Demand-side policies (e.g., carbon pricing measures) have been the predominant focus of climate mitigation efforts. But there is increasing scholarship that supports the use of supply-side measures such as extraction limits to mitigate climate change, because they offer a range of climate mitigation, economic, and, under some circumstances, political feasibility benefits (Green and Denniss 2018). Evidence suggests that the complementary use of both supply-side and demand-side measures can lead to an effective and efficient regime of climate mitigation, especially to alleviate the issue of supply-side and demand-side carbon leakage (Prest 2022). Andreoni et al (2023) use four models to explore the implications of fossil fuel extraction bans, finding that to reach the Paris Agreement’s 2°C target, demand-side measures should be used in tandem with extraction bans.  

Because demand-side measures have been the predominant focus until recently, scholars have begun to document the numerous benefits to using supply-side measures (again, alongside demand-side measures), including: 

• slowing down investment in carbon-intensive infrastructure, thereby avoiding lock-in of carbon intensive pathways (Lazarus and Asselt 2018; Green and Denniss 2018); 
• limiting countervailing price effects of demand-side measures (i.e. demand leakage) (Green and Denniss 2018);  
• avoiding perverse outcomes like the Green Paradox, where producers accelerate production in anticipation of high carbon prices in future (Lazarus and Asselt 2018; Green and Denniss 2018); 
• being economically attractive because of lower transaction and administrative costs (Lazarus and Asselt 2018; Green and Denniss 2018);  
• sending clear signals to investors and financial markets on the direction of energy transition and of the appropriate investments and divestments to be made (Piggot et al 2018; Green and Denniss 2018; Collier and Venables 2015); 
• increasing social-moral pressure for climate action, because supply-side policies are more readily observable and involve more readily identifiable actors (Lazarus and Asselt 2018; Green and Denniss 2018; Collier and Venables 2015); and 
• being politically more feasible to achieve under some political conditions, as supply-side policies appear to link more directly to people’s understandings of climate change and its causes (Green and Denniss 2018). 

While the Paris Agreement does not explicitly refer to supply-side policies, Piggot et al (2018) demonstrate the many ways in which supply-side commitments can be introduced consistently with states’ obligations under the Agreement, for instance via Nationally Determined Contributions. 

In relation to the types of supply-side policies that can be used, Rempel and Gupta (2021) analyse 28 different approaches to leaving fossil fuels in the ground, illustrating how fossil fuel bans are a particularly useful supply-side policy. 

Collier and Venables (2015) canvass the benefits of supply-side policies in relation to coal specifically. 

Again, the literature stresses that supply-side approaches are complementary to demand-side measures and should be used together. This is consistent with Rosenbloom and Rinscheid’s (2020) call for multi-pronged governance, warning against relying on only one approach to drive change.