Transcript Politics of low carbon industrial strategy: how to make reforms

Politics of low carbon industrial
strategy: how to make reforms
politically sustainable
Robert H. Wade
LSE
19 February 2015
Industrial policy & CC
• Challenge of curbing & adapting to CC takes
industrial policy debate to whole new level.
• => transformation of whole economies (>>
Polanyi’s Great Transformation): “green
growth” techno-econ paradigm
• => end of dominance of neoliberal “market
failure theory” of govt intervention
• But, dominant view in most DCs: “CC is a
luxury good”
Trends in planetary ecosystem
• Conclusion: trends in CO2, temperature
(atmospheric, sea), energy-intensity of
economic growth in wrong direction
Absolute decoupling?
• “Absolute decoupling” of CO2 emissions from
GDP growth is not occurring
• Tim Jackson, Prosperity Without Growth:
Economics for a Finite Planet, 2009
• Figure 5.3: Trends in fossil fuel consumption &
related CO2, 1980-2007
“Paradox of CC Inaction” (esp
implementation)
• (1) Near-consensus among climate scientists:
• CC real
• poses acute dangers to human civilization &
planetary ecosystem; it is probably biggest
challenge our global society faces
• caused in large part by human activities (esp
fossil fuels, livestock)
“CC inaction paradox” (ctd)
• (2) But public & politicians not prepared
undertake costly actions now (eg “sacrifice
economic growth”), b/c CC not clearly visible
& acute now.
• (3) By time CC is visible & acute, too late to
stop catastrophic consequences – unless a
stroke of Luck.
• Remember frog in pot of gently heating water!
(A. Giddens, The Politics of Climate Change, 2009)
“Stay in jail” card
• Likely necessary condition for avoiding exceeding
2 C “safe” threshold increase: stranded fossil fuel
reserves & unproductive fossil fuel infrastructure.
• Christophe McGlade & Paul Ekins, in Nature:
1/3 of global oil reserves, ½ gas reserves, 4/5 of
coal reserves must remain in the ground (=
“unburnable”)
If not, “stay in jail”.
(C.McGlade and P.Ekins, http://www.nature.com/nature/journal/v517/n7533/full/nature14016.html)
Pessimism reigns
• Daniel Kahneman: “I am deeply pessimistic
[on action to reduce CC]. I see no path to
success”
•
(quoted in G. Marshall, “Think about it – how our brains are wired to ignore climate change”, Guardian 24 Sep 2014, p.39)
• Lance Taylor & Duncan Foley: “If serious
mitigation is not implemented soon [at a level
exceeding one percent of world GDP],
prospects for the world economy are dismal”
Grounds for optimism?
• Nuclear fusion = “get out of jail free” card.
Good news: US, EU, SK, now China. But …
• Electricity storage + renewables: “firm that
cracks battery storage will be Microsoft of 21
C” (big storage – power stations, small storage
– cars)
Peretz-ian optimism: “green growth
here we come”
• 5 discontinuous techno-econ paradigms over
past 2 centuries, all pushed by cheap fossil
fuels: (1) canals + factories; (2) coal, steam,
r’ways  “Victorian middle class living”; (3)
steel & heavy engineering  transoceanic &
continental trade  Belle Epoche lifestyle; (4)
oil, auto, electricity, plastics, mass production
 “American way of life”; (5) ICT & flexible
prodn, starting 1970s
Peretz T-E paradigms
• Each wave rides on cheap new basic input
which raises productivity potential across
many sectors :
• A. Diffusion half, led by finance & free market
ideology forcing triumph of the new; but
finance overinvests in the new  bubble 
Crash. Roaring Twenties, 1990s-2000s
• B. Deployment half, led by producers & State.
Victorian boom, Belle Epoque, post-WW2
Our current T-E paradigm
• ICT + flex prodn revolution began to diffuse fast in
1980s (rise of finance, neoliberalism).
• Crashes of 2000 & 2008 mark turning point towards
deployment stage, which has 20-30 more years to
run.
• Govt policies & regulations can have major effect on
“direction” of deployment.
