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Using Policy to Transform Markets, Change Behaviours and Tackle Climate Change

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My friend Tonya Surman, the CEO of the Centre for Social Innovation (CSI), often refers to three approaches to changing the world: behaviour change, market transformation and policy.

Governments can use policy and partnerships to influence behaviours and support market transformations that will mitigate climate change.

Changing Behaviours

A few years ago, CSI member Rob Shirkey had the bright idea of putting warning labels similar to those on cigarettes packages right on the nozzles of gasoline pumps. His nonprofit, Our Horizon, has been campaigning around North America and recently secured a major victory when the cities of North Vancouver, Tofino and Port Moody passed the labels into law.

Labels remind end-users of the consequences of using gas on the environment, climate and people’s health. Slowly and surely, this leads to behavior change and creates opportunities for the private sector to respond to shifting consumer demands, such as with electric vehicles (EVs). It also helps governments convince voters of the need to make investments in things like charging stations for EVs or greener public transportation.

Market Transformations

Once people become more aware of the effects of fossil fuels they will demand greener products and services, creating new and exciting business opportunities, everything from solar phone chargers to solar home energy systems, eventually replacing bad markets with greener ones.

Take the driver that has decided they can’t bear driving to work in a climate change-causing vehicle. If they live in a country where energy is produced through wind, solar and hydro (thanks to a forward thinking government and enabling policy environment!), buying an electric vehicle would be the way to go. As the private sector responds to (and in some cases as with Tesla helps create) this demand, the government can support R&D and manufacturing through grants and tax incentives, and can offer consumers cash back rebates for purchasing an electric vehicle.

Policy for entrepreneurship

Entrepreneurs will respond to the perceived needs of potential customers, but they will also respond to demand that is manufactured through government policies, such as paying above market rates for clean power (see German feed-in tariff). These incentives can unleash a wave of new ventures and create new markets that will become more and more competitive as costs are driven down. Government can also support these fledgling enterprises by partnering with universities and for-profit and nonprofit accelerators and incubators that specialize in fast-tracking the success of early-stage enterprises.

Policy as a blunt instrument

Some corporations may use resources and dispose of waste irresponsibly to maximize short-term profits, negatively impacting people and the planet. Strong government regulations can help limit corporate self-interest (to pollute) and align it with the interests of all (to drink clean water).

Policy has been used in this way for everything from stopping acid rain to redirecting e-waste to increasing energy efficiency in new buildings. The magic of policy is that it can intervene when markets and behaviours aren’t responding fast enough, and here, a carbon tax scheme shines in its ability to push the market transformations and behaviour changes needed to properly address climate change now.

Policy around the world 

The Nordic Model to a kind of “hybrid” policy system which features a blend of capitalist economics with socialist values and associated with high levels of freedom, education, health and happiness. Hallbar, which means sustainability in Swedish, is highly valued. The Nordic countries are among the world’s highest-ranking countries according to the 2018 Environmental Performance Index (EPI) that ranks 180 countries on 24 performance indicators across ten issue categories covering environmental health and ecosystem vitality. These metrics provide a gauge of how close countries are to established environmental policy goals.

Act local, think global

Change starts at home, but the battle against climate change won’t be won without collaboration, knowledge sharing and global agreements. If polluters are able to move from one country to another to avoid regulations, or if some countries continue to emit greenhouse gases unhindered while others cut back, we will see a global increase in temperatures beyond 2°C and the consequences will be disastrous.

The good news is that doing something about it is within our reach, good for people, good for the planet and good for the economy. Governments, using policy and partnerships with the private and nonprofit sectors, can get us there by creating the behaviour changes and market transformations needed to develop the low-carbon economy of the future, and potentially millions of new green-collar jobs.

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