Jonas Meckling

Winning coalitions for climate policy

Green industrial policy builds support for carbon regulation The gap is wide between the implications of climate science and the achievements of climate policy. Natural sciences tell us with increasing certainty that climate change is real, dangerous, and solvable; social sciences report that key constituencies largely support action. But current and planned policy remains weak and will allow a long-term increase in temperature of 3.6°C (1). How can we address the gap between science and policy? From the political successes of climate policy leaders, we identify key strategies for building winning coalitions for decarbonization of domestic economies. Green industrial policy provides direct incentives for growth of green industries, which builds political support for carbon regulation.

The Globalization of Carbon Trading: Transnational Business Coalitions in Climate Politics

Over the past decade, carbon trading has emerged as the policy instrument of choice in the industrialized world to address global climate change. In this article I argue that a transnational business coalition, representing mostly energy firms and energy-intensive manufacturers, actively promoted the global rise of carbon trading. In this process, business was able to draw on the support of government allies and business-oriented environmental groups, particularly in the UK and the US. Alongside its allies, the coalition had pivotal influence in the internationalization of carbon trading through the Kyoto Protocol, in the U-turn of the EU from skeptic to frontrunner on carbon trading and in the re-import of carbon trading to the US. While business was not able to prevent mandatory emission controls, it was able to critically affect the regulatory style of climate policy in favor of low-cost, market-based options.

Sectoral approaches for a post-2012 climate regime: a taxonomy

Sectoral approaches have been gaining currency in the international climate debate as a possible remedy to the shortfalls of the Kyoto Protocol. Proponents argue that a sector-based architecture can more easily invite the participation of developing countries, address competitiveness issues, and enable immediate emissions reductions. However, given the numerous proposals, much confusion remains as to what sectoral approaches actually are. This article provides a simple, yet comprehensive, taxonomy of the various proposals for sectoral approaches. Based on the dual criteria of content and actors, three such types are identified and described: government targets and timetables; industry targets and timetables; and transnational technology cooperation. For each of these types, existing proposals and ongoing initiatives are discussed. In a second step, the article analyses the political landscape in which sectoral approaches are being debated, identifying the interests of their key advocates as well as the concerns of their critics. The Japanese government and energy-intensive manufacturing industries represent the main proponents of sectoral approaches to address the problems of carbon leakage and economic competitiveness. Developing countries, on the other hand, are wary of attempts to impose emissions reduction targets on their economies through sectoral target-setting. They, therefore, interpret sectoral approaches as sector-based forms of technology cooperation and technology transfer.

Oppose, Support, or Hedge? Distributional Effects, Regulatory Pressure, and Business Strategy in Environmental Politics

What explains the choice of corporate political strategy in environmental politics? Drawing on recent models of actor strategy formation in political economy, this article argues that basic material interests of firms are translated into strategies in the context of institutional environments. I advance a typological model that posits how distributional effects—positive versus negative—and perceived regulatory pressure—low versus high—interact in leading firms to adopt one of four ideal-type strategies: opposition, hedging, support, and non-participation. This article examines the model through the case of corporate strategies in the making of the European Union’s Emission Trading Scheme. The article contributes to theory-building on business strategy in environmental politics by offering a probabilistic explanatory model, and it flags hedging strategies as an increasingly prevalent form of business behavior.

Varieties of market-based policy: Instrument choice in climate policy

ABSTRACT Since the 1970s, European and US regulators have used different varieties of market-based environmental policy, which are rooted in competing types of liberalism: price instruments and quantity instruments, respectively. In the case of climate change, however, the EU and the US have converged on hybrid policy mixes. This convergence in instrument choice is examined in two cases: the emergence of the EU Emission Trading Scheme, i.e. the import of quantity regulation to the EU; and the creation of California’s feed-in tariff, i.e. the import of price regulation to the US. Increasing convergence in instrument choice is the result of international diffusion through learning and shifting domestic coalitions. This demonstrates that the two varieties of market-based environmental policy increasingly blend, and how policy import is driven by domestic government–producer coalitions rather than by policy-maker ideas of ‘best practice.’

