Well-designed and implemented regulation can support climate change mitigation and adaptation, encourage green innovation, and secure sustainable economic growth. To achieve these outcomes, governments should use tools and approaches designed to improve the quality of regulations, ensuring they efficiently achieve climate goals, particularly for high-emission sectors such as energy and transport which are critical for climate change mitigation.
Regulatory impact assessments play a critical role in this process by helping identify the likely impacts, feasible alternatives and trade-offs of different policy options. Among OECD countries with data available, 77% (27 out of 36) assess the environmental impact of all or major primary laws, while 60% (21 out of 38) do so for subordinate regulations (Figure 8.18). However, only around half of OECD countries extend these reviews to cover specific impact areas. Moreover, the impacts of subordinate regulations on specific areas tend to be assessed less systematically than those of primary laws, even though they can be significant. When it comes decarbonisation targets, 40% of OECD countries with data available (14 out of 36) assess the impact of all or major primary laws compared to 37% (13 out of 37) doing so for the subordinate regulations of all or major laws. For natural resources the shares are 37% of countries (13 out of 36) for primary laws and 34% (13 out of 38) for subordinate regulations. For human health the shares are 46% of countries (16 out of 36) for primary laws and 40% (14 out of 37) for subordinate regulations. Assessing these different impact areas is critical for gaining a comprehensive understanding of climate impacts. More systematic and granular evaluations are needed in practice to fully complete environmental impact assessments.
Regular ex post review is also essential for ensuring that existing regulations support national and international climate policy goals while promoting green investment and innovation. Identifying effective policy responses to climate change requires governments to adopt an agile approach, regularly evaluating and improving regulations to respond to evolving challenges and opportunities. Despite recent efforts, ex post evaluation remains an underdeveloped practice among OECD countries, particularly in the area of environmental impacts. Only 7 out of 38 OECD countries (18%) undertake any ex post review of regulations to assess whether they align with national or international environmental sustainability goals (Figure 8.19), and only 3 (8%) do this for regularly for all or major laws. Iterative and flexible ex post evaluation cycles enable governments to ensure regulations remain fit-for-purpose amidst rapid climate change and advancing technologies, through continuous review and adjustment through feedback loops. However, only 7 out of 38 OECD countries (18%) have undertaken a principle-based review to assess the impacts of existing regulations on environmental sustainability in recent years (Online Figure J.5.5).
