Carbon Coalitions: Business, Climate Politics and the Rise of Emissions Trading

Abstract

The role of business in climate policy has been analysed in a large number of books, both addressed at managers (see e.g. Bayon et al., 2009; Pinkse and Kolk, 2009) and researchers (see Newell, 2000; Skjaerseth and Skodvin, 2003). Moreover, emission trading analysis has seen an upswing since the first systems were introduced around 2005 (see Stowell, 2005; Skjaerseth and Wettestad, 2008). Often, emission trading is seen as a solution which came from Anglo-Saxon researchers, found its first practical applications in the US and then jumped across the Atlantic to find an unlikely champion in the EU. The latter became the leader in implementation of domestic trading and was instrumental for the development of global carbon markets through the linking of the EU ETS with the Kyoto Mechanisms CDM and JI. The role of business is usually seen as important but not decisive for these developments, with some oil companies such as BP and Shell introducing pilot trading schemes (Skjaerseth and Skodvin, 2003). In the EU industry associations actually tried to prevent the introduction of the trading scheme and only became supporters when they realized the possibility to make substantial windfall profits (Skjaerseth and Wettestad, 2008). Meckling starts from a different hypothesis: he thinks that companies were the key drivers behind introducing emission trading and achieved this by forming coalitions with other important stakeholders, especially policymakers. To prove this hypothesis, he first embarks on a voyage through different political science theories that could explain company influence on policy decisions. Meckling then goes on to assess the influence of business coalitions through the methods of process tracing, correlation and counterfactual thought experiments to establish ‘narrative causality’. For the reader not well versed in political science theories, it seems that Meckling develops narrative case studies – one for the Kyoto Protocol, one for the EU ETS and one for the emergence of trading schemes in the US. In my view this choice is already biased because all cases eventually led to emission trading. It would have been enlightening to include the case of Japan where no emissions trading system emerged or Australia where it took over 10 years to be approved. The studies are based on assessment of an eclectic array of documents and 52 interviews with a wide range of stakeholders held in 2007 and 2008, of which 24 came from business. Interviewee selection was done according to perceived importance of persons. It is impossible to check this claim because names of interviewees are not provided by Meckling. A long chapter discusses the characteristics of business coalitions and how they can exploit windows of opportunities opened through political crises. Meckling develops a policy matrix based on the relation of costs and benefits of a proposed environmental policy and the degree of political pressure business is exposed to. Only if costs are lower than benefits and pressure is high, business will support the policy. He stresses the importance of transnational coalitions and the ability of such coalitions to mobilize substantial financial and human resources simultaneously on different levels of political decision making. He sees the collaboration with NGOs as a crucial means to acquire legitimacy. A short history of emission trading follows which can be skipped by readers well versed in climate policy except for a fascinating section on the role of NGO Environmental Defense and Harvard professors in the late 1980s in the design of the SO2 trading scheme. The international developments are unfortunately only sketched and the important role of the pilot phase for Activities Implemented Jointly (AIJ) completely ignored. The case study on the inclusion of the market mechanism in the Kyoto Protocol starts from the premise that there was a ‘sudden rise to prominence’ (p. 75) of the mechanisms. Given