What is Good Climate Policy? Chile, Morocco, and how to get it right
photo: Raimond Klavins | unsplash

What is Good Climate Policy? Chile, Morocco, and how to get it right

When thinking of something all countries have in common, climate change legislation probably doesn’t spring to mind. In fact, all countries do have some form of climate legislation.

Yet even if countries were to implement all the existing policies and plans, they’d still only achieve half the emissions reductions needed to restrict global temperature increases to 1.5°C.

This void between need and reality is both an ambition and an implementation gap.

Scientists have found that while the introduction of climate change laws indeed does lead to lower emissions, the laws implemented have brought a completely inadequate 5–9% increase in the remaining carbon space for staying within 1.5°C.

This clearly shows the world needs more effective laws and policies.

So then, what are the key elements of a successful climate policy? Chile’s energy transition and Morocco’s reform of fossil fuel subsidies offer two examples. This post defines good climate policies, where they go astray, and examines the successes in Chile and Morocco.

Defining a good climate policy

Climate and energy policies that have led to significant emissions reductions in a given country compared with the projected business-as-usual emissions pathway in a sector are ‘good,’ according to scientists. Climate policies should be long, loud, and legal, and must be measured by their effectiveness, equity, and legitimacy.

An effective policy must provide clear directives to the implementing institutions. These institutions, in turn, must have the necessary capacity and political skills to implement the policy. In other words, the legislation quality must be high to ensure effective implementation. This aspect true of all policy, climate or otherwise.

A climate policy also must not be designed in a vacuum. Climate change affects urban planning, foreign affairs, security, the transport sector, health, and the energy sector, among others; therefore, relevant ministries should be involved when drafting policies. For just and equitable policy design, policymakers should consult with key stakeholders—such as affected communities, union representatives, youth representatives, and vulnerable groups—to achieve procedural justice.

Effective climate policy must be developed coherently with other climate targets at the national and international levels. Nationally, a climate policy needs to be consistent with other climate goals, such as long-term net zero targets and interim targets. Internationally, the policy should contribute to achieve the Paris Agreement goals and be embedded in the country’s Nationally Determined Contribution (NDC). International coalitions, such as the Beyond Oil and Gas Alliance and Powering Past Coal Alliance, help raise ambition.

Climate policy is generally more effective when it’s enshrined in national law, allowing citizens to hold their governments legally accountable. In this regard, the United Kingdom was the first major economy to have legally binding emissions targets. And while we’ve seen recent rollbacks in the UK, the move inspired countries like Germany to implement similar climate laws. Even better is when a country has an independent scientific body for evaluating and monitoring climate action, such as the UK’s Climate Change Committee and the Danish Council on Climate Change.

A national climate policy’s effectiveness depends on the country’s ability to implement it; in other words, the strength of the rule of law. Post-implementation, it’s important to assess whether the policy has successfully reduced emissions, taking its short- and long-term effects into account.

The transition to renewable energy: How Chile is leading the way

Transitioning from fossil fuel-based energy supply to renewable energy generation is the policy area with the greatest impact on global emissions. Worldwide, more than 140 countries have renewable energy targets, and many of these targets are supported by economic incentives or regulatory instruments.

Chile, highly vulnerable to the effects of the climate crisis, is one of these countries. It’s at the forefront of the renewables transition. While fossil fuels still have the largest share of its energy supply (73% in 2022), Chile’s renewable energy capacity has increased substantially. Historically a consumer of fossil fuels, the country set an ambitious target in its energy strategy, aiming to generate 80% of its electricity from renewable sources by 2030 and 100% by 2050. The latest CCPI ranks Chile 11th overall and 17th in the Renewable Energy category.

The recipe for a high-income-economy energy transition lies in a combination of factors. First, the 2022 adoption of Chile’s Climate Change Framework Law laid the groundwork. Developed through a participatory approach, the law enshrined the 2050 climate neutrality and NDC targets as legally mandated. It also distributed responsibilities among most of the ministries, binding them to climate action and building an institutional framework ensuring survival across changing governments. Its National Energy Strategy 2012-2030 involved communities and the private sector, giving it broad political support, while focusing on new green technologies, such as green hydrogen.

