Macroeconomic Implications for Decarbonization Policies and Actions: Proceedings of a Workshop (2025)
Chapter: Reflections
Reflections
At the end of each day of the workshop, participants offered closing thoughts to reflect on the issues that were raised; examine recurring themes; and consider key challenges, solutions, and examples of directions for future research discussed and shared across the workshop’s presentations, panels, poster session, and breakout discussion.
RECURRING THEMES: OPTIMISM, CONSENSUS, PRAGMATISM, INTERDISCIPLINARITY
The following were highlighted by several participants as recurring themes:
- Encouraging developments and emerging opportunities in decarbonization may offer reason for optimism.
- Consensus and coalitions are likely important for setting goals and driving action.
- Focusing on pragmatic solutions can help to overcome inertia and spur progress.
- Interdisciplinary and cross-sector collaboration is likely important to address the cross-cutting challenge of decarbonization.
Several participants noted that they were struck by the level of optimism on display at the workshop. Känzig emphasized the value of focusing on positive developments, such as increased use of renewables, decreasing costs, and technological innovations. He also highlighted the expansion of carbon pricing initiatives, noting that the opportunity to generate revenues from this strategy also comes with the potential to reinvest those revenues in ways that can help to offset short-term economic costs of decarbonization policies and address inequities. Edmonds, agreeing that there was encouraging news, cited the fact that banks are acknowledging and examining the multiple impacts—good and bad—that decarbonization can have on financial stability.
Carley highlighted the importance of consensus as an overarching theme, which encompasses the importance of social and financial policy objectives, the impact of geography and institutions on decarbonization, and the role of politics. Peng also emphasized the importance of consensus, noting that decarbonization is about people, community, and coalitions, not just technology or economics.
Field noted that a focus on pragmatism—from economic, political, and technological perspectives—had strengthened the workshop discussions. He emphasized the value of pragmatism, when paired with ambitious goals, to drive progress. Cleetus agreed that pragmatism and rationality are needed to overcome climate inertia and spur action. Without this, she expressed a concern that only a truly disastrous climatic crisis will shift the politics around decarbonization, leading to needless suffering and the potential for irrational decisions.
Kelly Maguire, U.S. Department of Agriculture, also expressed appreciation for the pragmatism and focus on opportunities that she saw during the discussions, and she cited interdisciplinarity as another key theme. She added that she is optimistic that experts and leaders from all sectors can collaborate on solutions to the cross-cutting challenge of decarbonization. She noted that despite the uncertainties that are on the horizon for decarbonization, the workshop discussions left her with hope and optimism for future progress.
While Wendy Edelberg, Brookings Institution, expressed pessimism about the effects of climate change, she agreed that there is reason for optimism about the progress being made and the tools being employed. She said that the workshop made clear that the “right” people are considering the problem in the “right” way, acknowledging the many unknowns, and creating a shared language to advance decarbonization.
EXAMPLES OF KEY CHALLENGES AND SOLUTIONS
The following themes related to key challenges and solutions were suggested by several workshop participants:
- Overcoming non-financial barriers such as local opposition to clean energy projects could involve building coalitions and identifying pragmatic solutions that can lift up communities.
- Pursuing pathways that emphasize decarbonization across a range of scales and capacities is likely important.
- Recognizing and communicating about risks and uncertainty early in policy planning may help to identify possible mitigations.
Participants also reflected on a number of key challenges and solutions that emerged through the workshop discussions. Känzig posited that overcoming lo-
cal opposition to new projects, deploying cutting-edge technology globally, and identifying emerging markets and future emissions sources are among the most pressing challenges. To overcome these challenges, many workshop participants highlighted the value of increased cooperation, revenue redistribution, and greater global investment, he said.
