of global Peatland ecosystems, regarded as the planet’s most crucial carbon sinks. The deterioration of these unique wetlands alongside their policy attention presents a puzzle for policy scientists and for students of anticipatory policy design. Two contrasting explanations have emerged. Some argue that pressures from economic globalization compel governments to relax environmental standards, while others point to deficiencies in policy design and implementation. Our paper applies Cashore’s Four Problem Types framework to assess a more nuanced explanation: that failure of global and local policies to curb ecosystem degradation is owing to a misalignment between how the problem is currently conceived of, and what conception is required for, effective environmental management. We find overwhelming evidence that reversing Peatland degradation necessitates a fundamental shift in applied policy analysis—from treating the crisis as a Type 3 (Compromise), Type 2 (Optimization), or even Type 1 (Commons) problem, to conceiving it as a Type 4 (Prioritization) challenge. Achieving this requires undertaking four essential policy design tasks: engaging sequentialist/lexical ordering processes; identifying key features of the problem that any solution would need to incorporate to effectively overcome; applying path dependency analysis to uncover policy mix innovations capable of “locking-in” sustainability trajectories that can fend off pressures for policy conception drift; and organizing multistakeholder “policy design learning” exercises that integrate complex sources of knowledge produced within, and across, the ecological and policy sciences.

Energy asset stranding in resource-rich developing countries and the just transition - A framework to push research frontiers

Climate policy will inevitably lead to the stranding of fossil energy assets such as production and transport assets for coal, oil, and natural gas. Resource-rich developing countries are particularly affected, as they have a higher risk of asset stranding due to strong fossil dependencies and wider societal consequences beyond revenue disruption. However, there is only little academic and political awareness of the challenge to manage the asset stranding in these countries, as research on transition risk like asset stranding is still in its infancy. We provide a research framework to identify wider societal consequences of fossil asset stranding. We apply it to a case study of Nigeria. Analyzing different policy measures, we argue that compensation payments come with implementation challenges. Instead of one policy alone to address asset stranding, a problem-oriented mix of policies is needed. Renewable hydrogen and just energy transition partnerships can be a contribution to economic development and SDGs. However, they can only unfold their potential if fair benefit sharing and an improvement to the typical institutional problems in resource-rich countries, such as the lack of rule of law, are achieved. We conclude with presenting a future research agenda for the global community and academia.

Fiscal and macroprudential policy coordination for stabilization purposes

AbstractThe COVID‐19 pandemic has highlighted the need of maintaining financial and economic stabilization to mitigate the negative effects of the health crisis. In the context of a currency area, national governments count on national fiscal and macroprudential instruments to stabilize their own economy. Through a DSGE model for a monetary union I assess the welfare implications of different macroprudential‐fiscal policy combinations, that are set with stabilization purposes. The findings confirm that for a supply and a demand shock, as the ones responsible for the economic crisis of 2020, the stabilizing policy mix might deteriorate welfare. By contrast, after a financial shock, similar to that of the Great Recession, the stabilizing policy combination strategies always achieve welfare gains.

Opportunities and limitations for social justice in Germany’s climate adaptation policy

In the quest for (more) effective adaptation, demands are rising in adaptation policy practitioners to address systemic injustices. In practice, however, adaptation incrementalism dominates, i.e. small-scale, reactive solutions, especially as it relates to addressing vulnerable populations. Germany is exemplary of these tensions. Little research investigates the larger context factors which impede the root causes of vulnerability from being addressed, how to transition away from incrementalism, and the role environmental agencies can play in this. Applying historical materialist policy analysis, the article follows a three-step approach which examines context, actors, and processes. The context analysis demonstrates how effective means for social redistribution were reduced since the mid-1980s in Germany’s capitalist welfare state. This corresponds with heightened social vulnerability to climate change. The actor landscape is diversifying. In the past, social policy actors (and tasks) were underrepresented but are becoming more important. The policy process indicates a greater focus on vulnerable populations. Yet, the understanding of the structural root causes of peoples’ vulnerability and financial resources of the policy field remain limited. This corresponds with informatory instruments of shallow depth. An improved root cause analytic coupled with new alliances and policy mixes are a good starting point towards greater social justice in adaptation.