Designing Governance for Long-term Climate Roadmaps: Don’t Forget the Politics
Many countries are developing long-term climate road maps to 2050 and beyond. Experience from “early movers” shows that getting the best value from road maps requires a careful eye on the politics of structural reform when embedding them in national governance systems.1
As has been often said in politics, when you hit an impossible problem, make it bigger. If you want to solve the difficult politics of the low-carbon transition, then experience from the last decade suggests the most productive way is to embed the debate firmly in national governance systems in a way that makes all parts of society and the economy take responsibility and ownership.
Long-term climate road maps are not new. The United Kingdom, Germany, and the European Union have had long-term, “whole of government” road maps since the mid-2000s. In 2005 South Africa pioneered an open stakeholder engagement process to develop climate change planning scenarios. China’s five-year economic plans have always been informed by longer-term modeling of low-carbon trajectories.
Long-term road maps of how to meet climate change goals have a proven track record of helping countries avoid expensive mistakes. However, this has not been a straightforward or technical process in any country.
The UK government began looking at long-term climate and energy trajectories in 2002, driven as much by the energy security implications of declining domestic oil and gas production as by climate change. The UK use of long-term road maps was institutionalised by the Climate Change Act in 2008. This established an independent commission to set a series of binding medium-term “carbon budgets” to cost-effectively achieve the United Kingdom’s 2050 goal of 80% GHG reductions.
An early recommendation of this process was that a least-cost approach required rapid decarbonization of the power sector by 2030, as much of the aging and polluting UK power fleet had to retire in the early 2020s. Originally, companies planned to fill this gap by building a new generation of coal and gas power plants, but 2050 analysis showed that much of this investment would result in “stranded assets” as the United Kingdom decarbonised.
Identifying this time inconsistency in market incentives led the government to ban any new coal power plants without carbon capture and storage (CCS). Further analysis showed that relying on the EU-wide carbon price to drive investment would result in too much gas investment and not enough zero-carbon power.
The United Kingdom subsequently became the first country in the world to undertake electricity market reform to support the climate transition, establishing auctions for all new low-carbon power capacity. This maintained investment and drove down renewable energy costs. This radical change in market structure was opposed by many as a major reversal of 1980s liberalisation and a shift towards intervention and state control. However, opponents of reform failed to propose alternatives that would reliably deliver a cost-effective trajectory to meet the United Kingdom’s long-term carbon targets.
Without a robust long-term road map showing the high cost of inaction, it is highly unlikely that the United Kingdom would have carried out such fundamental reforms to its electricity markets. The road map provided ministers with the evidence needed to face down incumbent interests in the energy industry, and among regulators and academics invested in existing market structures.
Road maps can be useful even when they are subsequently proved “wrong” by events or technology. For example, all the least-cost pathways analyzed by the European Union in the early 2000s included a large dependence on CCS in the power sector. The European Union created a multibillion-euro demonstration plan to make CCS commercially available before major investment decisions would be taken in the 2020s. All new coal power stations were also legally required to be “CCS ready.”
Unfortunately, the CCS demonstration programme failed. However, identifying the criticality of CCS galvanised a broader debate on the risks of “lock-in” to new fossil infrastructure, resulting in a generation of planned coal plants’ being canceled as governments and investors internalised future risks.
These examples show that the most important aspect of long-term climate road maps is not so much their details, which will constantly change as technology and markets evolve, but that they open up a different national conversation about long-term development choices. In most countries there is no venue to talk about long-term choices. Infrastructure still tends to be built based on cost-benefit analysis of individual projects rather than through systemic analysis.
The implications of long-term road maps often do not immediately emerge from the official analysis; instead, they become clear through open—and often robust—public debate, often supported by additional independent analysis.
For example, one of the primary results of the EU road map has been increased targets for electricity grid interconnection. This was not initially a high-profile result in the official road map. It became a focus for advocacy from some (underconnected) Member States in partnership with industry, think tanks, and nongovernmental organizations that commissioned additional research showing that the European Union’s 2050 trajectories were not credible or affordable without far stronger grid connections.
It is important to design not just the process by which stakeholders input into road map development (a process vital for their credibility and legitimacy) but also how the results of the road map will be used in decision-making processes—in other words, how long-term climate road maps are embedded in national governance systems.
There are many ways road map processes and results can be embedded in executive, legislative, regulatory, subnational, and stakeholder governance systems. The United Kingdom started with a road map process focused on “joining up” executive ministries, but it has since moved to an independent process founded in statute. Germany and South Africa have both used different models of stakeholder engagement around road maps that were advisory to the executive. France has used more formal negotiated multistakeholder agreements to define its long-term energy transition.
Each of these approaches to governance has strengths and weaknesses in terms of shaping debates and shifting the politics of transition. Every country has different political and constitutional dynamics that will determine the best way to embed long-term road maps, but some general lessons can be drawn from existing experience.
The United Kingdom’s first long-term climate road map was produced by the Prime Minister’s Strategy Unit. The Climate Change Department successfully argued that it should develop subsequent road maps. However, as a relatively weak ministry, it was unable to make other departments follow its analysis. As debates over the road map were held within the executive, there was little public or parliamentary scrutiny or pressure to force consistent action across government. The subsequent move to embed the United Kingdom’s long-term plan in the independent Committee on Climate Change (CCC), supported by the Climate Change Act, has proven far more effective at driving a “joined-up government” by shaping public debates with Parliament and stakeholders.
