Packaging and sequencing policies for more effective climate action

Governments need to use all policies at their disposal to address climate change. However, an effective policy package is more than just a collection of individual instruments. Policy instruments can interact in ways that create synergies and strengthen mitigation efforts. They can be bundled and implemented together to address multiple market failures, target different emissions sources, or improve cost effectiveness and efficiency. At the same time, policy interactions also bring the risk of trade-offs, potentially dampening the overall effect on emissions. How policies are sequenced may also affect their impact. This paper draws on recent reports and data to take stock of OECD work on climate policy instruments, reviewing available evidence on their effectiveness. It goes on to explore challenges and opportunities associated with policy interactions and how policy sequencing can enhance climate mitigation outcomes.