• They can be tailored to move processes, products, &
demand in direction of “green growth”, with low
energy- & materials-intensity
Peretz conclusion
• ICT + flex production have potential of achieving
green growth & sustainable lifestyles across the
planet, provided govts & businesses collaborate
around this project, beyond neoliberalism.
• But, she stops here, at “Vision” of what is feasible.
• What about “Execution”?
• Thomas Eddison: “Vision without Execution is
Hallucination”
Execution of low carbon vision
• Going from “what we should do” to results on the
ground requires:
• (1) legislation: objectives; new organizations with
law, finances, personnel; role of parliament
• (2) the legislated change in institutions must be
implemented “durably”
• (3) there must be “positive policy feedbacks” which
prevent policy backsliding: eg public opinion; new
vested interests in business; NGOs
Durability of reform (once enacted)
• Public policy literature gives too much
attention to adoption, not enough to
implementation/sustainability/durability
Mechanisms of durable reforms
• Welfare state: its introduction created new
constituency with favorable preferences
• Thatcher/Reagan liberalizing reforms:
weakened cohesion of potential opponents
• MPC of BoE: its creation went with
dismantling of authority within Treasury which
had earlier carried out same functions
UK Climate Change Act (CCA), 2008
•
•
•
•
UK CCA = world’s first Climate Change Act
“Britain leads the world in combating CC!”
PM Blair: “revolutionary step”
Guardian editorial: “revolution in slow
motion”
• All parties, CBI, TUC, many NGOs supported its
passage
Question: how durable has it been?
• Answer: not very
Build-up to the CC Act
• UK Labor govt, 2000, legislated various schemes
to cut emissions.
• Clear by 2005 not effective
• Friends of Earth launched The Big Ask campaign
to get high-powered CC legislation.
• Civil society groups on board, CBI, TUC, all
political parties, nuclear industry. Polls said public
supported.
• Parliament approved CCA, Nov 2008, world’s first
Climate Change Act.
(M. Lockwood, 2013, “The political sustainability of the 2008 Climate Change
Act”, IGov, EPG working paper: 1302.)
CCA: features
• (1) Aim to lock GHG reduction targets in
through legal means, binding on current &
future govts; including 80% cut in 1990 levels
by 2050
• (2) Independent CC Cttee (CCC), mandated to
recommend 5 yearly carbon budgets (starting
12 years in future). Cttee of 8 technocrats
(chosen by Department of Energy & CC) +
secretariate of 30
CCA: features
• (3) Govt required to propose policies to meet
CCC targets. CCC to report annually to
Parliament
• (4) New Department of Energy & CC (DECC)
• (5) Umbrella for other policies & laws
CCA rationale & mechanism
• Rationale: Bind future govts to emission
reduction targets, & thereby give investors
confidence to invest in low carbon
technologies & infrastructure
• Mechanism: (1) CCA puts govt & Parliament
under series of duties, actions, reports, to
create transparency, accountability & pol
pressure. (2) The engaged public supports.
(3) “Reform winners” support. (4) Provision
for “judicial review”.
Effects of CCA?
• Within 4 years (by 2012) CCA not inspired much
confidence in investors. Current govt’s
commitment to future targets very uncertain.
Govt in-fighting results in undermining of own
carbon targets.
• Expansion in gas-fired capacity 3 times
renewables capacity
• Uncertainty raises cost of debt for renewable
energy projects by 15% (2012).
(http://greenallianceblog.org.uk/2012/11/16/whats-
going-wrong-with-politics-and-energy-and-how-to-fix-it/
• World Wildlife Fund: govt allowing CCA to
“wither by neglect”
Why? Change in institutions? CCC
• CCC presents itself as akin to MPC of BoE.
Misleading.
• MPC given inflation target by govt, then
responsible for using its several instruments
• CCC recommends targets to govt, govt then
implements (or not). CCC no binding powers; it
monitors govt, reports to Parliament
• CCA calls targets “legally binding”. But no
enforcement mechanism, except that minister
must explain why targets not met. “Judicial
review” toothless
Change in institutions? DECC
• On plus side, DECC has taken energy policy
away from old Energy Dept (wh focused on
“competitiveness”).