Oil and state capitalism: government-firm coopetition in China and India

ABSTRACT This paper examines the domestic sources of the internationalization of national oil companies (NOCs) in China and India. It argues that – counter to notions of state-led internationalization – the going abroad of NOCs reflects a pattern of ‘coopetition,’ i.e., the co-existence of cooperation and conflict between increasingly entrepreneurial NOCs and partially supportive and interventionist home governments. In China, the state has predominantly assumed the role of resource supplier, rarely stepping in as a veto player. In India, the NOC–government relationship has been more adversarial, with the state intervening more often as a veto player than its Chinese counterpart and only slowly emerging as a resource supplier. These patterns of internationalization can be explained by how two major trends have been playing out in the two countries: (1) the marketization of NOCs, and (2) the reform of the governance of overseas investments. The findings matter to theory and policy. First, they unpack the relational dynamics of business–government relations in hybrid models of capitalism beyond notions of top-down and bottom-up dynamics. Second, our analysis shows that the state intervenes in the international energy strategies of emerging economies as the occasional veto player rather than actively leveraging NOC internationalization for geopolitical goals.

The developmental state in global regulation: Economic change and climate policy

What are the origins of global regulation? This article proposes that the developmental state — the state investing in economic development — can be a source of global environmental regulation. Through industrial policy, the developmental state can promote structural economic change in polluting sectors that supports global regulatory policy in two ways: first, providing state support to green industries creates economic interests in support of global regulation; and, second, driving down the cost of technology through government subsidies alters the pay-offs of global cooperation for other states. This article examines the two mechanisms in the case of climate change: the global leadership of the European Union; and international cooperation on the Paris Agreement. The argument advances our theory of the state in global regulatory politics as both a developmental and a regulatory force. This article identifies significant scope for the developmental strategies of major economies to change the interest and cost structures of polluting sectors to support global environmental regulation.

Protecting Solar: Global Supply Chains and Business Power

ABSTRACT Governments invested substantially in renewable energy industries in responding to climate change, while seeking to promote economic growth. They also engaged in a series of major trade disputes, notably in the solar photovoltaic and wind sectors. The European Union (EU)–China solar dispute is one of the largest such cases. In 2013, the European Commission (EC) announced duties on imports of solar products from Chinese manufacturers. This decision was at odds with the fact that the majority of the European solar industry opposed tariffs. We propose that the decision was affected by a shift in negotiating power between business and the EC. We suggest that the rise of global supply chains undermined the structural power of industry by dividing manufacturers over trade policy and by fragmenting the information conveyed to policy-makers. This provided an opportunity to the Commission to engage in ‘interest shopping’ by selecting an industry position that matched its own interest. Evidence from a comparative case study on EU and German responses to solar imports supports our argument. The findings suggest that the globalisation of production can strengthen the negotiating power of policy-makers, and implies that policy-makers face new trade-offs at the intersection of manufacturing and climate policy.

Corporate Policy Preferences in the EU and the US

Since the agreement of the Kyoto Protocol, business in the EU and the US has been split over the course of climate policy. Companies in Europe largely accepted mandatory emission controls. Companies in the US, instead, promoted voluntary commitments. However, in early 2007 the CEOs of major US corporations and the heads of a number of leading environmental groups called for the creation of a domestic cap-and-trade scheme. The launch of the US Climate Action Partnership has been widely perceived as a sea change in the positioning of corporate America on climate change. This article reviews the regulatory preferences of major business associations on both sides of the Atlantic. This serves to assess whether the transatlantic gap on corporate positioning on climate change is actually narrowing and what the compromise solution might be.

When do states disrupt industries? Electric cars and the politics of innovation

ABSTRACT When do states forge technological change in mature industries? This article challenges the emphasis on bureaucratic autonomy in explaining the ability of governments to promote technological change. We show that structural features of the bureaucracy alone are insufficient to account for variation in policy intervention, and argue that sectoral patterns of interest intermediation shape state capacity. Political coordination leads industry and government to broker technological transformations in consensus-driven negotiations. This prioritizes the interests of incumbent firms, likely resulting in regulatory capture and weak policy intervention. Political competition among interest groups and state agencies, by contrast, allows policy-makers to organize coalitions of technology challengers, likely leading to strong policy intervention. We examine this argument in the case of electric vehicle policy in Germany and the United States. Germany failed to disrupt its auto sector to transition to electric vehicles, while the United States adopted comprehensive policies for the manufacturing and commercialization of electric cars against incumbent opposition. Counter to conventional wisdom, our findings suggest that states can effectively engage in sectoral intervention to drive technological change in the absence of autonomous bureaucracies.