Climate action has never been more urgent. 2024 was the hottest year on record and the first to exceed an average of 1.5°C of warming. As the world faces record-breaking heat and escalating climate risks, this report provides governments with policy insights to help close the ambition and implementation gaps to reach net zero. Drawing on the OECD’s substantial body of climate policy research, this summary for policymakers brings together findings from the second phase of the Organisation’s Net Zero+ project, which focuses on building climate and economic resilience. The report shows that reaching net zero is still possible but requires urgent action. It also discusses the importance of public support, trade, investment and finance, climate adaptation and bridging knowledge gaps to improve the effectiveness of climate policies.
Fast-tracking Net Zero by Building Climate and Economic Resilience
Abstract
Executive Summary
Climate action has never been more urgent. The year 2024 was the hottest on record and the first to exceed 1.5°C of warming on average. It is now increasingly likely that global average temperatures will overshoot the Paris Agreement’s 1.5°C temperature goal. The scale of recent events linked to climate change impacts, from floods in Spain in late 2024 to wildfires in Los Angeles in early 2025, is a reminder of the risks that climate change poses to human and economic security.
Achieving net-zero emissions is still possible, however. Even if 1.5°C is exceeded temporarily, minimising overshoot is crucial to limiting the risk of crossing climate system tipping points and lessening the severity of climate change impacts (OECD, 2024[1]). Emissions must fall drastically by 2030 to remain consistent with Paris Agreement objectives. The next five years are critical to speeding and scaling up innovation and investment.
Countries have set net-zero targets and Nationally Determined Contributions (NDCs) under the Paris Agreement outlining medium‑term targets, but even if implemented in full, collectively these still fall short of what is needed (OECD, 2024[2]). Policy mixes are beginning to take effect, with significant emissions reductions achieved in some countries, but even scaling up the most effective policy mixes currently in place to all sectors globally would not be enough (Stechemesser et al., 2024[3]). Closing the ambition and implementation gaps requires the transformation of industries, economies, societies, and individual behaviours at an unprecedented scale and pace.
Supporting the transition to net zero requires aligning finance with climate policy goals. In 2022, new investments in clean energy reached USD 1.7 trillion – more than the USD 1.5 trillion invested in fossil fuels – but only a small share of total investments (total gross fixed capital was USD 26.4 trillion in 2022) (OECD, 2024[4]).
Ambitious climate action is compatible with economic growth. The next round of NDCs is an opportunity to step up efforts to reach national climate objectives and build climate resilience. In the short term, strengthened NDCs – if implemented through well-designed policies and supported by adequate finance and investment – can accelerate the development of efficient energy systems, create quality jobs, and spread economic co-benefits such as improved energy access, enhanced energy security, and better health outcomes. These advantages balance out the costs of implementing more stringent climate policies, with no dampening but a slight boost to global GDP compared with current policy trajectories in the short to medium term (OECD, 2025[5]). Over the long term, through 2050 and beyond, the escalating costs of climate change due to insufficient mitigation action reinforce the economic case for greater ambition and swift implementation today.
Over the long term, through 2050 and beyond, the escalating costs of climate change due to insufficient mitigation action reinforce the economic case for greater ambition and swift implementation today.
The race to seize the economic benefits of the net-zero transition is well underway. The global market for six main green energy technologies – solar PV, wind, electric vehicles (EVs), batteries, electrolysers and heat pumps – exceeded USD 700 billion in 2023 and, in today’s policy landscape, is set to nearly triple by 2035, reaching a value close to that of the global crude oil market in recent years (IEA, 2024[6]). Governments at all levels are implementing strategies to harness the economic opportunities associated with this market growth with the aim of achieving multiple objectives, including rapidly accelerating climate action, increasing economic and energy security and supply chain resilience, and promoting economic growth. Industrial policies targeted at environmental outcomes (or “green” industrial policies) could help to push the technology frontier and rapidly accelerate climate action, but poorly designed measures may undermine incentives for innovation and competition, leading to loss of public support for the globally integrated markets needed to ensure all can benefit from the green transition. Development co-operation and increased finance from all sources, in line with the Paris Agreement’s New Collective Quantified Goal, are essential to ensure that developing economies are not left behind.
Accelerating climate action requires public support, which means empowering and bringing citizens on board. The benefits and costs of the net-zero transition must be shared fairly, both to ensure equity and build support for the policy measures needed to drive progress. Low trust in government, particularly with respect to complex policy issues such as climate change, makes this challenging, but a growing number of governments are adopting innovative approaches to engage citizens and promote sustainable behaviours. The transition must be just, or risks being significantly slower or not happening at all.
The Net Zero+ Policy Paper Series, representing Phase II of the OECD Horizontal Project on Climate and Economic Resilience, synthesises contributions from over 20 OECD committees and bodies to provide recommendations and insights for governments to meet their objectives of a rapid and resilient transition to net zero while enhancing economic and societal resilience to climate change impacts. The key messages below are drawn from the 15 policy papers in this series, listed in in the foreword to this summary.
Meeting net-zero objectives is still possible
“Green” industrial policies can help activate positive tipping points to advance the development and adoption of new technologies and accelerate emissions reductions, but entail risks and require careful policy design.
Well-designed policy packages that take into account policy interactions and sequencing can create the necessary conditions for rapid progress.
Decisive action on methane emissions can act as a handbrake on global warming, buying precious time.
By encouraging energy efficiency, promoting behavioural change, and shifting consumption patterns, demand-side policies have significant mitigation potential, but have been relatively underutilised to date.
Governments themselves will need to reform, for example through innovative institutional arrangements, aligning public budgets, backing place-based climate action, and developing agile regulatory environments to be able to implement the policies at the scale and pace needed.
The net-zero transition needs to bring workers and citizens on board
Building and maintaining public support for climate policies (and trust in government more broadly) depends on an effective government-citizen interface and genuine commitment to ensuring a just transition that leaves no workers, households, regions, or countries behind.
Harnessing the foundational importance of education can empower people to take and shape climate action and to acquire the skills needed for the emerging net-zero economy.
Trade, finance and investment can accelerate climate action
Open markets and trade play an important role in accelerating climate action, including through trade in environmental goods and services and enabling the circular economy. Yet growing use of government support as part of “green” industrial policy risks undermining well‑functioning global markets and increasing trade tensions. Efforts are also needed to address government support that encourages more emissions-intensive production.
Aligning finance and investment from all sources with climate goals will rely on a wide range of policies across the real economy and financial sector.
Climate adaptation efforts and investments need to be intensified
More efforts are needed to build resilience to climate impacts. This requires an iterative, place‑based approach to climate adaptation policymaking, investing in resilient infrastructure, and adopting nature-based solutions.
Scaling up adaptation finance remains challenging and relies on clear investment frameworks as part of national adaptation plans, integrating resilience within green budgeting, improving transparency, and leveraging insurance and risk transfer mechanisms.
Bridging knowledge gaps can improve the effectiveness of climate policies
These gaps include the need to better understand the effectiveness of specific climate policy packages for mitigation and adaptation, improved tracking of alignment of finance with climate goals, identifying and communicating the carbon footprint of individual products, and more data to determine climate and transition impacts and risks in developing countries.
