Climate policy efforts struggle to keep pace in an era of accelerating climate change and growing economic and political inequalities. Existing research shows the climate mitigation success of countries that first introduce subsidies to promote the switch to renewables and sequence it with regulation and carbon taxes. Still, the general public overwhelmingly prefers to stick with subsidies.
This raises the question of whether climate subsidies really promote not only the acceptance of ambitious climate politics but also the switch to the other, stricter climate protection instruments, namely taxes and regulations, which are necessary for the policy mix of a successful strategy. I argue that, from a comparative political economy perspective, consumer subsidies offer the necessary public exposure to direct demand for climate policies. But can policymakers leverage subsidies for measures like energetic modernization or electric vehicles to perpetuate national strategies and facilitate bans and rising fossil fuel prices?
To answer this question, I use automated classification coding based on an established database of domestic climate policies (N=3000) and measures of carbon pricing schemes across developed democracies. This allows me to test the relationship between subsidy adoption and the prioritization of stricter climate measures in national policymaking by running regression analyses across 30 years in a large sample of high-income democracies. My results show that the adoption of climate subsidies, in fact, can serve as a blueprint for ambitious instruments. Still, domestic factors, such as the political landscape, structural demands, and diffusion through mutual dependencies, remain dominant in explaining climate policymaking.