Negotiation and Policy-Making in the Climate Regime
A thesis presented to
the faculty of
the College of Arts and Sciences of Ohio University
In partial fulfillment
of the requirements for the degree
Master of Arts
Saskia A. van Wees
November 2009
© 2009 Saskia A. van Wees. All Rights Reserved.
2
This thesis titled
Negotiation and Policy-Making in the Climate Regime
by
SASKIA A. VAN WEES
has been approved for
the Department of Political Science
and the College of Arts and Sciences by
Patricia A. Weitsman
Professor of Political Science
Benjamin M. Ogles
Dean, College of Arts and Sciences 3
ABSTRACT
VAN WEES, SASKIA A., M.A., November 2009, Political Science
Negotiation and Policy-Making in the Climate Regime (127 pp.)
Director of Thesis: Patricia A. Weitsman
In order to understand why the Kyoto Protocol has not been as stringent as many hoped, this paper will seek to answer two main questions. First, why do international treaties on climate change always result in a lowest common denominator of commitment? Negotiations for the Framework Convention on Climate Change and the
Kyoto Protocol indicate that the policy goals of proactive parties are deflated by the foot- dragging of even just a few resistant parties. Secondly, this thesis will examine why some states are more progressive about fighting climate change than others. The
European Union and the United States—which have displayed vastly different policy preferences throughout the duration of the international climate regime—will be compared to answer this second question. A two-level games approach is employed to examine how the international system, as well as domestic characteristics, affected the
EU and US policy preferences.
Approved: ______
Patricia A. Weitsman
Professor of Political Science 4
ACKNOWLEDGMENTS
I would like to express my great appreciation to my committee chair, Professor
Patricia Weitsman, who spent countless hours reading (and re-reading) drafts of my thesis and providing me with her brilliant insight into international relations. It has been an honor to work with Professor Weitsman, and her enthusiasm and constant encouragement have made this project (and graduate school in general) very rewarding.
I would also like thank Professor Nancy Manring, who taught me a great deal about domestic environmental issues and went out of her way to serve on my thesis committee during her year on sabbatical. I am very appreciative of her ability to find hope and optimism in all subjects—even those which seem quite discouraging.
The idea of this whole project came about during an independent study under the guidance of Professor Harold Molineu. He helped me to come up with this research topic, and the paper I wrote for his course ended up becoming the foundation of this thesis. I will forever be grateful to Professor Molineu, who has served as a mentor to me, providing invaluable advice during the crafting of this project and also throughout my education at Ohio University.
I could not have written this thesis without the support of my family—especially my mother, who first got me interested in environmental issues and was always a phone call away whenever I felt overwhelmed. I would also like to thank my friends, Skrobot,
Teri, David, and Julie, who have been so supportive of me. 5
DEDICATION
To my parents 6
TABLE OF CONTENTS
Page
Abstract ...... 3
Acknowledgments...... 4
Dedication ...... 5
Chapter 1 ...... 9
Introduction ...... 9
Climate Change is a Global Commons Problem ...... 10
Political Responses, Cooperation, and Regimes ...... 12
Overview ...... 15
The United Nations Intergovernmental Panel on Climate Change ...... 18
The Framework Convention on Climate Change ...... 19
COP1 and COP2 ...... 21
COP 3 and the Kyoto Protocol ...... 22
Ratification and Subsequent COP Meetings ...... 24
Where the Protocol Stands Now ...... 26
Levels of Analysis ...... 28
The Two-Level Game Approach ...... 30
Conclusion ...... 31
Chapter 2 ...... 32
The Global Commons and Collective Action Problems ...... 35
Game Theory: Climate Change as a Prisoner’s Dilemma or a Stag Hunt? ...... 38 7
Regimes ...... 43
Regime Structure ...... 44
Concerns with Relative Gains Cause a Lowest Common Denominator Effect ...... 46
Small Groups v. Large Groups in the Provision of Collective Goods ...... 48
The Systemic Level of Analysis ...... 51
Problems with the Systemic Level of Analysis ...... 52
Conclusion ...... 54
Chapter 3 ...... 56
State Level of Analysis ...... 57
The Framework Convention on Climate Change ...... 58
The European Union Negotiating Position ...... 58
The United States’ Negotiating Position ...... 59
The Resulting Framework Convention on Climate Change ...... 60
COP meetings and the Clinton Administration ...... 61
Interest Groups in the United States ...... 65
The Kyoto Protocol ...... 68
The EU Negotiating Position ...... 68
The United States’ Negotiating Position ...... 70
The Resulting Kyoto Protocol ...... 71
Domestic Characteristics Complicate International Climate Treaties ...... 72
Perceptions of Threat and the Validity of Climate Science ...... 73
Energy Dependence ...... 75 8
Interest Groups and Lobbying ...... 79
The State Level of Analysis ...... 85
Conclusion ...... 88
Chapter 4 ...... 90
The Two-Level Game Approach ...... 91
Criticism of the Two-Level Game Approach ...... 94
Findings ...... 95
The Future of the Climate Regime ...... 99
The Development of a Global Carbon Market through Emissions Trading ...... 101
US Acid Rain Program ...... 104
European Emissions Trading Scheme ...... 106
Phase 1 ...... 108
Phase 2 ...... 111
Criticism of the European Emissions Trading Scheme ...... 112
Emissions Trading versus a Carbon Tax ...... 113
Implications of the European ETS and US Acid Rain Program for Future Cap and
Trade Programs ...... 114
Contraction and Convergence ...... 116
Conclusion ...... 118
Bibliography ...... 123
9
CHAPTER 1
Introduction
As the Earth’s population has grown, so has the strain on its environment.
