Within Reach: Navigating the Political Economy of Decarbonization

Within Reach

Navigating the Political Economy of Decarbonization

Stéphane Hallegatte,

Catrina Godinho, Jun Rentschler,

Paolo Avner, Ira Irina Dorband,

Camilla Knudsen, Jana Lemke,

and Penny Mealy

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Attribution—Please cite the work as follows: Hallegatte, Stéphane, Catrina Godinho, Jun Rentschler, Paolo Avner, Ira Irina Dorband, Camilla Knudsen, Jana Lemke, and Penny Mealy. 2024. Within Reach: Navigating the Political Economy of Decarbonization. Climate Change and Development Series. Washington, DC: World Bank. doi:10.1596/978-1-4648-1953-7. License: Creative Commons Attribution CC BY 3.0 IGO

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ISBN (paper): 978-1-4648-1953-7

ISBN (electronic): 978-1-4648-1954-4

DOI: 10.1596/978-1-4648-1953-7

Cover image: © Arthimedes / Shutterstock. Used with the permission of Arthimedes / Shutterstock. Further permission required for reuse.

Cover design: Bill Pragluski, Critical Stages, LLC

Library of Congress Control Number: 2023919988

Climate Change and Development

The Climate Change and Development Series was created in 2015 to showcase economic and scientific research that explores the interactions between climate change, climate policies, and development. The series aims to promote debate and broaden understanding of current and emerging questions about the climate-development nexus through evidence-based analysis.

The series is sponsored by the Sustainable Development Vice Presidency of the World Bank, and its publications represent the highest quality of research and output in the institution on these issues. The World Bank is committed to sharing relevant and rigorously peer-reviewed insights on the opportunities and challenges present in the climate-development nexus with policy makers, the academic community, and a wider global audience.

TITLES IN THIS SERIES

Green Digital Transformation: How to Sustainably Close the Digital Divide and Harness Digital Tools for Climate Action (2024) by the World Bank

Within Reach: Navigating the Political Economy of Decarbonization (2024) by Stéphane Hallegatte, Catrina Godinho, Jun Rentschler, Paolo Avner, Ira Irina Dorband, Camilla Knudsen, Jana Lemke, and Penny Mealy

Reality Check: Lessons from 25 Policies Advancing a Low-Carbon Future (2023) by the World Bank

Diversification and Cooperation in a Decarbonizing World: Climate Strategies for Fossil Fuel-Dependent Countries (2020) by Gregorz Peszko, Dominique van der Mensbrugghe, Alexander Golub, John Ward, Dimitri Zenghelis, Cor Marijs, Anne Schopp, John A. Rogers, and Amelia Midgley

Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters (2017) by Stéphane Hallegatte, Adrien Vogt-Schilb, Mook Bangalore, and Julie Rozenberg

Shock Waves: Managing the Impacts of Climate Change on Poverty (2016) by Stéphane Hallegatte, Mook Bangalore, Laura Bonzanigo, Marianne Fay, Tamaro Kane, Ulf Narloch, Julie Rozenberg, David Treguer, and Adrien Vogt-Schilb

Decarbonizing Development: Three Steps to a Zero-Carbon Future (2015) by Marianne Fay, Stéphane Hallegatte, Adrien Vogt-Schilb, Julie Rozenberg, Ulf Narloch, and Tom Kerr

Contents

Boxes

Figures

Maps

Tables

Foreword

Political economy can be a sensitive topic. At an individual level, why people do what they do and think what they think is inherently personal, private even. Collectively, however, people’s thoughts, feelings, and behaviors shape current and future events.

It is tempting to avoid analyzing or addressing the political economy for fear of creating unnecessary controversy. But for climate policy makers, this stance will not hold, as shown by the successes and failures of the past decade.

The world has united around the Paris Agreement on climate change, committing to hold global temperature rise to less than 2°C above preindustrial levels and pursue efforts to limit it to 1.5°C. More than 70 countries, representing 76 percent of global emissions, have pledged to reach net zero emissions. Meanwhile, the costs of low-carbon technologies have fallen, and their capabilities have risen.

If people were driven purely by science and economics, the climate crisis would be halfway to solved by now. But, as the latest Intergovernmental Panel on Climate Change (IPCC) report lays out so unequivocally, it is not. Moreover, unless the political economy is considered as thoroughly as the science and economics of climate change, it will not be.

When we look at climate success stories across the world, it is tempting to focus on the substance of policies, be it climate-smart agriculture, renewable energy, or green building codes. This is undoubtedly useful. Yet it is equally useful to peel back the particulars to expose the underlying characteristics of successful policies. In doing so, we are forced to reevaluate what is considered possible.

As this book shows, overcoming political economy barriers is within reach. However, it does require policy makers to adopt certain approaches.

First, appreciate that the political economy is not a static force to navigate. Rather, it is a dynamic relationship that evolves. Indeed, policy makers have the ability to strategically shape how the political economy evolves by doing things that build support over time.

Politicians build support for what they want to do by knowingly picking their battles and words to change minds. Policy makers can also bridge the gap between what is possible and what is needed by knowingly advancing policies that will be well received by most, if not all. This, in turn, facilitates further action. As the adage goes, new policy creates new politics.

Second, fully consider what is really motivating people. People’s willingness to embrace climate policies is not purely driven by fear of extreme climate impacts or whether they themselves personally benefit. There are even cases where direct beneficiaries of particular climate policies still oppose them because they perceive them as unfair or illegitimate.

