The Climate Action Monitor 2024

3. How far did countries’ climate action progress?

Effective climate action plays a critical role in complying with countries’ national commitments and achieving net-zero targets. In 2023, only a modest expansion of 2% in countries’ climate policy effort was recorded. To achieve the Paris Agreement temperature goals, climate action must increase significantly. Chapter 1 of this report showed that current Nationally Determined Contributions (NDCs) and net-zero targets are not in line with limiting global warming to 1.5°C or 2°C, indicating an ambition gap. According to the first Global Stocktake1, policies implemented by the end of 2020 were insufficient to meet countries’ NDCs, indicating an implementation gap as well (UNFCCC, 2023[1]).

This section provides a snapshot of key developments in climate policies in 2023 based on the Climate Actions and Policies Measurement Framework (CAPMF) developed under the International Programme for Action on Climate (IPAC).2 The CAPMF tracks trends in climate mitigation action of governments by considering both adoption and stringency (i.e. the degree to which policies incentivise or enable GHG emission reduction)3 of policies for OECD and partner countries, excluding the USA (Nachtigall et al., 2022[2]). It identifies 130 policies covering a broad range of instrument types (e.g. market-based, non-market-based) and other climate policy actions (e.g. climate targets, climate governance, climate data). These account for around 75% of the instruments listed in the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report (IPCC, 2022[3]). Moreover, the CAPMF also covers important sector-specific policies responsible for around 89% of greenhouse (GHG) emissions in OECD and OECD partner countries.

The primary objective of the CAPMF is to track the evolution and stringency of government national climate mitigation policies over time (1990 to 2023). It collects a broad set of harmonised data that is internationally comparable and suitable for a broad-based quantitative and qualitative analysis. However, it has some limitations and, hence, should be interpreted carefully. 4 First, the coverage is not global; it covers 50 jurisdictions including the European Union as a bloc. It considers all countries covered under IPAC except the United States, since the CAPMF does not fully capture its climate action. Second, due to data availability constraints, the CAPMF does not collect data on all policies, for example, it does not fully capture new climate policies such as carbon abatement payment or pledges (e.g. Global Renewables and Energy Efficiency Pledge) (COP28 UAE, 2023[4]) nor does it include ETS II, which will only become fully operational by 2027. Efforts are underway to expand the policy coverage of the CAPMF to better reflect countries’ policy approaches and capture more recent policy developments. Finally, the results of the CAPMF should be interpreted in a descriptive rather than prescriptive way (see Annex for more details).

Notwithstanding these limitations, the CAPMF is a valuable database that provides insights into increasingly complex and varied climate policy approaches across countries. It has already been used in several studies and served as a foundation for evidence-based policy recommendations (D’Arcangelo, Kruse and Pisu, 2023[5]; Stechemesser et al., 2024[6]).

The expansion of climate mitigation policy action has slowed

In 2023, national climate mitigation policy action, as measured by the CAPMF, only expanded by 2% across OECD and OECD partner countries (Figure 3.1). While this is more than the 1% observed in the previous year (OECD, 2023[7]), it still falls short of the 10% annual average expansion in climate policy action between 2010 and 2020. Climate policy action is measured as a combination of policy density and policy stringency.5 In 2023, the increase in climate policy action was driven principally by the strengthening of existing policies; countries adopted few new policies.

The following sections provide details on the areas where climate policy action expanded and where it did not. The modest expansion in national climate mitigation policy action in 2023 reflects many different, at times opposing, policy developments across country groups, sectors, and instrument types. Generally, climate policy action expanded in most countries but declined in a few. Notably, climate policy action contracted slightly in the electricity sector but rebounded in the transport, buildings and – most strongly – industry sector after a decrease in 2022. Climate policy action grew strongly for non-market-based instruments (nMBIs) such as standards. Meanwhile, market-based instruments (MBIs) such as carbon pricing and subsidies declined slightly, continuing the slowdown of recent years.