Population doubled in the 38 years between 1950 and 1987, and continues to increase at an exponential rate (Chasek et al., 5). Simultaneously, the consumption of resources per capita is skyrocketing across the world (Chasek et al., 2). The drastic increase in production and consumption—coupled with an exponential growth in population—has placed an unprecedented demand on the planet. Tropical forests and fisheries are threatened by the exhaustion of resources and pollution, and freshwater resources are quickly depleting as well. While all of these global environmental issues are projected to become more problematic in the future, the issue of global climate change recently received a great deal of international focus.
Since the late 1980s, the development of climate science pushed the global community to pay increasing attention to environmental issues. Today, the impending threats associated with anthropogenic climate change can already be seen, and very few reputable scientists question the scientific theory of atmospheric warming. According to scientists, the effects of greenhouse gasses (emitted primarily by fossil fuels) increased the occurrence severe floods and droughts, larger populations of insects, increasing intensity of hurricanes, and the melting of ice caps. In addition, sea levels rose dramatically over the past century, threatening many coastal communities. Further, the
United Nations’ Intergovernmental Panel on Climate Change estimates a 0.6 to two foot rise in sea level will continue in the next century (US EPA). All of these weather 10
changes come as a result of increasing global temperatures, which are predicted to rise
between 3-7 degrees Fahrenheit between 1990 and 2100 (Schreuder, 11).
Such changes in the Earth’s climate will undoubtedly affect human living
conditions. Some international relations scholars fear that climate change will exacerbate
scarcities in resources, leading to civil and interstate wars (this, in fact, has already been
witnessed in some areas). Others study how human rights in present and future
populations will be affected by climate change. International political economists,
human rights scholars, and students of national security all have unique insights into the effects of climate change as well as how atmospheric warming can be slowed. Starting in the early 1990s, however, a majority of nations, political leaders, and environmental groups began calling for environmental initiatives to cut back on the damaging greenhouse gas emissions implicated in the global rise in temperature.
Climate Change is a Global Commons Problem
Since climate change is a world-wide phenomenon with global effects, any
attempts to mitigate the problem require cooperation at the international level. Because the emission of greenhouse gasses into the atmosphere can occur anywhere, and because the atmosphere is a global good that does not respect state boundaries, the pollutants released in Belgium, for example, affect the atmosphere in Thailand and across the world.
For this reason, climate change is a very unique international issue.
Other global commons problems are often dealt with by giving property rights to some states which are responsible for managing their portion of the environment. For 11
example, the UN Convention on the Law of the Sea allows sovereign property rights to
states which border oceans (Alcock, 2). Although these regimes have been quite
successful in resolving global commons problems, they are also different analytically
from climate change, since it is much more difficult (if not impossible) to assign property
rights to the atmosphere. Further, while ozone-depleting CFC usage has been effectively
dealt with by the Montreal Protocol, the climate regime has been unable to produce a
universally-accepted treaty to manage greenhouse gas emissions—partially because,
unlike the case with CFCs, there is no inexpensive and widely-available alternative to
fossil fuel usage.
The emission of chemicals into the atmosphere is very complicated because, on one hand, states may be understood to possess a sovereign right to burn fossil fuels; while on the other hand, their burning of such energy bears negative impacts which violate the climate in other countries. Since climate change is a complex transboundary issue which
affects all states across the world, it necessitates a global response.
Garrett Hardin’s Tragedy of the Commons is a useful metaphor in understanding
how decision-making that is rational at the individual level leads actors to be collectively
worse off. In his writing, Hardin asks readers to “picture a pasture open to all,” in which
each herdsman will try to raise as many cattle on the commons as possible. This all
works out well for years, since wars and disease keep the numbers of cattle low. But
eventually, “comes the day of reckoning, that is, the day when the long-desired goal of
social stability becomes a reality” (Hardin, 348). He explains that at this precise moment,
the logic of the commons is transformed, commencing its progression towards tragedy. 12
Since the herdsmen are rational and self-interested, they will each seek to
continue to raise more and more cattle on the commons. All of the profits from the cattle
go to the individual herdsman, so each sees a gain of +1 animal in keeping an additional
cow at the commons. However, when all herdsmen (being rational actors) keep adding additional cattle to the commons (which is finite), they all contribute to overgrazing. The
overgrazing causes negative effects shared across all herdsmen, and is therefore less than
-1 per person. Because the benefit is +1 and the cost is only a fraction of -1, each
herdsman finds that “the only sensible course for him to pursue is to add another animal
to the herd. And another; and another…” (Hardin, 384). The problem is that every
herdsman concludes this, resulting in actions which destroy the land for everyone.
