What makes them believe in the low-carbon energy transition? Exploring corporate perceptions of the credibility of climate policy mixes

Journal Article

The credibility of climate policy has been identified as paramount factor for low-carbon investment and innovation and is thus key to achieving the decarbonization objectives set out in the Paris Agreement. Yet, despite its importance, we have only limited insights at present into how such policy credibility is formed. To address this gap, we explore whether and to what extent corporate perceptions of policy credibility depend on the current policy mix. We draw on the case of the German Energiewende and rely on data collected in 2014 in a survey of German manufacturers of renewable power generation technologies. We analyzed the answers of 390 companies using a linear regression model and found that corporate perceptions of policy credibility are mainly shaped by two characteristics of the policy mix: the coherence of policymaking and implementation, and the consistency of the policy mix. Changes in the design of the core demand-pull instrument (in Germany, the Renewable Energy Sources Act, EEG) and the nuclear phase-out policy are also important as are Germany’s targets for the expansion of renewable energies. These insights enable us to derive broader policy and research implications concerning climate policy credibility.


Find out more about our project on ‘Policy synergies and trade offs for low energy innovation‘.