Debate | Private Sector Innovation vs Government Regulation in Solving Climate Change

We’re proud to launch the PPC Debate Series 2025 as part of Politics Week. Across three debates, our writers explore opposing sides of timely prompts, replying to one another in short essays designed to challenge assumptions and open up dialogue. These pieces are the result of collaboration over the semester, and we’re excited to share them with you. 

Meet the Writers

Paige Stephens is studying a Bachelor of Laws and Bachelor of Commerce conjoint. With a strong interest in human rights–centred issues, she has previously written "International Law is Ineffective in Mediating Israel’s Occupation of Palestine” and “Understanding Protectionism: Global Policy, Volatile Effect” for the PPC.

Daniel Blundell is a second-year student, pursuing a Bachelor of Laws and a Bachelor of Arts, majoring in Politics and Philosophy. He is particularly interested in AI regulation, economic and fiscal policy, and criminal justice. He has written “Explainer | The 2025 Budget in a Nutshell” for the PPC.

With that, let's jump in!

Paige:

In 2025, the International Trade Union Confederation reported that of the 136 governments assumed to submit enhanced Nationally Determined Contributions (NDCs) – individual plans for climate action under the Paris Agreement – only 79 committed, with just 20 publishing sufficiently promising plans (International Trade Union Confederation, 2021). Not only is this a regretful statistic, but a show and tell of global governments' priorities. Science has warned us that climate change is worsening, yet governments prioritise short-term economic growth over climate action for stronger political campaigns and popularity, consistently disregarding the urgency of climate action (Moser et al., 2023). Comparatively, the private sector has been increasing climate-change mitigation investment, with global contributions reaching over USD $250 billion annually, remaining consistent and reliable (Bhattacharya et al., 2022). This showcases a global trend, while government power remains confined to election cycles, the private sector remains consistent and fast-adapting to growing climate concerns. 

The first key point I will prove is that government climate regulation is unstable and inconsistent due to political back-and-forth. Stemming from inevitable shifts between opposing governments, dramatic changes are made between oppositions, with right-wing parties often displaying climate change scepticism and resisting regulatory measures for preferred economic savings (Reitz & Jörke, 2021). This delays and pauses any hope for effective government climate regulation in many major nations. 

The second point is that the private sector has strong financial incentives to invest in climate change solutions for business continuation. The private sector has the competitive push to do better for the incentive of continued profits, whereas governments often view climate change investment as an unnecessary expense (Bhattacharya et al., 2022).

Overall, the private sector perceives climate change investment as a business advantage, incentivising other businesses to follow, and that is what differentiates the effectiveness of the private sector from government regulation.

Daniel:

Admittedly, our governments have so far been disappointingly ineffective in their climate change mitigation efforts since the first major international agreement, the 1992 United Nations Framework Convention on Climate Change, was signed by 165 countries (United Nations, 1992). Despite this, governmental regulations remain the most effective means to mitigate climate change. Part of this reasoning is due to the power governments have to regulate CO₂ emissions, and their personal responsibility for such emissions. Carbon Majors is a database of historical data from the 180 biggest oil, gas, coal and cement producers in the world, of which 169 are still currently active. The CO₂ emissions of the 180 companies in the database accounted for 80.3% of global fossil fuel CO₂ emissions in 2023. From these 169 companies, Carbon Majors (2025) found that 53% of global fossil fuel and cement CO₂ emissions came from state-owned entities in 2023, compared to 24% from investor-owned companies. Additionally, in 2021, energy production was responsible for 75.7% of global greenhouse gas emissions (World Resources Institute, 2024). Considering that all governments have the power to regulate energy companies, whether publicly or privately owned, it means that governments will be necessary for providing solutions to climate change, and private sector innovation will only go so far.

Overall, I bring two substantive points to this debate. Firstly, I will address current global governmental efforts to address climate change and the efficacy of this regulation compared to private sector innovation. Secondly,  I will explore how private companies are, in reality, falling short of their mitigation goals, and then explain how governments properly incentivising companies to invest in sustainable outcomes will prove to be more effective.

