EVIDENCE

Background

Achieving international climate targets requires ambitious climate and energy policy reforms in low- and middle-income countries. Many of these countries face growing emissions while also navigating development needs, institutional constraints and political economy challenges that differ substantially from those in high-income countries.

International financial support can help partner countries initiate and implement such reforms. One important instrument is policy-based lending, which links financial assistance to specific policy measures and reform steps. Yet, the effectiveness of such support depends on a sound understanding of which climate policy instruments work, under which conditions, and in which sequence.

Designing effective climate policy reforms therefore requires robust scientific evidence on the impact of policy instruments, the role of economic and political institutions, and the influence of key actors such as firms and political elites. EVIDENCE addresses this need by generating empirical insights that can inform climate and development policy in low- and middle-income countries.

Project objectives

EVIDENCE aims to identify effective sequences of climate policy reforms in low- and middle-income countries and to make this knowledge usable for policy-based lending and other instruments of international climate finance.

The project is divided into four Work packages:

1. Evaluating the effectiveness of climate policies
    EVIDENCE will conduct a systematic ex-post evaluation of climate and energy policy measures across a broad set of low- and middle-income countries. Using advanced empirical methods and comprehensive international policy data, the project will assess which individual policies and policy mixes have contributed to significant greenhouse gas emission reductions. The analysis will cover different sectors, including electricity, buildings, industry and transport, and will pay particular attention to the institutional and economic conditions that shape policy effectiveness.
2. Understanding the role of the private sector
    Businesses play a central role in climate policy implementation, investment decisions and the credibility of reform processes. EVIDENCE will investigate how private-sector climate strategies interact with national climate policies, and how firms respond to or shape policy reforms. This research will help identify barriers and opportunities for mobilizing private resources for climate mitigation and for designing policy reforms that are ambitious, credible and implementable.
3. Assessing the role of political elites
    Climate policies are shaped not only by technical evidence and available finance, but also by political priorities, institutional constraints and the preferences of key decision-makers. EVIDENCE will study how political elites, including policymakers, government officials and practitioners, influence the adoption, design and stringency of climate policies. This will help identify the conditions under which reforms are more likely to succeed and the potential windows of opportunity for ambitious climate policy.
4. Translating evidence into country-specific policy dialogue
    EVIDENCE will establish regular dialogue forums for selected partner countries, including South Africa, Indonesia, Morocco and Colombia. These forums will provide structured exchange between PIK, BMZ and relevant partners. Country-specific policy briefs and workshops will translate the project’s scientific findings into accessible and policy-oriented insights, supporting the strategic development of BMZ’s policy-based lending portfolio.

Through these activities, EVIDENCE will contribute to a better understanding of how climate policy reforms can be designed and sequenced to reduce emissions effectively while supporting broader development objectives. The project will generate evidence that can inform German development cooperation as well as international climate and development policy dialogues.