Aligning Policies for a Low-carbon Economy

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This report produced in co-operation with the International Energy Agency (IEA), the International Transport Forum (ITF) and the Nuclear Energy Agency (NEA) identifies the misalignments between climate change objectives and policy and regulatory frameworks across a range of policy domains (investment, taxation, innovation and skills, trade, and adaptation) and activities at the heart of climate policy (electricity, urban mobility and rural land use).

Outside of countries’ core climate policies, many of the regulatory features of today’s economies have been built around the availability of fossil fuels and without any regard for the greenhouse gas emissions stemming from human activities. This report makes a diagnosis of these contradictions and points to means of solving them to support a more effective transition of all countries to a low-carbon economy.



Scaling-up low-carbon investment and finance

There is an urgent need to significantly scale-up investment to low-carbon, more energy efficient alternatives (e.g. renewable energy, sustainable transport systems, energy efficiency) and to shift investment away from fossil fuel use. The low-carbon transition will require mobilising of all sources of public and private sector investment and finance, including institutional investors. Governments need to use their scarce resources to trigger large-scale private sector investment in activities otherwise unlikely to attract sufficient private funding. However, some financial systems regulations hinder the allocation of longterm finance to low-carbon infrastructure investments. This chapter reviews such barriers in areas including: regulations related to long-term investment; corporate disclosures on climate risks; public procurement; and the allocation and delivery of development finance. It then provides some guidance for governments on how to align principles governing financial regulations, corporate governance and public spending with the low carbon transition.


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