David Levy’s bleak analysis of the carbon market is complemented by recent research by Charles-Clemens Rüling, Bettina Wittneben and myself regarding climate conferences as the sites of transnational climate policy making. While climate skepticism has long accompanied climate science and the debate about anthropogenic climate change, fresh skepticism about the structure and outcomes of climate policy processes is growing among those serious about saving our climate. The Kyoto Protocol, the much quoted “only game in town” in transnational climate policy, has failed to commit large industrialized countries and major carbon emitters such as the U.S. (in its first commitment period) and Canada (in its second) to binding targets for emissions reduction; the EU Emissions Trading Scheme, a cornerstone of supposedly ambitious European climate policy, has been written off by many civil society groups as well as by the European Parliament, voting against its reform in April; controversial energy production practices such as large-scale hydro-fracking are slowly but surely becoming more accepted even in countries such as Germany, a stronghold of the green movement. Meanwhile, the detrimental effects of climate change are being felt in both developed and developing countries, exemplified by the recent flood catastrophes in Europe and India. As climate policy is crumbling away, evidence grows to show that global warming and its threat to life on our planet is fact not fiction. Why have the decades of transnational policy efforts not produced better results?
In what he called the “Giddens’ Paradox”, Anthony Giddens argued that the problem climate policy needs to solve is unusually complex, requiring a significant change in behavior today to combat a threat that lies – largely – still in the future. This situation deters policy makers from addressing global warming during their government. Based on his own experience of being witch-hunted by climate skeptics in the U.S., Andy Hoffman has suggested that worldviews, values, and ideologies have turned any departure from the high-carbon path into a “culture war” with highly uncertain outcomes. Not least because of these intricacies, carbon markets have been embraced by policy makers as a “realpolitical” option to which businesses, civil society, and nation-states around the world could subscribe in moving towards a low-carbon economy.
In his recent blog piece, David Levy concludes that carbon markets have failed because financial institutions have succeeded in shaping them in line with their business models as “complex, opaque, volatile, and hard to value”. As a result they cannot send clear price signals that could effectively regulate carbon emissions. Matthew Patterson, a matter-of-fact supporter of what he has dubbed “climate capitalism”, commented that not the instrument itself should be criticized, but the lack of political ambition to regulate it properly.
Our own research on the transnational climate policy process in which these market solutions have been developed sheds further light explaining its sluggish pace and poor outcomes. Specifically, we analyzed changing micro-dynamics at the annual meetings of the “Conferences of Parties” (COPs) to the United Nations Framework Convention on Climate Change (UNFCCC) and unravel three interrelated mechanisms that have led to a state of deadlock in the climate negotiations, particularly following the ratification of the Kyoto Protocol in 2005.
First, the Kyoto Protocol Instruments, particularly the “Clean Development Mechanism” (CDM) of certifying emission reduction units to be traded in emissions trading schemes attracted many new actors from finance, consulting, technology, and development organizations into the climate policy field. They all hoped to benefit financially from the new regime. Organizations from the development, anti-globalization and gender movements, trade unions, faith-based organizations, or research institutes from different academic disciplines also aimed to make use of growing public awareness of climate change issues. The average number of Observer organizations at the COPs more than doubled after 2005, and they have been pursuing issues largely unrelated to climate change mitigation.
Second, negotiations about the concrete instruments of the carbon markets became very technical and complex. The average number of government delegates doubled after 2005 because ever more experts with specialized knowledge were needed for each country’s Party delegation. This specialization increased the need for internal coordination and reduced the time that negotiators had for interaction with Observers, so that negotiations became increasingly detached from those actually affected by climate change. The growing complexity of negotiation items also divided the technical negotiators from the high-level political segment taking decisions in the second week of the COPs, as the latter could no longer fully comprehend the draft negotiation texts.
Third, the U.S., initially the main promoter of the Kyoto Protocol and its associated market mechanisms, never actually ratified it. This has created deep discord between the EU and the U.S. and also split the negotiations into two tracks, one dedicated to the Convention itself (including all Parties), and another dedicated to the implementation of the Kyoto Protocol (CMP; including only the Parties to the Kyoto Protocol). Meanwhile, the U.S. under George W. Bush also began setting up several alternative bilateral and multilateral climate-related negotiation forums.
These three developments – the growing number and range of actors, the creation of highly technical policy instruments for the Kyoto Protocol, and an increase in the number and type of negotiation tracks and forums – led to a situation in which, in the words of one of our interview partners, “there are more and more parallel processes” and “only very few people understand the whole thing”. Thus, the creation of carbon markets not only served the interests of strong business lobbyists as argued by David Levy, it also prevented advances in transnational climate negotiations because of a set of path-dependent dynamics that moved field constituents and issues away from the key aim of the policy endeavor at first, which was to mitigate human-made climate change in industrialized countries.
As a way out of this situation, David G. Victor suggested that a process similar to the one used by the World Trade Organization, not aiming for universal membership and legally binding agreements but starting from concrete agreements among the few largest carbon emitters and moving “bottom-up” would lead to more effective climate policies. Based on our analysis, and in terms of institutional theory, drawing boundaries around field members and issues is clearly necessary to (re-)introduce momentum in the transnational climate policy process. Whether or not such momentum will be any more than moving deckchairs around the Titanic, we cannot know. But for the sake of our planet, we must try.
Levy, David L. “The Promise of Carbon Capitalism?” Review of Climate Capitalism: Global Warming and the Transformation of the Global Economy by Newell, P. & Paterson, M. (Cambridge University Press, 2010). ClimateInc.org (February 2 2011).
Schüßler, E., Rüling, C.-C., Wittneben, B. 2013. On melting summits: The limitations of field-configuring events as catalysts of change in transnational climate policy. Academy of Management Journal, in print.