Hardin then applies this concept to pollution, stating:
“the rational man finds that his share of the costs of the wastes he discharges into the commons is less than the cost of purifying his wastes before releasing them. Since this is true for everyone, we are locked into a system of ‘fouling our own nest’ so long as we behave only as independent, rational, free-enterprisers” (Hardin, 352).
Accordingly, it is apparent that individual rationality on the part of states which do not
impose restrictions on greenhouse gas emissions is creating a collective disaster in the
form of global climate change.
Political Responses, Cooperation, and Regimes
Global cooperation is difficult to achieve as the international system is
characterized by anarchy (or the lack of a centralized governing body to ensure all states
comply with agreements). As Hardin’s Tragedy of the Commons demonstrates, states 13
may wish to reduce greenhouse gas emissions in order to slow and prevent further
climate change, but, because of the anarchical nature of the international system, every
state is aware that unilateral defection is easy and beneficial as it allows for free-riding.
As a result, regimes are created to overcome the obstacles to cooperation at the international level. Kenneth Oye explains that “despite the absence of any ultimate international authority, governments often bind themselves to mutually advantageous courses of action” (Oye, 69). Such cooperation is often facilitated by the creation of regimes, which come about when states decide that a problem becomes unacceptable and too costly to ignore. States, of course, will only come to an agreement if they see it as being in their best interests (Chasek et al., 19).
While there are many different definitions of regimes, Pamela Chasek et al. broadly describe a regime as “a system of principles, norms, rules, operating procedures, and institutions that actors create or accept to regulate and coordinate action in a particular issue area of international relations” (Chasek et al., 17). They explain that regimes are often based on a convention, which “may either contain all the binding obligations expected to be negotiated or be followed by a more detailed legal instrument elaborating on its norms and rules” (Chasek et al., 19).
Sometimes states create a framework convention, which is agreed upon with the expectation that parties will meet in the future to negotiate further texts to clarify and elaborate upon the convention. This was the case in the 1992 UN Framework
Convention on Climate Change (FCCC), which established the climate change regime.
The FCCC, like other framework conventions, generated “a set of general principles, 14
norms, and goals for cooperation on the issue (including a regular Conference of the
Parties, or COP, to make policy and implementation decisions) rather than major binding
obligations on the parties.” As is characteristic of framework conventions, the FCCC also produced a subsequent protocol (the Kyoto Protocol), which gave parties more specific, legally-binding commitments (Chasek et al., 19-20).
Nevertheless, the Convention and the Protocol’s effectiveness are often questioned. Both are criticized as being too lenient, likely as a result of negotiations which led to a lowest common denominator of commitment. Further, while the Kyoto
Protocol was ratified by over 181 Annex I (global north/industrialized) and Annex II
(global south/developing) countries, the largest Annex I emitter of greenhouse gasses— the United States—refused to participate (“Status of Ratification”, UNFCCC website).
These problems, as well as widespread non-compliance with emission reduction goals, undermined the Kyoto Protocol and created great setbacks in the fight against climate change.
There is hope for a stronger climate regime, however. Although the US demonstrated reluctance in adopting international efforts to reduce greenhouse gas emissions, many European Union countries agreed to take on ambitious commitments.
Over the years, the EU became the global leader in climate change policy and served as a counterweight to the US during treaty negotiations. In fact, in 2005, the EU starting trading emissions under the European Union Emissions Trading Scheme to ensure compliance with its Kyoto targets. Nonetheless, worldwide emissions continue to increase while the threats of climate change become increasingly ominous. 15
Overview
In order to investigate the complexities of the climate regime, this thesis takes the state to be the primary unit of analysis. Although there is no denying the growing influence of international organizations, multinational corporations, and non- governmental organizations, states are still considered the dominant actors in international relations, as only they are capable of adopting the “broad economic, regulatory, trade, and development policies that impact the environment.” They are also ultimately responsible for negotiating international agreements and participating in global regimes (Chasek et al., 41).
Although the state will be the primary unit of analysis in this paper, an exception must be made for the EU. The Union is a unique supranational body comprised of individual member states, yet it performs many of the same economic and developmental functions for its members—just like states do for themselves. First, while the European
Union and individual member states may be parties to negotiations such as those for the
Kyoto Protocol, it is the Union itself which formally bargains with other states during
negotiations. (The EU negotiating position is universal to all member states.) Thus, the
EU can be analyzed as an international actor which performs similar functions as the US
delegation during the negotiation process of international climate change treaties. Since
the EU operates in many ways as a unitary state in the international system, it can be
compared with other states, such as the US.
