Global climate policy is at a critical juncture, demanding effective strategies for emission reductions. While the IPCC plays a vital role in informing policymakers about climate change, its Working Group III (WGIII) reports on mitigation receive less attention and practical application compared to Working Group I's (WGI) reports on the science of climate change. This discrepancy is puzzling, given the crucial role WGIII should play in shaping effective climate policy. The paper focuses on the reasons for WGIII's lower impact, specifically analyzing the IPCC's approach of being 'policy-relevant but not policy-prescriptive'. This principle, while aiming for neutrality, has inadvertently led to an implicit emphasis on carbon pricing as the primary solution, neglecting the diversity of other policy instruments. The paper investigates this issue by examining the scenario generation process in WGIII, where models prioritize carbon pricing mechanisms, often overlooking other crucial policies and their potential impact.

The paper reviews the historical context of the IPCC, starting from its establishment in 1988 and the subsequent development of its assessment reports. Early reports focused on the scientific consensus and potential solutions, but the economics literature underlying the modeling often relied on standard neoclassical theory, with assumptions of whole-economy utility maximization. This approach, while useful for normative modeling, has limitations in accurately describing real-world economic behaviors. The authors note the shift in IPCC procedures to incorporate uncertainty, risk, and greater inclusivity, along with new chapters on finance and innovation. The economics literature surrounding climate change is discussed, highlighting the limitations of solely relying on carbon pricing as a solution, due to its mixed real-world record and the potential for it to be ineffective compared to other policy measures. The paper highlights the need for a balance between the efficient (pricing mechanisms) and the effective (diverse policy instruments that actually yield emission reductions) aspects of climate change solutions.

The paper employs a qualitative analysis of published literature, primarily focusing on the IPCC's Assessment Reports and Special Reports. It supplements this with related publications on the policymaking process and the role of large-scale modeling in policy support. The authors delve into the selection of literature, explaining the approach from the initial focus on IPCC reports and their references, gradually incorporating more recent additions for a comprehensive perspective. A crucial part of the methodology is the use of the E3ME-FTT community modeling framework as an illustrative example of an alternative approach. E3ME, a demand-driven macro-econometric model, is described, emphasizing its differences from optimization models and its capacity to assess a wider range of policies. The FTT model, focused on technology diffusion, is also detailed, highlighting its ability to simulate technology adoption under various policy scenarios. The combination of these models provides a comprehensive framework for analyzing multiple policy instruments and their impacts, going beyond the limitations of the IPCC's predominant modeling approaches.

The key findings revolve around the limitations of the IPCC's current approach to scenario modeling and its limited relevance to policy design. The authors highlight that the current IPCC approach, while ostensibly neutral, implicitly promotes carbon pricing as the primary solution, neglecting other crucial policy instruments. This is revealed by the analysis of the Illustrative Mitigation Pathways (IMPs) in AR6. The authors' analysis of the E3ME-FTT model provides a contrasting example, demonstrating the potential for more granular and realistic policy assessments. By simulating a comprehensive basket of policies (energy efficiency mandates, regionally-differentiated carbon prices, feed-in tariffs, subsidies, and regulations), the model shows positive GDP impacts, even considering potential economic adjustments and challenges like structural change and the Just Transition. The model reveals complexities of GDP impacts and employment variations across different regions and time periods, offering a more nuanced picture than a simple cost-benefit analysis. Importantly, the model emphasizes the need for a mix of policies, suggesting that carbon pricing alone may be insufficient, and the synergistic effects of various instruments need consideration. The findings also highlight that the IPCC's current approach lacks sufficient detail regarding sectoral transformations, distributional impacts, financial risks, and policy interactions.

The findings challenge the IPCC's current scenario process, indicating that its neutrality has unintentionally led to a bias towards carbon pricing as the primary solution. This limits the practical applicability of the IPCC's reports for policymakers, who need more diverse and detailed policy options for effective climate action. The use of the E3ME-FTT model demonstrates the feasibility and value of alternative approaches, showing that a wider range of policies can be effectively assessed to inform better policy decisions. The limitations of the IPCC's current emphasis on standard economic models, lacking insights into actual economic behavior and policy implementation, are discussed. The IPCC's limited use of alternative models, like E3ME-FTT, that consider broader policy options and human factors is a key challenge for improving policy relevance.

The paper concludes that the IPCC's WGIII needs significant reform to better support climate policy design. It highlights four major hindrances in the current structure: implicit promotion of carbon pricing, standardized narratives neglecting diverse policy needs, evolving policy community needs not aligning with the IPCC's analytical approach, and discrete (not continuous) reporting cycles. To improve its relevance, the IPCC should embrace economic plurality, move beyond normative axioms of uniform carbon pricing, and address the granular reality of climate policy implementation through detailed, multifaceted modeling approaches. A cross-disciplinary special report on real-world policy options could help facilitate this transition.

The paper primarily relies on qualitative analysis of existing literature and a specific modeling framework (E3ME-FTT). While this provides valuable insights, it doesn't encompass all possible modeling approaches or policy contexts. The illustrative E3ME-FTT example, though detailed, doesn't represent every aspect of complex financial markets or social factors that can influence policy outcomes. The assumptions of the E3ME-FTT model, like its reliance on historical patterns of human behavior, may limit its ability to fully capture the dynamics of large-scale transitions. Future research could focus on expanding the range of models considered and incorporating more granular data to refine the analysis.