Paige:

Thank you for your response, Daniel.  I appreciate your perspective, though I feel that you have contradicted yourself. You acknowledge that state owned enterprises are responsible for 53% of global fossil fuel and cement CO2 emissions, yet argue that private companies are the ones falling short. This argument highlights public sector gaps and idealised potential. In fact, the very data you cite—Carbon Majors (2025)—reinforces my point. If governments were truly implementing effective climate mitigation strategies, state-owned enterprises wouldn’t be responsible for over half of global CO₂ emissions. Therefore, wishful thinking that governments will act is naïve and unrealistic, especially with changing political climates.

Moving to my first point that government regulation is less effective than private sector regulation due to changing governments. New Zealand's national coalition government's 2024/2025 budget is a prime example, featuring a devastating $103m cut to climate change programmes, climate specialists, and the Climate Change Commission (Corlett, 2024). Furthermore, the Economic Intelligence Unit (2024) states that with the results of recent elections, broader nations such as South Africa, India, Mexico, and the United States are expected to reverse, or dilute climate change efforts. This suggests that even when governments possess the ability to mitigate climate change, political transitions disrupt continuity, leading to inconsistent policy implementation.

Unlike governments, which constantly shift climate policies, the private sector has shown consistency and commitment. As Sloan et al. (2019) argue, private sector climate goals are tied to long-term business strategy and innovation—not political cycles. This gives the private sector a stronger incentive to act. To make it clear: without permanent and enforceable policies, government regulation will continue to fall short. If we’re serious about tackling climate change, we need to stop relying on unstable government action and start backing private-sector solutions.

Daniel:

Thanks for your reply, Paige. It appears I should respond by first clearing up the first point I made. I’m not arguing that governments have, in the past, been effective at solving climate change; quite the contrary, I would agree that our governments have been woefully inadequate at providing fixes to the problems they’ve created. With the 53% statistic, I am highlighting the fact that because so much of our global CO₂ emissions come from state-owned enterprises, it is the governments that have to bring forth effective solutions themselves, and private sector innovation can only do so much when it comes to mitigating environmentally harmful practices that they are not responsible for.

This brings me to my analysis of how governments are managing to address climate change and the efficacy of these efforts compared to private sector innovation. Firstly, whilst I acknowledge that shifting political climates make it difficult for climate policy to remain consistent, governmental regulation is incredibly effective when this isn’t the case. At the COP28 climate change conference, more than 130 national governments agreed to work together to triple the world’s installed renewable energy capacity to at least 11,000 GW by 2030 (IEA, 2024). For 2023, global annual renewable energy capacity additions increased by almost 50%, and China’s own development accounted for an incredible 56% of global expansions and is predicted to deploy four times more renewable capacity than the European Union from 2023-2028 (IEA, 2024). China is also projected to be responsible for half of the 2030 global goal for new renewable energy production capacity (IEA, 2024). This clearly demonstrates that in a stable political climate, governmental regulation and incentives are genuinely effective at providing climate change solutions.

Paige:

Thank you, Daniel. I appreciate the clarification. However, this reinforces my concern: governments may have the power to implement climate solutions, but lack consistency. Though ambitious, the COP28 commitments you cite have no legal standing and will ultimately rely on political climates. This is much like how, despite making ambitious pledges in the Paris agreement, many countries—such as the US—fail to adopt sufficient policies to meet these goals (OECD, 2024). Furthermore, citing China as an example of effective government-led climate regulation overlooks another key issue: China's political system differs strictly from the liberalised, multi-party democracies that dominate much of the world (China Daily, 2021). It seems your argument then relies on many nations converting political systems to a form of dictatorship to be wholly feasible. 