In order to understand why the Kyoto Protocol is not as successful as many
hoped, this paper will seek to answer two main questions. First of all, why do 16
international treaties on climate change always result in a lowest common denominator of
commitment? Negotiations for the Framework Convention on Climate Change and the
Kyoto Protocol indicate that, because all states must reach a consensus, the policy goals
of proactive parties are deflated by the foot-dragging of even just a few resistant parties.
Secondly, I will examine why some states are so much more progressive about fighting climate change than others. More specifically, I will identify why the EU took on such an eager role in the international climate change regime while the US has been
hesitant about many any commitments (let alone participating) in the regime and its
treaties. To do this, I plan on using a two-level games approach to understand how the
international system, as well as domestic characteristics, affected the EU and US policy
preferences.
Understanding why agreements such as the FCCC and Kyoto Protocol get pulled
down to the lowest common denominator will not only be useful in preventing the same
problems when crafting future agreements, but it will also inform negotiation theory
more broadly. Meanwhile, comparing the EU and US roles in climate change decision-
making might also prove helpful in understanding why certain states are more proactive
than others. The EU and US are prime candidates for such a comparison, as both are democratically-governed actors comparable in wealth and influence, and, in order for a climate change treaty to be of consequence, both the actors should ideally be participants.
The importance of the EU and US in the climate regimes is reflected in scholarly work as well as the press. Germany, Japan, and the US are singled out by several scholars as the most critical players in international climate change. Further, the 17 international press often focused on the EU, Japan, and the US during comparisons on negotiating positions (Schroder, 25-26). It is not surprising that these actors are often focused upon, as they represent the most powerful industrial countries in the world and it is evident that economic influence is closely related to political influence in matters such as climate change. But, while Japan (like the EU and US) has been very influential in the development of climate change treaties, it chose to take the middle road between the two extremes of the EU and US. Although it often called for greater commitments on the part of other industrialized countries, Japan was already so efficient in fossil fuel usage that it feared any further reductions would be very difficult for the country (Paterson, 81), Japan and the US also banded together in the JUSCANZ (Japan, US, Switzerland, Canada,
Australia, Norway and New Zealand) alliance, which served to counter the EU’s progressive stance toward climate change policy (Schroder, 26). Thus, the policy stances of the EU and US represent the two most divergent of all the key players in the negotiations for the UNFCCC and Kyoto Protocol (Newell, 14).
To summarize, understanding and finding a good way to manage climate change will be useful in explaining global cooperation in general, as well as providing guidance for dealing with other global environmental issues which are becoming increasingly important. Before any analysis can begin, however, it is important to understand the history of climate change negotiations. A good starting point is the late 1980s, when climate science was really starting to solidify and politicians were beginning to see greenhouse gas emissions as something that needed to be dealt with through public and international policy. 18
The United Nations Intergovernmental Panel on Climate Change
As a result of growing concern out of the emerging science on climate change, the
Intergovernmental Panel on Climate Change (IPCC) was established in 1988 by the
United Nations Environment Programme and the World Meteorological Organization.
The IPCC has a mission of:
i. “Assessing the scientific information that is related to the various components of the climate change issue, such as the emissions of major greenhouse gases and modification of the Earth’s radiation balance resulting therefrom [sic], and that need to enable the environmental and socio-economic consequences of climate change to be evaluated;
ii. Formulating realistic response strategies for the management of the climate change issue” (Paterson, 43).
The IPCC has three main components: Working Groups I, II, and III. Working Group I
deals with science, and is charged with assessing and interpreting climate change science.
Working Group II attends to the impacts of climate change—particularly focusing upon environmental and socioeconomic impacts. Finally, working Group III has the mission of formulating policies and strategies to mitigate the effects of and prevent climate change.
Working Group I, which is comprised of 2,500 of the world’s leading climate scientists, found that increasing greenhouse gas emissions would warm the Earth’s atmosphere (Schroder, 16). One of the working group chairs, John Houghton, explained that “virtually every scientist in the world who has made significant contributions to the
science of global climate change had a part in the generation of the assessment” presented by the IPCC. The IPCC report stated that the scientists were certain that greenhouse gas 19 emissions “increases will enhance the greenhouse effect, resulting on average in an additional warming of the Earth’s surface” (Paterson, 44). These findings were particularly important, as they provided the first definitive explanation of anthropogenic
(human-caused) climate change, and it had been determined by thousands of the scientific field’s leaders.
Drawing upon the findings of the previous two groups (particularly those of
Working Group I, since II did not accomplish very much), Working Group III of the
IPCC recommended a global framework convention on climate change, to be negotiated by policy makers (Schroder, 16). At the 1990 Second World Climate Conference in
Geneva (where states gathered to discuss the ramifications of IPCC findings) the
Ministerial Declaration of the SWCC called on the UN General Assembly to negotiate an agreement to mitigate climate change, resulting in the Framework Convention on Climate
Change (Paterson, 48).
