The Rapid Rise of Global Climate Regulations
In today’s post, we look at how climate laws have trended over time, the sectors they are targeting, and themes.
Over the past few years, there has been a significant increase in the number of climate laws being enacted by governments around the world. This trend reflects the growing recognition and need to address climate change and pressure from citizens, governments, and organizations worldwide to act to mitigate climate impacts.
As a response to this pressure, policymakers are implementing an array of regulations aimed at reducing greenhouse gases (GHGs), promoting the adoption of renewable energy alternatives, and enhancing energy efficiency standards. These regulations have been steadily coming to fruition in recent years, reflecting a global commitment to a more sustainable future. In today’s post, we look at how climate laws have trended over time, the sectors they are targeting, and the themes.
Key Takeaways
The European Union, Spain, France, Brazil, and the United Kingdom have the highest number of climate-related regulations passed since 2000.
Climate policies tend to take a mitigation style approach over adaption.
The sectors that have the highest number of climate laws passed include the energy sector and transportation.
Regulations that focus on hydrogen, biodiversity, CCS (Carbon Capture and storage), and FIT (Feed-in Tariffs), are among emerging themes in recent regulations passed.
Methodology
We assessed 25 countries around the world to understand the types of climate laws that have been enacted since 2000. Countries spanned the globe, including countries in North America, South America, Europe, and Asia. The data used in our assessment is from The Grantham Research Institute on Climate Change and the Environment.
Countries Assessed
Data Source: The Grantham Research Institute on Climate Change and the Environment.
Setting the Stage
From a global perspective, almost every country in the world has enacted regulations related to climate since 2000. However, the European Union, Spain, France, Vietnam, and Brazil, all lead with the highest number of climate-related laws since 2000. The below heatmap showcases the locations with the most laws since 2000, with the darker blue representing a higher value.
Figure 1
Globally, climate regulations saw an increase starting in 2010. The Paris Agreement, an international treaty signed by 196 counties to limit global warming1, came into force in 2015, contributing to the rise of climate laws being enacted as countries were making changes to meet their commitments. This resulted in over 200 climate laws being established in 2015 alone, as showcased in Figure 2.
Figure 2
*This analysis does not include the total number of laws already in place prior to 2000, only a count of the laws that were passed after*
Policy Type: Mitigation & Adaption
Climate Policies adhere to a mitigation approach over an adaptation approach.
There are two main approaches that regulations have taken to address the challenges of climate change: Adaption and Mitigation. Climate Mitigation centers on the idea to reduce or prevent certain activities that are responsible for global warming. This type of strategy takes many forms but may include reducing fossil fuel consumption, promoting sustainable agriculture practices, increasing energy efficiency, or implementing CCUS. These activities are intended to prevent or limit the worst impacts of climate change, such as rising temperatures, sea level rise, and more frequent and severe weather events.
Climate adaptation, on the other end, involves strategies for adapting to the impacts of climate change that are already happening or are expected to occur in the future. This includes changing or adjusting our behaviors to reduce the negative impacts on our community ties, ecosystems, and infrastructure. Climate adaptation activities may include developing drought-resistant crops, improving emergency response in case of severe weather events, or building more resilient infrastructure to handle extreme weather.
Figure 3
Since 2019, there has been a significant surge in policies that prioritize a mitigation-focused approach to addressing climate change. The United States, for instance, has nearly twice as many laws pertaining to climate mitigation than to adaptation, with more than two-thirds (67%) of all climate laws taking this approach. Countries such as Italy, Germany, and Greece have an even greater emphasis on mitigation, with 94% of Italy's climate laws and 93% of Germany's climate laws focusing on this strategy. In our analysis, no countries were found to prioritize adaptation over mitigation, although Vietnam was close to an even split, with 53% of its climate laws classified as "mitigation".
Sector Breakdown
Energy & Transport industries are most impacted by climate-related policies.
After categorizing the types of laws that have been put into effect, our curiosity turned to the sectors that these laws are aimed towards. To gain insight, we assessed 11 distinct sectors, including energy, health, transport, agriculture, buildings, industry, social development, water, waste, and economy-wide policies. As expected, we discovered that climate policies or laws were predominantly focused on the energy and transportation sectors. A noteworthy spike in the number of energy-related policies was observed in 2020 when compared to the previous year's total. Additionally, there was a considerable increase in policies relating to the transportation industry, particularly regarding carbon and methane in recent years.
For carbon and emission more broadly, countries started announcing economy-wide climate strategies. Last year, Brazil developed plans to achieve climate neutrality, which involve defining periodic greenhouse gas inventories for each sector. The National System for the Reduction of Greenhouse Gas Emissions (SINARE) will serve as a central registry for recording emissions, removals, reductions, and offsets of greenhouse gases, as well as acts of trade, transfers, transactions, and retirement of certified emission reduction credits. Additionally, SINARE will enable the registration of carbon footprints for products, processes, and activities, as well as carbon from native vegetation, carbon in the soil, blue carbon, and carbon stock units without the need to generate a certified emission reduction credit, in accordance with established rules2.