This modest expansion of climate policy action underscores the need for governments to intensify efforts to fulfil their NDCs and achieve the Paris Agreement temperature goals. While climate policy action – as measured by the CAPMF – does not directly measure the effectiveness of these policies, recent evidence suggests a positive relationship between the expansion of climate policy action and emissions reductions (Nachtigall et al., 2024[8]). Specifically, the average change of climate action between 2015 and 2020 has been associated with a 13% reduction in emissions (Nachtigall et al., 2024[8]). Extrapolating these results suggests that countries must expand climate action to meet their NDCs and to be on track with the Paris Agreement temperature goals (IPCC, 2022[3]). Countries retain multiple options to accelerate climate action by strengthening existing policies or introducing new initiatives.

The expansion of climate mitigation policy action was mostly driven by increases in policy stringency

In recent years, the expansion of climate mitigation policy action was driven by the strengthening of existing policies rather than due to adoption of new ones. Between 2010 and 2022, more than half of the aggregate expansion of climate policy action can be attributed to the adoption of new policies (Figure 3.2). However, in 2023, policy adoption was responsible for only 10% of the expansion in climate policy action whereas strengthening existing policies accounted for 90%. This finding underscores the critical importance of tracking policy stringency. It would not be possible to recognise a significant expansion in climate action based on increased intensity by only tracking policy adoption, for example, the expansion of climate action in the European Union based on the increasing price of GHG emissions in EU Emissions Trading System (EU ETS) after its implementation in 2005 would be undetected, although prices increased from EUR 5 to EUR 80.

The gap in climate policy action between OECD and OECD partner countries continued to widen

In 2023, climate policy action increased in 41 countries, accounting for around 60% of global GHG emissions. At the same time, it contracted in eight countries, accounting for 8% of GHG emissions. On average, OECD countries had stronger climate action in place than OECD partners; this trend has been progressively widening over time, increasing by almost 2% in 2023 (Figure 3.3). The increasing disparity of climate action between countries can affect competitiveness and may lead to carbon leakage, potentially undermining the effectiveness of increased climate action on global emissions reductions. This reinforces the need for enhanced international co-ordination and co-operation to ensure fulfilment of national commitments and achievement of global objectives.

Climate policy action of some sector-specific policies has picked up

Sectoral climate policy action picked-up in 2023. This was driven by increased policy action in the transport, buildings and industry sectors (Figure A.1.), steered by increased action of nMBIs (see below). Using the CAPMF data, a study led by the Potsdam Institute for Climate Impact Research indicates that certain sectoral policies were responsible for significant emissions reductions in various countries (Box 3.1).

In contrast, climate policy action in the electricity sector decreased, primarily due to fewer renewable energy auctions. The slowdown of climate policy action in the electricity sector is accompanied by a rise of electricity-related emissions. Despite more availability of cost-competitive renewables (IRENA, 2022[9]), electricity-related emissions in OECD and OECD partner countries grew by over 2% in 2022, remaining the major emissions source. On the positive side, more countries committed to coal bans and phase-outs.6

In 2023, countries continued the upward trend in international climate co-operation policies. This was primarily due to the improved provision of climate data, such as such as the implementation of the System of Economic and Environmental Accounts (UN, 2012[10]). Cross-sectoral policies also experienced some increases, due to improvements in fossil fuel production policies, public expenditure of research, development and demonstration, and setting climate targets. However, virtually no country accelerated net-zero target ambitions, which have increasingly become a source of domestic political contention (Nature, 2023[11]). (see Figure A.3 for more details).

Box 3.1. Climate policies that have resulted in significant reductions in emissions

Policy makers, researchers and businesses need to know which policies reduce emissions at scale to meet the temperature goals of the Paris Agreement. A study led by the Potsdam Institute for Climate Impact Research combines the CAPMF data with a machine learning approach to detect major emissions breaks. This provides the first global, systematic ex post evaluation to identify policies and policy mixes that have led to large emissions reductions.

