Policy Sequencing Towards Decarbonization: Divide and Conquer

The European Union (EU) and its member states have taken measures to decarbonize their energy systems for nearly 30 years now (Wettestad, 2000). Those efforts have led to an increasing amount of generation from renewable energy and dropping emissions alike. With the adoption of the Paris Agreement, Member States have to increase their efforts in fully decarbonizing their energy systems mid-century. While countries are making good progress in the electricity sector, full decarbonization requires the decarbonize of all sectors in a flexible system. With those new challenges arising, we take a look back in understanding which policies have made the decarbonization of the electricity sector successful. Based on an argument of static efficiency, existing literature frequently argues that there are ‘first-best’ and ‘second-best’ best policies for decarbonization (Edenhofer et al., 2019 , Levi et al., 2020 , Pahle et al., 2018). The ‘first-best’ best option, those scholars argue, is carbon pricing, while the ‘second-best’ option is technology specific deployment policies. In order to arrive at ‘first-best’ approaches countries should employ policy sequencing (Pahle et al., 2018 , Meckling et al., 2017). In this paper we want to depart from the idea of ‘first-’ and ‘second-best’ approaches and instead argue that Europe, to date, has been particularly successful in its decarbonization efforts because its member states pursued different decarbonization strategies – as a sequence of different policies - that have reinforced each other through a division of labor. Hence we ask: How have different policy sequencing logics supported the EU’s decarbonization efforts? Taking the example of Germany and the UK, we show A) that there are no ‘first-best’ or ‘second-best’ policies but that policy success is highly context-depended and B) that a one-size fits all sequence to decarbonization is not desirable but rather a mix of different approaches has positioned the EU as a climate leader. To this end we will review the existing literature and analyze both qualitative and quantitative data. We conclude that the EU has been successful precisely because of its ‘divide and conquer’ approach. Those insights are particularly relevant because EU legislation – and member states alike- no longer promote individual strategies but increasingly focus on a homogenous policy mix with carbon pricing and a coal-phase-out at its core (EC, 2014 , BMWI, 2017 , UK, 2017). This increasing lack of diversity may be problematic considering the fact the EU’s goal of becoming carbon neutral by mid-century, which requires new technologies to continuously be brought to market.