Driving Transformative Change: Assessing the Direction and Design of Decarbonization Policies in the EU, US, China, and Japan

ABSTRACT: The transition to low‐carbon economies demands policies that drive both decarbonization and deep socioeconomic transformation. This paper assesses the “transformative potential” of 3,400 decarbonization policies from Europe, the US, China, and Japan. We define transformative potential considering both policy direction – alignment with sustainability goals, and policy design ‐ presence of mechanisms that can induce transformation, such as experimentation, actor diversity, multiscale coordination, and reflexivity. The research shows that when we consider a broad universe of decarbonization policies, transformative potential is still limited: only 20% of policies align with at least one transition pathway and include at least one transformative mechanism; and just 2% include three or more mechanisms. By identifying distinguishing features of these higher transformative potential policies, the paper contributes to understanding how technological, sectoral and contextual factors shape the capacity of policies to enable transformative change.