The Framework Convention on Climate Change
In December 1990, the Intergovernmental Negotiating Committee (INC) on
Climate Change was created by the UN General Assembly to negotiate a Convention text. States which were parties to the negotiations spent the next 16 months negotiating until the UN Framework Convention on Climate Change was finalized (Schroder, 19).
As would become characteristic of the US role in the climate change regime coming out of the FCCC, the country pushed for lesser, non-binding commitments to reduce greenhouse gas emissions, and was hesitant about even participating in the agreement at 20
all. Fortunately, however, the United States agreed to take part in the FCCC in the final
stages of its development (Schreuder, 50).
The UN Conference on Environment and Development (UNCED) was held in
Rio de Janeiro in June 1992 (Schroder, 19). Ten thousand official delegates from 150
countries, as well as thousands of NGO representatives, attended the meeting. They
finalized the details of the Framework Convention on Climate Change (FCCC), which
called on countries to voluntarily reduce greenhouse gas emissions to safer levels, usually
with a baseline of a certain percentage below 1990 levels. The delegates also produced a
broad agreement, Agenda 21, calling for sustainable development in the 21st century and
the Rio Declaration, which outlined the basic tenets of the FCCC regime (Chasek et al.,
32-33).
Two of the most cited Rio Declaration principles are the precautionary principle
(which states that countries should take preventative measures even if a threat is slightly
uncertain) and the principle of common but differentiated responsibility. This latter
principle explains that industrialized states (which developed off cheap fossil fuels) are
disproportionately responsible for problems such as climate change, and should therefore
engage in greater action to remedy the problem. Further, the Rio Declaration
underscores the need for sustainable development, as well as technology sharing and
transfer between states.
Because of the conference’s emphasis on global problems such as climate change,
the Declaration also states that “environmental measures addressing transboundary or
global environmental problems should, as far as possible, be based on an international 21
consensus.” This statement corresponds to another principle within the document which
reaffirms that states are sovereign, but that a country’s sovereign use of its resources cannot cause damage to other states. Consequently, the sovereignty principle (which had to be included in order to garner necessary signatures) cannot be used to create a
roadblock in dealing with transboundary issues, such as climate change (Rio Declaration
on Environment and Development).
Thus, the 1992 UNCED (also called the Rio Conference or the Earth Summit)
resulted in the adoption Agenda 21 and the Rio Declaration, which could guide the
Framework Convention on Climate Change. After the drafts were adopted, 154
governments signed the framework convention, agreeing to attend subsequent
Conference of Parties (COPs) meetings in order to create a treaty with binding emissions
targets (Vaughn, 311). By 1994 the FCCC came into force, after having been ratified by
50 countries. (Now, almost every country across the globe ratified the convention
(Harris, 11)).
COP1 and COP2
The first Conference of Parties meeting was held in March 1995, and resulted
in the Berlin Mandate (Vaughn, 311). In addition for setting up a timeframe for creating
a new protocol to the FCCC which would establish binding emission reduction
commitments, the Mandate reaffirmed the Rio Declaration’s principle of ‘common but
differentiated responsibility.’ As part of the agreement, industrialized countries accepted
that they were disproportionately responsible for the emission of greenhouse gasses 22
responsible for climate change, and that developed countries should therefore take on
greater commitments to combat climate change.
By COP 2, which was held in July 1996, the Clinton Administration went back on its approval of the Berlin Mandate. In response to domestic pressures, the US delegation to the meeting stated that developing states must be subjected to commitments as well, but finally compromised by asking instead for ‘meaningful participation’ on the part of
Annex II countries (Schreuder, 51). COP2 also called for a legally binding protocol which included specific timetables and emission reduction targets for Annex I countries, which would be agreed to at the subsequent COP3 Kyoto Protocol.
COP 3 and the Kyoto Protocol
The COP3 meeting was held in Kyoto, Japan with the purpose of finalizing a legally-binding treaty to reduce greenhouse gas emissions in developed, Annex I countries. After over a week of negotiations, and one all-night final negotiating session, the Kyoto Protocol to the United Nations Framework Convention on Climate change was adopted by a consensus of 159 states on December 11, 1997. While the FCCC merely suggested parties reduce emissions, the Protocol mandated all Annex I countries which ratify the treaty submit to legally binding emission reduction targets, with a collective goal of emission reduction of 5.2% below 1990 levels.