Meanwhile, supporting my second point, the private sector’s financial incentive, ambition, and power to solve climate change only grows. In 2023, private climate finance reached almost $2 trillion USD, reflecting this shift in climate action (Climate Policy Initiative, 2025). I emphasise these statistics because a stable political climate is never entirely feasible or trustworthy in terms of creating climate solutions, something your argument relies on. Yet, the private sector has consistently proved its ability to uphold climate goals. Furthermore, as global economies evolve, we see a significant trend towards privatising state-owned enterprises worldwide, expanding the private sector's influence in climate change mitigation. This does not mean that government regulation shouldn’t be used, but it paints a clear picture: private sector innovation is leading, and will continue to lead, climate change mitigation. For these reasons, if government climate action depends on a one-party system—something infeasible to most nations—how can it be considered more effective than the private sector's deliberate efforts?

So, Daniel, while we agree that governments play a significant role, we disagree on how much we can feasibly depend on them. Instead of wasting precious time hoping for political stability, we should support the private sector innovation which is currently involved in solving the problem of our time. That being said, this is not a call for the abandonment of government climate policy, as I agree that climate policy is incredibly effective when it’s upheld. Instead, I believe that by supporting private sector innovations regarding climate change solutions, we can continue inciting innovation and investment, and hope that governments will follow.

Daniel:

Kia ora Paige, and thank you for your response.

Whilst it is fantastic that private climate finance reached nearly $2 trillion USD in 2023, approximately 50% of the $380 billion increase from the previous year was driven by households and individuals (Naran et al., 2025), and furthermore, over 75% of climate mitigation finance was directed to energy systems and transport which demonstrates that a large amount of this investment is not from private companies going greener. In their 2024 report, Day et al. (2024) assessed the climate strategies of 20 companies across four sectors: automotive manufacturers, electric utilities, fashion and food and agriculture. Their previous reports in 2022 and 2023 covered another 31 companies. These 51 companies reported combined revenues of $6.1 trillion USD in 2022 and were responsible for approximately 16% of total GHG emissions for the same year. Day et al. (2024) found that most of these companies are projected to “fall far short of economy-wide emission reductions required to stay below the 1.5°C temperature limit”. Furthermore, there is very limited depth to emission reduction targets for companies’ upstream and downstream (scope 3) emissions, which account for over 90% of the emission footprints of most of the 51 companies that were assessed (Day et al., 2024). These findings demonstrate that private companies, whilst having invested in climate change mitigation, will not do so properly or effectively. Without proper incentives, the private sector won’t direct itself towards innovation, and the “sheer variation in corporate carbon emissions’ measurement and disclosure is itself evidence that resources, incentives, and efforts are misplaced (Coen et al., 2020).

This illustrates why governments will have to play a key role in climate change mitigation. According to Fiorino (2023), the government is a necessity for mitigation efforts as it has the ability to put a price on carbon, methane and other pollution, invest in public goods and engage in international problem-solving. Furthermore, private sector innovation alone will not be enough for a few key reasons. Firstly, the costs of GHG are not reflected in the market cost of carbon-based fuels and the damages they cause. Secondly, there are few incentives for the private sector to invest in public goods, and thirdly, managing climate change mitigation requires a large amount of coordination, which will require governmental intervention (Fiorino, 2023).

I appreciate the discussion we’ve had, Paige, and I think we’re in agreement on many things. To me, it is clear that both private sector innovation will play a leading part in producing solutions to climate change and reaching our global goals, so long as it is driven by governmental regulation and the proper incentives.

References

Paige - Reply 1:

Bhattacharya, A., et al. (2022). Scaling up private climate finance in emerging markets and developing economies. International Monetary Fund. https://www.imf.org/-/media/Files/Publications/GFSR/2022/October/English/ch2.ashx

International Trade Union Confederation. (2021, April). Governments’ failure to live up to Paris Agreement promises puts planet stability at risk. International Trade Union Confederation https://www.ituc-csi.org/governments-fail-paris-agreement.