Sometimes, the primary driver of individuals’ views on climate action is not their budget but their beliefs. Yes, policy makers need the hard data to plainly assess where the costs and benefits fall. But it is essential to acknowledge that this is only half the equation.

Third, embrace pragmatism. This is easier said than done. As the science becomes increasingly grim and the timeline more urgent, it is tempting to become more unyielding in what is considered an adequate policy response. Fight that urge. It will only close doors. Instead, be more flexible about how to achieve climate objectives on the informed understanding that doing so will open more doors than it closes.

In practice, that requires policy makers to give much more thought to policy opponents—both the substance behind their opposition as well as the power they wield to slow or sink action. Find out what feeds them, without presumption, and make room for them.

The need for emissions reduction is more urgent than ever. The approach proposed in this book is not about slowing change—quite the opposite. By starting with what is possible, policy makers can create momentum and help catalyze new technologies, new economics, and new politics, making accelerated change possible.

Navigating political economy barriers is hard. It is easier to believe that if people just understand the science of climate change, they will support emissions reduction efforts. Or that if people benefit from a climate policy, they will support it. That may be true to a degree, but it will not ever be enough.

Knowing what has been achieved, and the urgency of what is left to do, policy makers need to favor climate action that is dynamic, that allows for the paradoxes of human nature, and that is above all pragmatic. The success of climate action over the next decade and beyond depends upon policy makers embracing their power to shape not only economic and technological fortunes, but the political economy too.

Juergen Voegele

Vice President for Sustainable Development

World Bank

Acknowledgments

The preparation of the report was led by Stéphane Hallegatte, Catrina Godinho, and Jun Rentschler, with a core team comprising Paolo Avner, Ira Irina Dorband, Camilla Knudsen, Jana Lemke, and Penny Mealy. Stéphane Hallegatte supervised the preparation, review, and editing of the report. Catrina Godinho co-led the writing of the report and project administration, conceptualization, review, and editing. Jun Rentschler co-led the conceptualization, project management, and analysis. Penny Mealy led the preparation of chapter 3; Ira Irina Dorband and Paolo Avner led the preparation of chapter 4; and Camilla Knudsen led the preparation of chapters 5. Jana Lemke was instrumental in writing, as well as review and production. All authors contributed to writing, reviewing, and preparing the final manuscript.

The report includes important contributions and inputs from Alina Averchenkova, Puneet Chitkara, Mathieu Cloutier, Jose Antonio Cuesta, Hancheng Dai, Frederick Daley, Verena Fritz, Michael Ganslmeier, Elisha George, Meghan Gordon, David Groves, Marek Hanusch, Gilang Hardadi, Daniel Herszenhut, Kayenat Kabir, Tamara Krawchenko, Mariza Montes de Oca Leon, Jia Li, Charlotte Liotta, Vivian Liu, Alexander Lotsch, Jorge Martinez-Vazquez, Nicholas Menzies, Tom Moerenhout, Jonas Nahm, Shohei Nakamura, Andrew Nell, Peter Newell, Samuel Okullo, Wei Peng, Joe Pryor, Sophie de Vries Robbe, Marcus Saraiva, Hugh Searight, Harris Selod, Anjali Sharma, Iryna Sikora, Johannes Urpelainen, Vincent Viguié, Anya Vodopyanov, and Farah Zahir.

Key feedback and suggestions were provided by Luc Christiaensen, Joeri de Wit, Joseph Dickman, Chandrasekar Govindarajalu, Dirk Heine, Stuti Khemani, Xenia Vanessa Kirchhofer, Somik Lall, Alan David Lee, Neil McCulloch, Sheoli Pargal, Rachel Bernice Perks, Julie Rozenberg, Marcela Rozo, Neha Sharma, Michael Stanley, Brian James Walsh, Michael Ward, and Melvin H. L. Wong.

We gratefully acknowledge the invaluable comments and advice provided at different stages by internal and external peer reviewers: Aziz Amuzaini, Eric Arias, Christian Bodewig, Chiara Bronchi, Elizabeth N. Ruppert Bulmer, Kevin Carey, Louise J. Cord, Thomas Farole, Marianne Fay, Caroline Fischer, Vivien Foster, Adrian Fozzard, Verena Fritz, Defne Gencer, Nora Kaoues, Tom Kerr, Jose Antonio Cuesta Leiva, Dena Ringold, Stephane Straub, Stephen Stretton, Richard Sutherland, William Sutton, Ioannis Vasileiou, Andrea Fitri Woodhouse, and Nkulumo Zinyengere.

Mary C. Fisk of the World Bank’s Publishing Unit was the production editor. We are also grateful to Lucy Southwood for her skillful developmental editing of the manuscript and to Honora Mara for her thorough copyediting. Bill Pragluski, Critical Stages, was the designer. Communications support was provided by Carl Hanlon, Ferzina Banaji, Melissa Bryant, Catherine Sear, Jessica Brand, Joana Lopes, Alexis Condon, Sarah Farhat, and Jon Race.

The report was prepared under the guidance and leadership of Juergen Voegele, Vice President for Sustainable Development. Finally, the team acknowledges the generous support of the Climate Support Facility and guidance from Jennifer Sara, Director of the Climate Change Group, and Renaud Seligmann, Director for Strategy and Operations of the Sustainable Development Practice Group.

About the Authors

Paolo Avner is a senior