While the Kyoto Protocol is more forceful than the Convention on Climate
Change, it is also quite nuanced and allows for many flexibility mechanisms for parties having difficulties reducing emissions. Such mechanisms include credit for carbon sinks 23
(forests, oceans, and other natural areas which sequester carbon) joint implementation
(JI), which refers to a program in which Annex I countries can invest in each other’s emission reduction projects to earn credit toward their own reductions target, and also the
Clean Development Mechanism (CDM), which would allow Annex I states to receive credit for investing in emission reduction projects in developing countries (Harris, 11-
12). However, it is a fourth mechanism, emissions trading, which seems to be relied upon the most for countries attempting to comply with emission reductions. Emissions trading involves putting a cap on allowable emissions for a country (or group of countries), and then distributing emissions allotments between various entities (countries, businesses, or people, for example). Thus, if France were allowed to emit 300 tons of greenhouse gasses per year but went over allocation by 200 tonnes, the country would be required to purchase the allowances for 200 tonnes from Germany, which emitted 200 tonnes less than its allocation that year. Thus, Germany is rewarded for over-compliance,
France is punished for exceeding its allowance, and the net effect is still in compliance with greenhouse gas reductions commitments.
Carbon sinks, JI, CDM, and emissions trading are flexibility mechanisms which allow for greater compliance with emission reduction commitments. Further, these mechanisms were necessary in attaining Washington’s signature to the Kyoto
Protocol. But, on the other hand, the treaty’s flexibility is criticized for allowing parties to evade their own domestic commitments, and, because time ran out during the Kyoto meeting, it was also agreed that vague details of the mechanisms were to be ironed out at subsequent COP meetings. 24
Ratification and Subsequent COP Meetings
Although the Kyoto Protocol was adopted by a consensus of the COP3, states would still need to sign and ratify the treaty for it to go into effect. In 1998, after the
Protocol was opened for signatures, the US (along with most Annex I parties) signed onto the treaty in preparations for ratification (“Status of Ratification”, UNFCCC website). In order for the Protocol to come into force, the Annex I parties which ratified the treaty must represent 55% of all 1990 emissions released by industrialized states. With the US being the largest greenhouse gas emitter, its ratification would be key to bringing the
Protocol into effect.
The EU, Japan, and Canada (along with several other Annex I and Annex II parties) ratified the Kyoto Protocol by 2002, while the US Congress refused to approve the same. Even with a large majority of Annex I states ratifying, the treaty still could not come into effect because it did not cover 55% of all Annex I parties’ 1990 emissions accounted for (“Kyoto Protocol: Status of Ratification”, UNFCCC document).
Meanwhile, COP meetings continued to take place to finalize the details for the
Kyoto Protocol. COP4 was held in Buenos Aires in November of 1998, where parties agreed that by the year 2000, specific guidelines for emissions trading, technology sharing, JI, and the CDM should be outlined (Harris, 12). By the November 2000 COP6 meeting in The Hague, verification and compliance systems were set up to ensure states remained on track for their Kyoto commitments. Further, the meeting discussed how to help small island states threatened by rising sea levels and also how to assist in cleaner 25 development in Annex II countries. After that, however, the meeting started to go sour.
Discussion over whether or not carbon sinks (which the US had plenty of) should contribute to a country’s emission reduction goal brought the greatest struggle. Because parties (particularly the EU and US) could not come to an agreement, the COP6 talks were deferred to a later date.
The COP6bis talks resumed in July 2001 but the US, now being led under
President George W. Bush who had already publicly rejected the Protocol, chose to send a delegation which would not participate in talks. (Instead the delegation would observe the COP6bis meeting.) Meanwhile, the rest of the parties were able to resolve nearly all of the issues that had caused a stalemate at The Hague (Schreuder, 52-53).
The next meeting, COP 7, was held in October, 2001 in Marrakesh, Morocco.
There, the parties adopted the Marrakesh Accords, which created the FCCC financial bodies (the Global Environmental Facility, Least Developed Countries Fund, Special
Climate Change Fund, and the Adaption Fund) in hopes of getting more states to ratify the Protocol and bring it into effect (Harris, 13). The following COP8 meeting was also quite productive, but it took on a new tone: for the first time, the FCCC seriously addressed adaptation to climate change (Schreuder, 56). This focus on adaptation would continue through COP10, which was held in Buenos Aires in December 2004 and was actually nicknamed the “Adaptation COP” as a result of its emphasis of adaptation rather than mitigation of climate change (Harris, 13).
Just before the COP10 meeting, Russia finally ratified the Kyoto Protocol. After the Bush Administration declared that the Kyoto Protocol would never be ratified by the 26
United States, the world looked to Russia—the only other Annex I country with enough emissions to bring the Protocol into effect. Russian President Vladimir Putin dragged his feet on signing the Protocol, opting to use his country’s newfound bargaining position to extract “significant rewards from international partners on other issues in exchange for ratification while still elevating Russia’s image as a cooperative partner in international affairs.” But eventually Russia became the climate treaty’s hero, ratifying the Protocol on November 5, 2004, thereby pushing the Kyoto Annex I parties’ collective emissions contributions to over 55% of 1990 levels. After the Russian ratification, the Protocol came into force 90 days later, on February 16, 2005 (Henry and Sundstrom, 47-50).