Figure 3.5 illustrates two detected emissions breaks (vertical red lines) in Great Britain's electricity sector. These follow the introduction of a carbon price floor (CPF) that imposed a minimum carbon price for power producers in the EU Emissions Trading System. The literature has attributed most of the decline in emissions to the CPF (Abrell, Kosch and Rausch, 2022[12]; Leroutier, 2022[13]; Döbbeling-Hildebrandt et al., 2024[14]). This study reveals the CPF was part of a wide policy mix, indicated by the coloured squares at the bottom of Figure 3.5. The mix highlighted the importance of non-market-based instruments such as renewable portfolio standards or stricter air pollution standards alongside market-based instruments such as feed-in-tariffs and auctions.

Figure 3.5. Policy mixes that led to substantial emissions reductions

Emissions and policy adoption or strengthening: Great Britain’s electricity sector 2000-2022

The study also offers a broad range of important findings and policy recommendations. Most identified emissions reductions were linked to two or more measures, highlighting the importance of policy mixes. There is no one-size fits all approach; successful policies and policy mixes vary across sectors and countries. Carbon pricing is particularly effective in the electricity and industry sector, both of which are characterised by firms that seek to maximise profit. Emissions reductions in the buildings and transport sectors – which are typically characterised by heterogeneous households – mostly require a complex mix of policies, including non-market-based instruments. Carbon pricing, regulation and subsidies work well in developed countries, but carbon pricing does not always work in developing countries. In developing countries, the study could not identify emissions breaks associated with carbon pricing in the transport and electricity sectors.

Source: (Stechemesser et al., 2024[6]).

Market-based instruments continued to decrease, non-market-based instruments increased and actions based on targets remained strong

Market-based instruments use continued to decrease

The use of MBIs has declined for the second consecutive year, primarily driven by reduced financial support for renewable electricity, notably auctions (Figure 3.6). This trend reflects both governments’ diminishing fiscal space and reluctance to implement or strengthen carbon pricing schemes (Dechezleprêtre et al., 2022[15]). On a positive note, the European Union has passed the “Fit-for-55” package, which includes a plan to implement ETS II to cover the buildings, road and maritime transport sectors (European Commission, 2023[16]). However, as ETS II will only become fully operational by 2027, the CAPMF does not currently take it into account.7

Non-market-based instruments are growing driven by performance standards

In contrast to MBIs, the use of nMBIs increased sharply in 2023 (Figure 3.7). This was primarily due to more stringent performance standards, notably related to EU minimum energy performance standards (MEPS) for electric motors. There was also some progress in other performance standards, technology standards and information instruments. For example, Peru adopted new MEPS for appliances, and the European Union banned the sale of new passenger cars with internal combustion engines by 2035.

Countries advanced on policies related to setting targets, governance, climate data provision and international co-operation

Policy actions related to targets, governance, climate data and international co-operation increased slightly after having grown significantly with adoption of the Paris Agreement in 2015 (Figure 3.8). Positive developments in 2023 include Korea’s ratification of the Kigali Amendment to reduce the consumption and production of hydrofluorocarbons (HFCs) (UNEP, 2022[17]). In addition, countries such as Iceland, Ireland and France significantly ramped up financing of their climate advisory bodies, highlighting their importance to guide and advise governments, and ensure commitment and accountability. Developed countries exceeded the USD 100 billion goal of climate finance for the first time in 2022, reaching USD 115.9 billion (OECD, 2024[18]).8

Countries use different policy mix to meet their emissions reduction targets

The climate change policy mix can be broadly defined as governments’ general strategy to reduce emissions through adoption of different types and stringency levels of policies tailored to different emissions sources. While the CAPMF cannot capture the entire complexity of countries’ policy approaches, it can identify key characteristics. These include the number of adopted policies, the stringency, the types (e.g. MBIs versus nMBIs), and the sectoral focus.

This section presents different characteristics of countries’ policy mix, contrasting OECD with OECD partner countries in the year 2023. More details on the heterogeneity of policy approaches across countries, along with detailed country-level data, can be found in the IPAC Dashboard.