• But, DECC tightly circumscribed: little
influence over:
• (a) other depts with policy-making powers in
relevant areas, (b) Treasury, (c ) EC
• DECC minister is Liberal-Democrat, junior
partner
Positive feedback from public? No
• Eg 2008: 60% of UK “strongly agree” or
“agree” that “many scientific experts still
question if humans are contributing to climate
change”
• 77% “strongly agree” or “agree” that “most
people are not prepared to make big
sacrifices” to help stop climate change
(Giddens, Politics,
p.103)
Positive feedback fr public?
• Lower % rated CC as priority in 2011 than in
1997, despite IPCC, international conferences, pol
leaders, NGOs, hurricanes, floods.
• Throughout, % who rate CC as priority for public
policy in single digits. “Environment” hardly
mentioned in 2010 election campaign.
(Matthew Lockwood, 2013,
“The political sustainability of the 2008 Climate Change Act”, IGov, EPG working paper: 1302, on which I have drawn extensively.)
Most important & other important
issues facing Britain today: 1997-2011
Why little positive feedback from
public?
• CC different from earlier generation of
localized air & water pollution, which drove
env mvts & legislation. GHG odorless &
colorless.
• “Our cuts benefit others” : DCs & future
generations.
• “Our cuts cost us” : eg “green taxes” on energy
bills (scare stories in right-wing media)
• Co-benefits: energy security, econ growth, new
jobs, health? Public does not count them
Other reasons for little positive public
feedback
• Sceptics/denialists good access to media,
because of rule of media “balance”
• Sub-group of sceptics/denialists have waged
well-organized, well-funded “campaigns of
doubt”
• Most of Republican party = loyal servant of
fossil-fuel lobby.
• UK Conservative MPs: 1/3 doubt man-made CC
(2008).
Positive feedback from specific
groups? Not much
• NGOs: Has CCA helped campaign groups (eg FoE) to
sustain focus on implementation of CCA? Only
marginally, b/c campaign groups hostage to issueattention cycle, must keep moving to new (rising)
issues. Also, Great Recession deflated public support
for “environment” NGOs.
• Business: Split. Some support groups like Climate
Group, Corporate Leaders Group on CC. Others (esp
energy-intensive) seek exemption from climate policy
or softer targets: “competitiveness”.
Positive feedback from “reform
winners”? Not much
• Investors in low-carbon electricity: Theory of
CCA: they were expected to constitute new
“vested interests” to counter vested interests in
fossil-fuels
• In practice, open conflict within govt coalition on
gas vs. renewables, gas has tended to win.
• Expansion of gas capacity >> renewables capacity
since 2008
• This strengthens vested interests opposed to
carbon policies which would “strand” these fossilfuel assets.
What is achievement of CCA/CCC?
• In face of strong push-back against GHG
reduction measures (“costs”,
“competitiveness”, “risks of unilateral action”),
CCA/CCC/DECC, long term targets, and
reporting requirements on govt & Parliament
have slowed down the dilution of CC action.
Why not more durable?
• (1) Limited institutional transformation.
• (a) targets not enforceable; (b) CCC & DECC have
limited powers vis-à-vis existing depts; (c ) CCC
must weight “fuel poverty” & “ competitiveness”
in setting targets
• (2) Constituencies: Limited positive feedback
effects (eg “green jobs”); strong negative
feedback effects (eg “green taxes”, fossil-fuel
opposition, investor uncertainty due to political
disagreements).
• (3) Gas-fired electricity is low-risk option
Conclusions
• (1) IP debate must take low carbon issue as central
• (2) Peretz optimism rests on extrapolating from
earlier T-E paradigm shifts to perceive emerging
“green growth” T-E paradigm. But, CC imposes
global constraints, requires inter-state cooperation,
publics not supportive
• Peretz correct: To make progress on CC, have to
entice public & policy makers by making it attractive
to them (eg co-benefits), not just rely on “fear of
Catastrophe”.
