Meeting the goals of the Paris Agreement requires unprecedented, policy-led transformations in multiple technologies and sectors. The greatest successes achieved so far in the low-carbon transition happened in ways that few people expected, using approaches that were not those recommended by standard economic analysis. To replicate these successes, we need to learn the lessons and think differently about the dynamics of change in our economies.
Rather than seeing the challenge as one of managing difficult trade-offs between the pursuit of economic growth and the cost of cutting greenhouse gas emissions, we must improve our understanding of transformational change to appropriately include the potential for accelerated innovation, technology cost reductions, job creation and significant economic benefits.
This means also changing how we appraise relevant policies. We need a new approach, to supplement traditional cost-benefit appraisal with new techniques, to understand the risks and opportunities of transformational changes.
The EEIST project, engaging researchers across Europe and major emerging economies, tackles this challenge by developing a framework to support decision-making through Risk-Opportunity Analysis (ROA). This flagship report reviews evidence and theory to explain the limitations of traditional appraisal methods and the rationale for the ROA, illustrating the framework across a series of historical and forward-looking case studies.