Anew study from a team of researchers that includes faculty from the University of California San Diego and Princeton University shows how climate policies involving a mix of subsidies for clean energy and taxes on pollution can significantly reduce greenhouse gas emissions that cause climate change.

While these kinds of climate policy mixes are widely used in the real world, the the study, published in Nature Climate Change is the first to show how the combination of such policies can be simulated in economic models that are the backbone of nearly all climate policy discussions – including the recent United Nations Climate Change Conference in Brazil held Nov. 10-21.

The results reveal that climate policies involving financial incentives can spark rapid adoption of cleaner technologies in the near term, but without policies that also punish polluters it won’t be possible to stop climate change.

“This work helps make our climate models more realistic about how governments actually behave,” said the study’s coauthor David Victor, professor at the School of Global Policy and Strategy and co-director of UC San Diego’s Deep Decarbonization Initiative (D2I). “For years, models have told us what’s economically efficient — but not what’s politically possible. Our goal is to bridge that gap so policymakers can craft strategies that survive real-world politics.”

The research provides a rigorous, data-driven look at how policy design and political timing affect the nation’s ability to decarbonize its energy system.

A Study on Climate Policy Arriving at a Critical Moment

The study comes out at a pivotal time for U.S. and global climate policy. The transition to a new U.S. administration in 2025 has cast uncertainty on many clean energy incentives enacted under the Inflation Reduction Act (IRA). At the same time, the federal government has never implemented a meaningful tax on warming pollution, although some states have adopted small tax-like policies.

“In the United States, we are removing the reward policies designed to accelerate decarbonization and it's unlikely this administration will introduce any policies that punish larger emitters,” Victor said. “ Meanwhile, other countries are taking different paths — China is adding new incentives and some penalties and Europe is leaning heavily on policies that make emissions more expensive. You’re seeing a global experiment in real time.”

Read the full article about the clean energy transition by Christine Clark at UC San Diego Today.