As a result, the United Kingdom to a large extent avoided the problem of stranded utility assets seen in other countries. The CCC gave clear guidance that if the United Kingdom was to meet its 2050 goals, emissions intensity in the power sector would have to fall below 100g/KWh by 2030. This strictly limited the space for any new fossil power stations. The fact that this was an independent recommendation to Parliament, and that the Climate Change Act put the burden on the executive to prove why recommendations shouldn’t be adopted, meant that companies and investors had clear and reliable guidance on which to base investment decisions.
The South African Long-Term Mitigation Strategy (LTMS) process took a different approach, convening a wide variety of government and nongovernment stakeholders in a process facilitated by external think tanks. This was considered a success in terms of engagement, but there was a lack of clarity on how the resulting “scenarios” would be used. When the South African government used one of the scenarios as its national submission to the Copenhagen climate talks, many industrial stakeholders believed they had been involved under false pretenses. This soured relations and made industry more cautious in engaging in future policy development.
The South African government then moved to an executive-driven process that every five years produces climate and energy plans developed with limited external consultation. This reflects a reluctance to engage stakeholders on more difficult political issues, such as coal mining and energy intensive industries, and has left investors without clear guidance on the energy system’s trajectory.
Countries often hope that just publishing a long-term plan will facilitate more and cheaper investment. However, investors are suspicious of “paper plans” and more interested in any restrictions on retrospective regulation or damaging policy swings. Investors will look carefully at how plans will—or will not—shape the development of detailed policy and regulation. Is compliance with plans mandatory? Do market and infrastructure regulators have to “take them into account” when making decisions? Under what conditions can deviation from long-term plans be justified?
Providing investors with higher transparency and “certainty” will limit a country’s ability to flexibly respond to changing circumstances but can also lower financing costs—vital when building a capital-intensive clean energy system. Both flexibility and certainty have costs, and the art is embedding long-term plans in a way that balances these tensions. Though there are no hard and fast rules, experience suggests that revisions every five years of detailed plans that go out 10-15 years within a broad 30-40-year framework is a reasonable compromise given technology and investment life cycles.
The European Union failed to embed its 2050 road maps as legal policy due to objections from some Member States. This has led to high costs, as there is no binding and consistent long-term benchmark for EU energy decision making. For example, gas import infrastructure has been massively expanded—often backed by public funding—while EU gas demand has been dropping due to climate policies. However, without binding EU-level guidance on future gas demand public authorities and banks have found it hard to object to large-scale projects, which will struggle to earn a return if the European Union meets its climate goals.
Looking forward, governments are beginning to explicitly use long-term road maps to address some of the most politically difficult areas in the climate transition. The European Union has said it will produce a “social transition” road map alongside its next 2050 plan. This will aim to anticipate disruptive social impacts from the transition and put policies in place to manage them. A similar approach has been taken in the latest German 2050 plan, which mandates a commission for “Growth, Structural Change, and Regional Development” to handle transitions in sensitive sectors such as coal and lignite.
When done in the right way, long-term road maps change a country’s choices—and shape its politics. They provide a “space” where new solutions that cut across traditional boundaries can emerge, where the value of decisions can be tested across long time scales, and where groups often excluded from decision making can raise neglected issues.
The United Kingdom has struggled to deliver its climate adaptation plans despite this being part of the CCC’s remit. Every five years, the CCC produces assessments of the climate risks to the United Kingdom and the government’s response to them. However, action lags far behind risks, and recent official surveys have shown that flood defense is the infrastructure system least trusted by the UK public. The core reason for this is that, unlike in the energy sector, there is no centralized industry or stakeholder constituency for adaptation. Responsibilities for action are dispersed across public authorities, and there is no legally binding resilience target. This external context means that despite its independence the CCC has far less impact in this area than on mitigation choices.
Most road map processes have been poor at engaging with subnational actors in cities and regions. These authorities control large amounts of public investment and are critical for deploying clean infrastructure systems needed to meet national targets. As a result, devolved powers and budgets are often inadequate. The European Union is beginning to bring cities more strongly into the governance of its Energy Union but only at a consultative level.
Experience shows that to be effective in shaping good decisions road map governance must be designed with an eye to the political dynamics necessary to drive real change, not just the technical requirements of policymaking or procedures for stakeholder engagement.
If embedded in the right way, long-term road maps can open up difficult issues before they become toxic, allowing solutions to be developed and supported more widely. Constructing a broader national conversation that brings in new voices also reduces the power of incumbent interests to seek rents, delay progress, or move money into suboptimal investments.
More independent approaches involving the legislature or commissions can give investors more confidence in a country’s decarbonization trajectory. Clarity on how regulators and other authorities must use road maps can ensure consistency, lower costs, and avoid stranded assets.
For governments, running a technical road map process with limited consultation can appear attractive, as it maximises direct control and allows difficult questions to be avoided. However, this is an illusion of control if the government is serious about shifting to a low-carbon path. Decarbonisation requires active alignment between all levels of the public sector, investors, companies, and consumers; this is impossible if they are excluded from the process of developing and debating long-term plans.
Embedding long-term road maps in broader and more independent governance processes will make these processes messier but their results more impactful, as they will help shape and advance the politics of transition.
1 Many of the case studies in this paper are based on unpublished research carried out by Camilla Born, Senior Policy Advisor at E3G.