Conclusions (ctd)
• (3) Fate of UK CCA 2008 is cautionary tale
• (4) 2014 saw upsurge of CC legislation/policies
(eg US-China). Is this “global climate
awakening”? Don’t take legislation & policies
at face value. Distinguish Vision & Execution.
Execution requires real institutional changes +
net positive feedback
• (5) Analysis of UK CCA execution can be
applied to other IP cases
END
Overarching challenge
• To make progress on CC, have to entice public & policy makers
by making it attractive to them, not just rely on “fear of
Catastrophe”. Major changes in how we live do not happen
by fear or rationality but by desire & aspiration (or war). How
to entice?
• (1) Widen goal from “avoid or adapt to CC” to: promote
“green growth”.
• (2) Shift vision of “good life” from energy- & materialsintensive consumption, to more service-intensive ways of
achieving well-being (eg rental economy for durable goods).
• (3) Establish wide-ranging & coherent policies to create
synergies in innovation & investment. Stop incentives for
labor-saving innovation, boost incentives for energy- &
materials-saving innovation.
Outline
• 1. Trends in planetary ecosystem: CC is real!
• 2. “Paradox of CC inaction”
• 3. Why not more progress towards
decarbonization? Several reasons, beginning
with low “salience” of CC in public opinion.
• 4. “Progress” is function not only of policy
“adoption” , but also “implementation”. What
factors make for durable reform? Case of UK
Climate Change Act (CCA) 2008
Govt efforts underway since 1980s
• UK: Thatcher, 1988, speech to Conservative Party
confc, stressed CC as problem. UK Parliament,
1994, proposed voluntary emission reduction
targets. Toughened early 2000s. Climate Change
Act 2008
• IPCC 1988 (under UN). 5 assessment reports
since 1990. AR5 2014, 800+ contributors.
• International conferences: 1992, Rio Earth
Summit, UNFCCC (196 parties, 2014); COPs,
annually since 1995; 1997, Kyoto; 2009,
Copenhagen; 2010, Cancun; 2014, COP20, Lima
Why not more progress?
• Common explanations:
• (1) “lack of political will” on part of political
leaders
• (2) vested industrial interests (eg fossil fuels)
• Truth in both, but superficial. Downplay
• (3) public opinion – CC “low salience”
• (4) CC legislation lacks (a) institutional
buttressing & (b) positive policy feedback
Public opinion
• Salience: For issue to get sustained political
momentum, substantial majority must say it is
up near top of their concerns, relative to other
issues ( = “highly salient”); & must remain
salient over time.
• Cf Anthony Downs: the “issue-attention
cycle” (1972)
Polling evidence: US
• US: 2009: two thirds of Americans “disagree”
or “don’t know” in response to: “Global
warming is a fact & is mostly caused by
emissions from vehicles & industrial facilities”
(Angus Reid poll, Oreskes & Conway, “Defeating the merchants of doubt”, Nature, 465, 686-87, 10 June 2010).
Lessons from durable reforms
• (1) New institutions (laws, orgns, finances)
needed to govern the policy area; some
existing competing institutions dismantled
• (2) New policy/institutions must build
clientele of supporters (“reform winners”),
weaken “reform losers”. Then, positive policy
feedback makes it difficult for politicians &
“reform losers” to roll back
Patashnik, E. (2008) Reforms at Risk: What
happens after major policy changes are enacted Princeton NJ, Princeton University Press
Newspaper coverage, & salience of
CC/env: UK, 2000-11
CC in public opinion: “back of the
mind”
• UK: Even at height of CC concern in 2006-07,
most people ranked CC well below: crime,
immigration, NHS, jobs, “the economy”, inflation.
Crash of 2008 & Grt Recession further eclipsed.
• Lower % rated CC as priority in 2011 than in
1997, despite IPCC, international conferences, pol
leaders, NGOs, hurricanes, floods.
• Throughout, single digits. “Environment” hardly
mentioned in 2010 election campaign.
(Matthew Lockwood, 2013,
“The political sustainability of the 2008 Climate Change Act”, IGov, EPG working paper: 1302, on which I have drawn extensively.)