Where the Protocol Stands Now
Today, every Annex I party to the FCCC has ratified the Kyoto Protocol—with the exception of the United States. Even Australia (whose former prime minister, John
Howard, refused to sign onto any climate treaty which the US and developing countries were not subject to) signed onto the Protocol as a result of action by the new Prime
Minister, Kevin Rudd (Crowley, 118). The Protocol covers over 160 countries across the globe—including developing countries making voluntary commitments to reduce greenhouse gas emissions (Schreuder, 11).
The Kyoto Protocol is not perfect, and because of the intense pressure to work out a consensus, the treaty winded up being lax on many key issues. During subsequent
COP meetings, this caused tensions between the US, EU, and developing countries, as specific issues (such as the Clean Development Mechanism, emissions trading, and sinks) 27
needed clarification (Agrawala, 123). While most of these issues are resolved, they
involved giving some countries great concessions which undermined the effectiveness of
the treaty. Thus, a recurring problem in the climate change regime is that, in order to
acquire the support of enough countries, parties must compromise with one another and
give concessions which often weaken the treaty and bring it down to the lowest common denominator of commitment.
It is often noted, however, that no other state subverted the FCCC and Kyoto
Protocol quite as much as the United States. Both the Bush (Sr.) and Clinton
Administrations sent delegations to FCCC meetings which worked to weaken the climate
change regime by discouraging efforts to reduce greenhouse gas emissions. However, it
was apparent that the Clinton Administration was actually fairly supportive of the aims of
the FCCC, agreeing to the Berlin Mandate but then retracting its support at later COP
meetings in response to domestic pressure. In fact, the first few months in office, the
Clinton Administration attempted to pass national environmentally-friendly legislation,
such as the BTU gas tax, but often was unsuccessful due to heavy objection from
Congress (Harrison, 99). Domestic opposition to strong environmental legislation continued for several years, and Clinton’s delegation to the Kyoto meeting had to walk a fine line, attempting to create a treaty which the international community and Congress
would find acceptable.
Unfortunately, however, the Clinton Administration was unable to strike a
compromise between Congress and the rest of the world, and, after the president signed
the treaty, the Senate refused to ratify it. A few years later, President George W. Bush 28
pulled out of the treaty entirely, and US delegations to COP meetings were only allowed to observe.
While the US rejected any sort of leadership role in the climate change regime, the EU had actively sought such a position. It often pushed for strengthening the commitments of states that were parties to the climate change regime, and many
European countries took on large emission reduction goals, aware that the US would not do the same. In order to understand why the EU took the lead in the climate change regime while the US dragged its feet, it may be useful to look at how international and domestic politics affect states’ foreign policy-making. This will be done using a two- level-games approach.
Levels of Analysis
In international relations, there are varying levels of analysis in which researchers attempt to describe phenomena. Andrew Moravcsik explains that “the level of analysis tells the investigator where to look for the causes of state behavior by classifying
competing explanations (or independent variables) according to the units in which they
are conceptualized” (Moravcsik, 5). While scholars differ on how many levels are
relevant to studies in international relations, most agree there are at least two: the
international (or systemic) level, whose unit of analysis is the international system as a
whole; and the domestic (or state) level, which seeks to describe how individual states
interact. According to Robert Jervis, “which level one focuses on is not arbitrary and is 29
not a matter of taste—it is the product of beliefs (or often hunches) about the nature of
the variables that influence the phenomena that concern one” (Jervis, 15).
Many international relations scholars (such as Singer, Jervis, and Moravcsik) agree that the international system is the most comprehensive level of analysis. The international system-level is conducive to realism, as Moravcsik explains that states on this level are “distinguished only by their relative position in the international system”
(Moravcsik, 5). Sweeping assumptions about actors’ rational self-interest allow for researchers to study international relations as a whole. Thus, the international system-
level facilitates generalizations which can contribute to models and theories which are
more scientific in nature.
The assumptions which necessarily underlie research at the international system
level can also create problems, however. Jervis explains that states in the international
system may be influenced by domestic politics, often causing them to behave in
seemingly non-rational ways. (This phenomenon in often found in global environmental
issues, as well, as what is rational on the individual level is collectively irrational,
resulting in a collective action problem such as the one demonstrated by Hardin).
Further, Moravcsik points out that states’ actions in the international scene may also be
determined by political leaders unaccounted for in the international system level.
The state level of analysis does not create many of the problematic generalizations
found at the international system level. David Signer explains that the state-level of
analysis is better at accounting for differentiation between actors because it examines
them more closely. He warns, however, that avoiding the assumption of actor 30
homogeneity can also be problematic because it “may lead us into the opposite type of
distortion—a marked exaggeration of the differences among our sub-systemic actors”
(Singer, 189). Further, Jervis points out that the state level of analysis often goes into so
much detail that generalizations for models and theories are not easily deduced.