Another milestone was the law’s decarbonisation plan–-an agreement between the government and the private utility sector to shut down or convert 71% of all coal plants by 2025 and 100% by 2040. Its long-term climate strategy includes specific measures, such as an improved bidding system for electricity supply and fixed CO2 emission targets and budgets for each sector.

With high renewable energy potential owing to its geography combined with a strong political will, Chile can claim to be a leader in the energy transition. Despite this, our national experts also note that fossil fuel subsides, which are still in place, should not be continued, and that the implementation has not yet led to the anticipated GHG emissions reduction. The long-term effects also still need to be evaluated.

However, so far, Chile is committed to ensuring coherency, legal accountability, and equity in its energy transition.

Subsidising destruction through fossil fuel subsidies

While national governments have considerable power to incentivise green technologies, many countries use their financial power the complete opposite way—by spending money on activities that accelerate the climate crisis; namely, in environmentally harmful subsidies (EHSs).

These countries are very much aware of what they’re doing. The EU Commission has put together a complete overview, listing each member state’s EHS. The EHSs range from tax exemptions/reductions for energy-intensive companies or specific groups—such as company automobile tax benefits in Austria, Belgium, and Germany—to direct subsidies, such as a beef slaughter premium in Finland. Germany’s aviation industry is also subsidised through an energy tax exemption.

Fossil fuel subsidies are the most prominent example of how governments continue to financially reward energy production, which has disastrous impacts on the climate. These subsidies are policies that reduce fossil fuel costs for users and/or producers. The fossil fuel industry benefits massively from states’ continued preferential treatment, whether in the form of direct cash transfers, credits, tax exemptions, or policy inaction.

The scale of fossil fuel subsidies is a staggering 7.1% of global GDP, as the International Energy Agency estimates global subsidies at $1 trillion in 2022 – an all-time high and nearly double that in previous years. Subsidies in the EU were an estimated €123 billion in 2022. Meanwhile, industrialised countries have pledged to provide only $100 billion (about €94 billion) in climate finance annually.

While further stoking the climate crisis, fossil fuel subsidies give harmful energy sources a leap over renewables, slowing the transition to cleaner fuels. Low-income households aren’t even the main benefactors of lower energy prices; rather, the better-off segments are.

Phasing out fossil fuel subsidies is therefore crucial for achieving the global energy transition. Policymakers recognised this as early as 2009, when the G20 states agreed to ‘phase out and rationalise over the medium-term inefficient fossil fuel subsidies.’ At COP28 in 2023, countries agreed to ‘phase out inefficient fossil fuel subsidies.’ What ‘inefficient’ means remains unanswered and, as with all international pledges, implementation will take place at the national level.

Morocco: When the financial burden became too big, change was needed

Morocco has taken up the challenge of reforming its fossil fuel subsidies. The country ended gasoline and fuel oil subsidies in 2014 after a transitional period. While it spent $6.5 billion (6.5% of its GDP) on these in 2012, this amount fell to 1.1% in 2015. The reform was coordinated across key ministries, combined with ambitious renewable energy targets and aligned with other national climate plans (such as the NDC), and, thus, ticking the boxes for good climate policy criteria.

Next to saving money, the reform is expected to reduce domestic emissions by 6.6% by 2030 compared with business-as-usual emissions. Morocco is ranked 9th overall in the CCPI, which puts it among the high-performing countries.

Fossil fuel subsidy reform in a just manner

Despite the success, protests against the reform and price increases highlight the importance of countries implementing reform in a just and equitable manner. Morocco’s government introduced and expanded social policies. It also continued to subsidise butane, which is used primarily by low-income households use for cooking.

The case of Morocco shows governments should take a structured approach to phasing out fossil fuel subsidies, a reform comes with many associated benefits. Regrettably, in 2023, geopolitical circumstances led to Morocco resuming fossil fuel subsidies.

Effective climate policies are critical for reducing emissions. As mentioned, good climate policy is long, loud, and legal, and must be evaluated by its effectiveness, equity, and legitimacy. It must be achieved through stakeholder engagement and show policy coherence, cross-ministerial collaboration, and strong implementation. Chile’s transition to renewable energy shows what this can look like, and Morocco shows the importance of phasing out fossil fuel subsidies in a just manner.

Author

Merle Clara Riebandt