The climate policy mix results from a complex interaction between past climate action, climate ambitions, emissions profiles and available technologies, as well as countries’ cultural, social, political and institutional conditions, among other factors. There is no one-size-fits-all policy approach and no single recipe for effectiveness. Assessing policy effectiveness requires more sophisticated econometric or modelling techniques, such as those presented in Box 3.1 or proposed under the OECD Inclusive Forum on Carbon Mitigation Approaches (IFCMA) (OECD, 2023[19]).

OECD countries have more policies than partner countries do, but their stringency levels are comparable

OECD countries, on average, have a higher policy density than OECD partners have, while the levels of stringency are comparable (Figure 3.9). OECD countries generally use a more complex mix of policies to reduce emissions. This difference also explains the divergence of climate action between OECD and OECD partner countries in 2023. Since OECD countries had adopted more policies and most of their increased climate policy action was driven by strengthening existing policies, their climate policy action expanded more than those of OECD partner countries.

OECD partner countries have less stringent policies, though some countries reach stringency levels of OECD countries (Figure 3.9, lower panel). The CAPMF data illustrate that some countries prefer to adopt relatively few, albeit stringent, policies. Conversely, others prefer to adopt many policies with rather low stringency. Both approaches culminate in the same level of overall climate policy action. Using CAPMF data, a recent OECD study sheds light on the heterogeneity of countries’ mitigation strategies (D’Arcangelo, Kruse and Pisu, 2023[5]). Its findings suggest that strategies with more diverse policy instruments may create synergies that enable countries to reduce emissions at a lower level of policy stringency than introducing few instruments.

Figure 3.9. Difference in climate policy action between OECD countries and partners is mostly driven by differences in policy density, not policy stringency

Policy adoption and average stringency of adopted policies by country group: 2023

Source: Based on data from OECD, IEA, ITF, World Bank and others using the methodology of Nachtigall et al. (2022): “The climate actions and policies measurement framework: A structured and harmonised climate policy database to monitor countries’ mitigation action”, OECD Environment Working Papers, No. 203, OECD Publishing, Paris, https://doi.org/10.1787/2caa60ce-en.

OECD partner countries place a greater emphasis on non-market-based instruments

OECD partner countries put much more emphasis on the use of nMBIs compared to OECD countries (Figure 3.10). For instance, information instruments – one type of nMBI – in OECD partner countries exceeds that in OECD countries (Figure A.8). Climate policy actions related to targets, governance, climate data and international co-operation also play a larger role in OECD partner countries whereas MBIs are more used in OECD countries.

The predominance of nMBIs in OECD partner countries may reflect, among other reasons, the lower administrative capacity to adopt and enforce the policies compared to MBIs.9 Some OECD partner countries may lack administrative capacity to administer complex MBIs such as an ETS (Narassimhan et al., 2018[20]). Partner countries may also prefer to use their budget for other purposes than to subsidise the development and deployment of low-carbon technologies – a key MBI. The prevalent use of nMBIs in OECD partner countries’ policy mix reiterates the importance of describing them. Without this information, policymakers, researchers and businesses would misinterpret the climate policy action of OECD partner countries.

Climate action is misaligned with countries’ emissions profile in transport and electricity sectors

The descriptive analysis suggests that climate policy action may not be well-aligned across emission source sectors. Across the four sectors covered by the CAPMF, transport accounts for the highest share of energy-related emissions in OECD countries, but climate action is second to lowest (Figure 3.11). Similarly, in OECD partner countries, climate action in the electricity sector is the lowest, yet this sector accounts for the largest share of emissions (Figure 3.11). The building sector in both OECD and OECD partner countries shows high levels of climate action, but its share of emissions is lowest in both country groups.

The apparent misalignment of the level of climate policy action and GHG emissions across different sectors suggests possible avenues for more effective climate action. Although there are many other considerations, such as effectiveness, equity and costs, these, albeit indicative, results would suggest that OECD countries need to intensify climate policy action in the transport sector while OECD partner countries need to focus action on the electricity sector. In the first case, some countries have implemented new policies. For example, countries are increasingly channeling funds towards electric mobility whereas the European Union expanded its emissions trading scheme towards the transport (and buildings) sectors. In the second case, more needs to be done to decarbonise the electricity sector. While the CAPMF can provide a first indication of a potential misalignment, more work is needed to assess countries’ specific conditions and restrictions to provide tailored policy recommendations.