Känzig also cited issues around modeling challenges and socioeconomic barriers. Some modeling challenges can be addressed by analyzing empirical data from the existing carbon market. So far, this evidence suggests that while policies have reduced emissions, they have unfortunately created short-term economic costs that disproportionately affect under-resourced households. This makes it important to emphasize—and effectively communicate—policies that foster accessible implementation and revenue distribution, he said. For example, he suggested that the IRA, which has sparked a flurry of climate change mitigation investments and activity, could be used to prompt improved distributional outcomes from carbon pricing mechanisms.
Peng added that overcoming local opposition is a key challenge. To address this, she emphasized the importance of focusing on building coalitions and lifting up communities. Carley added that multidisciplinary, collaborative, and pragmatic solutions are also needed to address other formidable challenges, including institutional resistance, governance and siting disagreements, long interconnection queues, and a lack of political will. Kopp pointed out that decarbonization and adaptation efforts often face similar barriers.
Carley also stressed the importance of identifying the range of risks, opportunities, and outcomes within decarbonization—social, financial, political, and more—as early as possible in policy planning to ensure appropriate safeguards or mitigations are in place. Policy planning would also benefit from expanding the range of decarbonization objectives and improved understanding of institutional behavior around energy transition, how policies present risks and opportunities, and how to better communicate uncertainty, she said.
Hafstead said that the workshop discussions illuminated the many social and political barriers inherent within the overall challenge of decarbonization, and that these in turn affect modeling and policymaking in areas like grid planning or transmission expansion. He noted that the urgency of the climate problem means that there is no time to wait for political opportunities to arise and emphasized that researchers and policymakers would be wise to use existing tools now to address these non-financial barriers.
Baroud noted another challenge, which is that the interdisciplinary nature of the research can make it difficult to determine who the right audience is and how to best reach them. Each discipline has its own platforms, but the implications of decarbonization policies are cross-cutting.
POTENTIAL DIRECTIONS FOR FUTURE RESEARCH
The following ideas were highlighted by some workshop participants as possible areas for future research:
- Finding opportunities to better leverage models and tools to more fully address policymakers’ questions and inform decision making.
- Improving data and modeling to better elucidate the connections among different facets of decarbonization actions and impacts.
- More fully accounting for the macroeconomic impacts of policies and trade-offs to facilitate comparisons among different policy options.
- Equipping international researchers to address complex interdisciplinary questions around decarbonization and its macroeconomic implications.
Turning to the question of future research directions, Edmonds suggested that researchers could conduct a detailed examination of which policy improvements will be most likely to be effective. For example, he posited that IRA-sponsored subsidies and other incentives could be more successful than carbon taxing. Hafstead agreed that more research on IRA-prompted policies is needed to create empirical evidence of their successes, failures, distributional impacts, and cost-effectiveness. He added that there is much more to learn about the macroeconomic impacts that policymakers must balance, such as inflation or labor market disruptions, when designing policies. More data on these impacts can help modelers better represent how decarbonization will affect people, places, and sectors. Environmental policy designers can also learn from previous economic disruptions or policy shocks in order to smooth the transition, he said.
Hafstead and Peng also stressed that more and more consequential policies, technologies, and strategies are needed to help innovations better penetrate the market, accelerate deep decarbonization, and meet ambitious net-zero goals. Carley agreed and added that it is important to build flexibility into policies and regulations in order to adapt to new developments and feedbacks. Edmonds also highlighted the need to better connect the tools and models that are available to inform decision making in order to more fully leverage their capabilities and address policymakers’ questions. For example, decision makers need to consider many variables, from energy to agriculture to water, and increased connectivity among modeling efforts could help to integrate these factors and create a more holistic picture. Peng suggested that educational investments in new training and curricula are needed to equip future scientists with tools to address these complex interdisciplinary issues.
Finally, Hallegatte suggested that researchers in high-income countries could spend more time investigating existing circumstances and potential policy re-
percussions, positive and negative, in other countries, which likely have far less capacity to do the work themselves. Elisabeth Holland, University of the South Pacific, noted that her experience at a Global South university taught her how important it is for researchers from other countries to create intentional partnerships with local universities and communities to be able to conduct work that can fuel future opportunities and capacities.