In 2021, Norway also released a comprehensive climate action plan to transform the country by 2030. Norway's climate action plan (Meld. St. 13 2020-2021) looks to achieve its emission reduction target under the Paris Agreement and promote green growth by transforming Norwegian society by 2030. The plan focuses on reducing emissions that are not included in the Emissions Trading System, such as those from transport, waste, agriculture, and buildings, as well as some emissions from industrial production and the oil and gas industry. The plan includes policy instruments such as taxation of greenhouse gas emissions, regulatory measures, climate-related requirements in public procurement processes, financial support for technology development, and research and innovation initiatives3.
Here in the US, we also recently passed legislation that focuses on carbon sink and capture projects. In 2021, the US passed the Plan to Conserve Global Forests: Critical Carbon Sinks along with direct investments in carbon capture and storage under the Infrastructure Investment and Jobs Act in 2022.
Figure 4
Climate Law Themes
Regulations that focus on hydrogen, biodiversity, CCS (Carbon Capture and storage), and FIT (Feed-in Tariffs), are among emerging themes in recent regulations passed.
After understanding the types of sectors that the laws were geared towards, we analyzed the underlying industry or theme they were targeting. We divided the laws into 170 different themes and assessed which themes were increasing over time.
*This analysis does not include the total of laws already in place prior to 2000, only a count of the laws that were passed after*
Emerging Themes Over the Past 5 Years
To begin, we wanted to understand which types of themes were increasing in frequency being passed. To do so, we analyzed the percentage increase in the number of laws enacted over the past 5 years. In Figure 3, we can see starting around 2018, all of the themes increased in laws being passed that pertain to their specific topic.
It comes as no surprise that regulations pertaining to the energy sector were among the most frequently passed. Hydrogen saw a 600% increase in regulations while coal saw a 400% increase. The broader energy efficiency topics followed with a 400% increase in regulations passed over the past 5 years.
Specifically, laws targeting carbon capture and storage (CCS) experienced a surge in frequency. CCS-related regulations increased by over 300% in 5 years. CCS is widely acknowledged as being vital to achieving "net zero" or helping countries reach their emissions reduction targets, and it is already playing a significant role in the broader energy transition. In addition, the recent updates to the 45Q tax credit under the Inflation Reduction Act (IRA) likely contributed to the upswing in CCS laws by providing incentives for the utilization of CCS technology.
In the past 5 years, healthcare-related legislation has also come to the forefront, with a particular emphasis on Covid-19 and the wider healthcare sector. Additionally, several categories piqued our interest, as investors, corporations, and NGOs have devoted attention to these topics. These topics include biodiversity, indigenous peoples, and the concept of a Just Transition. Biodiversity is an emerging concern in the realm of ESG, as evidenced by the growing popularity of frameworks such as the Task Force on Nature-Related Disclosure (TNFD) and the Global Reporting Initiative's (GRI) Global Biodiversity Standard. We have also witnessed the idea of a Just Transition become more prevalent as the energy transition pushes forward. A Just Transition is a term used to describe how the world can move to a “greener” and “low carbon” economy that is equal for all and the transition doesn’t impact certain members of society negatively.
Figure 5
As previously mentioned, and showcased in Figure 5, there has been a significant uptick in the number of climate-related laws enacted over the past 5 years. To further assess this trend, we took 20 themes from the previous assessment and examined what proportion of laws passed since 2000 were enacted in the last 5 years, providing insight into the speed at which climate legislation is being implemented.
Our analysis revealed that the laws passed on climate-related issues in the past 5 years constituted a majority of the laws enacted over the previous 20 years, indicating a global push for change. In essence, this suggests that there has been a surge of legislative action aimed at addressing climate concerns in recent years, highlighting the growing urgency to address this issue.
For example, 94% of the laws which have a “biodiversity” theme since 2000, were enacted within the past 5 years. We also see FIT (Feed-in Tariffs, which serve as a policy tool aimed at promoting the adoption of renewable electricity technologies, common outside the US) regulations from the past 5 years make up 94% of all the laws enacted for this category since 2000. This trend holds true for other themes like hydrogen, infrastructure, oceans, transport, and gas. Taking a holistic perspective of the 20 themes listed in Figure 5, we can see that 83% of climate-related laws since 2000, we enacted within the past 5 years.
Figure 6
https://www2.oabsp.org.br/asp/clipping_jur/ClippingJurDetalhe.asp?id_noticias=27927|pt
https://www.regjeringen.no/en/historical-archive/solbergs-government/Ministries/kld/news/2021/heilskapeleg-plan-for-a-na-klimamalet/id2827600/