Climate adaptation is increasingly becoming a priority for countries

In recent years, climate adaptation has emerged as a top priority for countries, driven by the escalating impacts of climate-related hazards (Chapter 2). Tracking adaptation policies could further support stakeholder engagement, promote peer learning and raise the efficacy of adaptation initiatives. Some progress has been made in surveying adaptation policies (OECD, 2024[21]), however more work needs to be done to identify a set of indicators that can better reflect each country’s specific climate-risk profile.

The number of countries submitting National Adaptation Plans (NAPs) and National Adaptation Communications to the United Nations Framework Convention on Climate Change (UNFCCC) provides an indicator of the expansion of climate adaptation efforts. The metric serves as a crucial indicator for assessing climate action under the Sustainable Development Goals (SDGs) (UN, 2017[22]). NAPs have surged since the adoption of the Paris Agreement to more than 50 countries in 2023 (Figure 3.13). This indicator provides a first glance of countries’ priorities and strategies for climate adaptation. However, it needs to be underpinned by concrete actions and robust monitoring frameworks to be effective.

Climate action and enhanced ambition

Climate-related hazards have reached unprecedented levels. Yet, under current policies, global GHG emissions are projected to rise by 2030 (UNEP, 2024[23]). While many countries have expanded their climate policy action efforts in recent decades, there is a critical need to enhance ambition and align action with the temperature goals set by the Paris Agreement.

Consistent with other international reports such as the UNEP emissions gap report (UNEP, 2023[24]) (UNEP, 2024[23]), the 2024 edition of the Climate Action Monitor confirms that current NDCs fall short of the GHG emission reductions necessary to achieve the Paris Agreement goals, creating an ambition gap. Moreover, current climate policies are insufficient to meet countries’ NDCs, as pointed out in the Global Stocktake (UNFCCC, 2023[1]). The Sixth Assessment Report of the Intergovernmental Panel on Climate Change estimated that policies implemented by the end of 2020 are projected to result in higher global greenhouse gas emissions than even the modest emission reduction commitments presented in NDCs, indicating an implementation gap. The slow progress of climate policy action in 2022 and 2023, as reported in this Monitor, poses a risk of countries failing to close the implementation gap.

Nevertheless, there are considerable opportunities for countries to address and narrow the implementation and ambition gaps. The upcoming submissions of new NDCs by early 2025 presents a crucial moment at COP29 to boost ambition and work towards limiting global warming to 1.5°C. More ambitious NDCs must be underpinned by concrete climate actions and policy instruments to effectively reduce emissions and close the implementation gap. Tracking trends in climate action is therefore essential for assessing countries’ efforts. Databases that track climate policy action can play a pivotal role in uncovering key policy trends by providing extensive information on the adoption and stringency of selected climate mitigation policies.

Improving policy data is essential to better support countries in reaching their emissions targets. The OECD’s Horizontal Project Net Zero+, which explores how governments can enhance climate and economic resilience, and IPAC which collects foundational data and develops key indicators, can support countries by providing key information and evidence-based policy recommendations. These complementary efforts are vital to provide a comprehensive overview of countries’ mitigation policy landscape and will support policy makers in implementing better climate policies for better lives.

References

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[1] UNFCCC (2023), Outcome of the First Global Stocktake, Fccc/Pa/Cma/2023/L.17, United Nations Framework Convention on Climate Change Secretariat, https://unfccc.int/sites/default/files/resource/cma2023_L17_adv.pdf.

Notes

← 1.  In the Paris Agreement, Parties agreed to carry out every five years a global stocktake of implementation to assess collective progress towards achieving its goals.