Moser, M. J., Kasperson, L. L., & Kasperson, R. E. (2023). Climate change adaptation: How short-term political priorities trample public well-being. Environmental Science & Policy. https://doi.org/10.1016/j.envsci.2023.03.004  Reitz, T., & Jörke, D. (2021). The reshaping of political representation in post-growth capitalism: A paradigmatic analysis of green and right-wing populist parties. Anthropological Theory. https://doi.org/10.1177/1463499620977992

Daniel - Reply 2:

Carbon Majors. (2025). Carbon Majors: 2023 Data Update. Carbon Majors. https://carbonmajors.org/briefing/The-Carbon-Majors-Database-2023-Update-31397

Ge, M., Friedrich, J., & Vigna, L. (2024). Where do Emissions Come From? 4 Charts Explain Greenhouse Gas Emissions by Sector. World Resources Institute. https://www.wri.org/insights/4-charts-explain-greenhouse-gas-emissions-countries-and-sectors

United Nations. (1992). United Nations Framework on Climate Change.https://unfccc.int/files/essential_background/background_publications_htmlpdf/application/pdf/conveng.pdf

Paige - Reply 3:

Carbon Majors. (2025). Carbon Majors: 2023 Data Update. Carbon Majors. https://carbonmajors.org/briefing/The-Carbon-Majors-Database-2023-Update-31397

Corlett, E. (2024, May 30). Right‑wing NZ government accused of ‘war on nature’ as it takes axe to climate policies. The Guardian. https://www.theguardian.com/world/article/2024/may/30/rightwing-nz-government-accused-of-war-on-nature-as-it-takes-axe-to-climate-policies

Economist Intelligence Unit. (2024, July 30). Global Outlook: The impact of elections on climate policies. https://www.eiu.com/n/global-outlook-the-impact-of-elections-on-climate-policies/

Longendyke, L. (2016, May 6). Setting Science‑based emissions targets: 5 companies offer lessons for success. World Resources Institute. https://www.wri.org/insights/setting-science-based-emissions-targets-5-companies-offer-lessons-success

Sloan, K., Teague, E., Talsma, T., Daniels, S., Bunn, C., Jassogne, L., & Lundy, M. (2019). One size does not fit all: Private-sector perspectives on climate change, agriculture and adaptation. The Climate‑Smart Agriculture Papers. Springer International Publishing. https://doi.org/10.1007/978-3-319-92798-5_19

Daniel - Reply 4:

IEA. (2023). Renewables 2023. https://www.iea.org/reports/renewables-2023

Paige - Reply 5:

China Daily. (2021, June 26). China’s political party system: Cooperation and consultation. China Daily. https://www.chinadaily.com.cn/a/202106/26/WS60d67bc9a310efa1bd65e144.html

Organisation for Economic Co‑operation and Development. (2024). Progress in national climate policy efforts remains insufficient to achieve 2030 targets. OECD. https://www.oecd.org/en/about/news/press-releases/2024/11/progress-in-national-climate-policy-efforts-remains-insufficient-to-achieve-2030-targets.html

Daniel - Reply 6:

Coen, D., Herman, K., & Pegram, T. (2020). Private Sector and Climate Change: A Case Study of Carbon-Based Governance. Global Governance and the European Union. https://www.globe-project.eu/private-sector-and-climate-change-a-case-study-of-carbon-based-governance_11373.pdf

Day, T., Hans, F., Mooldijk, S., Smit, S., Woodllands, S., de Grandpré, J., Putri Salsabila, N., Fraser, E., Kuramochi, T., & Warnecke, C. (2024). Corporate Climate Responsibility Monitor 2024. New Climate Institute. https://newclimate.org/sites/default/files/2024-08/NewClimate_CCRM2024.pdf

Fiorino, D. (2023, February 16). Does the private sector need government to manage climate change?. European Corporate Governance Institute.https://www.ecgi.global/publications/blog/does-the-private-sector-need-government-to-manage-climate-change

Naran, B., Shankar, V., de Aragão Fernandes, P., Dixon, J., Burnett, J., Abraham, S., Stout, S., Connolly, J., & Strinati, C. (2025). Global Landscape of Climate Finance 2025. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2000/06/compressed_Global-Landscape-of-Climate-Finance-2025.pdf