% respondents citing issue as most
important facing Britain today: 2010
Why CC not more salient? Nature of
CC problem  benefits obscure
• CC different from earlier generation of
localized air & water pollution, which drove
env mvts & legislation.
• GHG odorless & colorless.
• Benefits of “our” cuts accrue to others: (1)
people in DCs, (2) people in future.
• Costs accrue to us energy consumers.
• Difficult to generate positive mass feedbacks
Costs of curbing CC not obscure
• Politicians worry that voters do pay attention
to costs of CC policies; esp higher energy
prices (eg cars, aviation) & env taxes.
• Eg UK voters: (1) 60+ % hostile to higher taxes
on motoring; several fuel duty mass protests.
(2) Large majority support public support for
renewables. But only 1/3 say they would pay
even a penny more for renewable energy
• Therefore politicians say: “CC is bad politics”
Organization of sceptics/ denialists
• (1) Fossil-fuel producers are well organized, &
major donors to candidates, parties, &
election campaigns, esp in USA
• (2) Entire Republican Party = loyal servant of
fossil-fuel interests
Orgn of sceptics (ctd)
• (3) Small # of sceptics have excellent access
to media, disproportionate to numbers. Why?
• Sceptics have manufactured a “debate” about
CC with two sides, obliging media to present
“both sides” in name of “balance”.
• CF media must balance those who believe Earth around Sun with those
who believe Sun around Earth
Organization of sceptics (ctd)
• (4) Doubt campaigns:
• Public unmoved, confused & rejectionist b/c
people & orgns have waged organized
“campaigns of doubt” against climate science.
• N. Oreskes & E. Conway, Merchants of Doubt,
Bloomsbury: NY, 2010
Doubt campaigns (ctd)
• GW is only latest of long line of “doubt
campaigns” to keep problems off public policy
agenda.
• (1) 1950s -- 1980s: cigarettes  cancer
• (2) 1970s -- 1980s: man-made pollution 
acid rain & ozone hole
• (3) 2000s: pesticide DDT  harm to humans,
bald eagle, etc. Campaign argued govt shd
not have banned DDT
Premise of doubt campaigns:
• Campaigns focus on getting public &
politicians to reject scientific evidence that
threatens ideology or profits.
• Mantra: “the science is too uncertain to
justify public policy”.
• Mantra works, b/c if people think the science
is contentious, they are unlikely to support
public policies that rely on that science
“Doubt is our product”
• Playbook written by R.J. Reynolds: “Doubt is
our product, since it is the best means of
competing with the ‘body of fact’ that exists in
the minds of the general public” (senior
tobacco industry executive, memo, 1969,
quoted Oreskes & Conway, Merchants, p.34)
Organization of doubt campaigns
• In US, network of conservative & Libertarian thinktanks: EG Cato Institute, Heritage Foundation,
American Enterprise Institute, Competitive
Enterprise Institute, Heartland Institute, Marshall
Institute
• They are anti-government, anti-regulation, pro “free
market”.
• Anti “liberal environmentalists” = “internal enemy” =
“watermelons: green outside, red inside”.
• See CC as scam, hoax to justify more “government
intervention”
Current “climate awakening”?
• 2014 – “climate awakening” around world:
many countries passed CC legislation, ChinaUS deal
• But distinguish b/w policy adoption &
sustained implementation
• Trajectory of UK CCA helps identify factors
that produce more, or less, durability of policy
change
Argument so far
• Why little progress in stopping CC?
• Public concerned about CC but in “back of
mind” way. CC has low salience: comes far
down public’s list of “very important” issues
• Why (despite scientific evidence)?
• (1) Nature of CC problem: benefits of action
obscure; costs of action visible
• (2) Organization of sceptics  excellent media
& political access
“Climategate”, 2009-12
• Online release of emails from climate
scientists at University of E Anglia in UK, in
2009, just before Copenhagen conference,
turned into media event, “Climategate”.
• Investigations showed charges almost
completely baseless.
• Polls showed that event precipitated doubts
about reality of GW in large swathes of US &
UK populations