← 2.  The CAPMF is a climate mitigation policy tracker and database that covers countries responsible for 63% of global GHG emissions. The CAPMF tracks 130 policy variables, grouped into 56 climate actions and policies, consistently from 1990 to 2023 across 50 countries and the EU-27 as a bloc. The United States has chosen to not include their data in CAPMF given concerns that CAPMF does not fully or accurately capture U.S. climate action.

← 3.  Policy stringency is defined as the degree to which policies incentivise emissions reductions. Following the methodology of the OECD Environmental Policy Stringency Index (Kruse et al., 2022[25]), the CAPMF calculates stringency as a relative concept by assigning a stringency score between 0 (not stringent) and 10 (very stringent) to each policy variable. This is based on the in-sample distribution across all countries and years of the policy variables’ level (e.g. tax rate, emissions limit value, government expenditure) (Nachtigall et al., 2022[2]). High stringency values in a particular country do not necessarily suggest the policy is stringent enough to meet its mitigation goals. Rather, it means the policy in this country and year was more stringent compared to all other countries and years.

← 4.  The CAPMF should not be used as a performance indicator to rank countries’ climate action as its policy scope may not represent adequately the policy approach of some countries. For example, information is limited in sectors such as agriculture, forestry and land use, as well as on specific instruments such as tax credits. Furthermore, the CAPMF does not fully capture new innovative instruments or climate actions such as carbon abatement payment or pledges (e.g. Global Renewables and Energy Efficiency Pledge) (COP28 UAE, 2023[4]) nor does it include the ETS II, which will only become fully operational in 2027. Thus, policies included in the CAPMF may not be fully representative of the mitigation approaches of some countries. In terms of interpretation, although previous work has found a positive association between climate action as measured by the CAPMF and emissions reductions (Nachtigall et al., 2024[8]), increasing climate policy action does not necessarily imply a stronger mitigation effect. The effects of increased policy adoption and policy stringency will depend on many factors such as emissions coverage and abatement costs and will likely have different impacts across countries depending on their emission profile, available energy resources, and institutional framework (Nachtigall et al., 2022[2]).

← 5.  The CAPMF calculates climate policy action as the average of policy stringency across all building blocks (sectoral, cross-sectoral, international policies). Policy stringency in each building block is calculated as the average across all underlying modules (e.g. electricity market-based instruments, electricity non- market-based instruments), which – in turn – are calculated as the average of all policies included in each module. See Figure 2.1 in the methodological paper for the structure of the CAPMF (Nachtigall et al., 2022[2]). This approach is less subject to data availability compared to the unweighted average across all policies covered by the CAPMF. For some modules (e.g. electricity market-based instruments), the CAPMF comprises a large number of policies whereas for others (e.g. industry non- market-based instruments) it comprises only a few. Creating an unweighted average across all policies would, thus, bias overall climate action towards policy areas for which data availability is better. For the calculation of climate policy action of market-based or non market-based instruments, however, the CAPMF uses the unweighted average of policy stringency across all policies covered in the respective policy instrument type.

← 6.  For example, a number of countries joined the Powering Past Coal Alliance, which commits to accelerate the transition from unabated coal to clean energy (PPCA, 2017[26]). New members include the United States – the world’s third largest coal user after China and India – as well as Colombia, the world’s sixth largest coal exporter.

← 7. Numbers in this report do not yet include country-level data estimates on fossil fuel subsidies (FFS) for 2023. Accounting for FFS data may turn the decline of climate policy action in MBIs to a slight increase. In fact, FFS introduced in 2022 to shield households and firms from rocketing energy prices as a result of the energy crisis were responsible for the decline of climate policy action in MBIs in 2022. However, FFS declined sharply in 2023 thanks to a decrease of the global oil price and to governments increasingly removing financial support for energy products (Figure A4).

← 8.  This milestone was reached but two years later than the original 2020 target year. Most of the growth in climate finance, compared to the previous year, can be attributed to bilateral and multilateral public finance, as well as to attributed private finance. The CAPMF does not capture international climate finance flows.

← 9.  In fact, some OECD partner countries such as China adopted MEPS for electric motors earlier than the European Union (Figure A5).