Jervis, Singer, and Moravcsik present competing arguments about which levels of
analysis are most useful in studying international relations. Jervis implies that researchers should choose the level most applicable to understanding the case they are studying, and Singer adds that levels are mutually exclusive. Meanwhile, Moravcsik argues that, because leaders must calculate both domestic and international factors while formulating foreign policy, international relations should be studied on both the international system and state level. He describes Putnam’s “two-level game” as useful, as it utilizes both the state and systemic levels of analysis. This allows for the researcher to explain differing foreign policy outcomes as a result of international and domestic
factors—as Moravcsik argues that it is apparent that in many cases both play a role in
foreign policy-making.
The Two-Level Game Approach
Although there is quite a bit of contention about how best to employ levels of
analysis in international relations studies, it seems that the two-level game approach is
most appropriate in answering the main questions of this thesis. In the negotiation
processes for both the Framework Convention on Climate Change and the Kyoto
Protocol, domestic politics and the international system placed large constraints on heads- 31
of-state. The systemic level of analysis alone, as Moravcsik points out, cannot effectively
explain why global commons problems which affect all states are not resolved through
international negotiations (Moravcsik, 3-4). Instead, a two-level-games approach will
also emphasize domestic characteristics which affect international regimes and treaties—
allowing for differentiation between states and their policy preferences. As a result, the
use of the two-level game approach seems to be very fitting in answering the main
questions of this paper: first, why do international treaties get pushed to the lowest
common denominator of commitments, and second, why have the EU and US displayed
such different policy preferences?
Conclusion
Before moving on to answer the main questions of this thesis, it is important to
reiterate the basic nature of the problem. Climate change is a global commons problem
which requires a world-wide political response in order to prevent a “tragedy of the
commons.” Usually, global problems are tackled through regimes, which are created in
order to facilitate discussion and cooperation among states with a common interest in
addressing the issue. In the case of the climate regime, the FCCC served as the
foundational text upon which the regime was built. Unfortunately, however, the FCCC’s
original text proved to be weaker than many concerned with climate change hoped, partially because every state has a voice in negotiations making consensus on meaningful commitments difficult.
Although the COP meetings which followed the climate regime’s establishment indicated that most states were in favor of creating a more stringent, legally-binding 32 treaty at the COP3, the resulting Kyoto Protocol did not hold up to expectations. Despite notable efforts on the part of the EU and other states, other states that were not particularly interested in reducing greenhouse gas emissions worked to keep the general ambition low, and the highest emitter (at the time) and most important player—the US— failed to ratify the treaty. Consequently, many consider the Kyoto Protocol and climate regime in general to be a failure.
In order to understand why the climate regime has not lived up to the expectations set out by the IPCC and concerned states—and also the answer the central questions of this thesis—chapter two will examine how the international system has constrained the climate regime.
Next, chapter three will focus on the domestic differences between the EU and US which have led to their differing policy objectives. Finally, chapter four will combine insights from the previous chapters to paint a fuller picture of how both the international and domestic levels of analysis can be understood in tandem as part of a two-level game.
This last chapter will also include a section about possibilities for the future of the climate regime.
CHAPTER 2
The systemic level of analysis is often utilized by scholars to explain global environmental cooperation (or the lack thereof) in an international system of anarchy.
This level of analysis emphasizes the uniformity of states, patterns, international norms, power configurations, and also international political institutions (Singer, 80). At the 33 systemic level, states are assumed to be unitary in decision-making, and their actions are determined by international systemic factors—not domestic characteristics. Moravcsik explains that the systemic level also understands states to be rational actors which possess stable preferences across outcomes and also have the ability to utilize domestic bargaining resources (Moravcsik, 9). Since each state is merely a ‘black box’, reactive to the environment of the international system, it is differentiated only by relative position within the system. Singer says this is the “most comprehensive of the levels available, encompassing the totality of interactions which take place within the system and its environment” (Singer, 80). Such sweeping assumptions facilitate parsimonious generalizations which are scientific in nature and contribute to theories or models.
The systemic level of analysis is compatible with many other theories of international relations. Realism and liberalism, for example, understand the state as respondent primarily to external factors rather than internal politics, and therefore fit well at the systemic level. Under both the liberal interdependence and realist strains of systemic theory, states are assumed to be rational actors which possess stable preferences across outcomes. Further, it is assumed that states always hold the ability to employ domestic resources when bargaining. Moravcsik explains that if these three characteristics of states are assumed to be constant, they can be categorized as “black boxes” which respond only to fluctuations in international power dynamics. This does not entirely reject the existence of domestic politics, but a state’s internal politics, according to systemic theorists, are caused by variation in the international structure
(Moravcsik, 5-7). 34
Many realists use the systemic level to explain how international anarchy creates a system of self-help, leaving states concerned with relative gains. The debilitating fear associated with relative gains prevents states from cooperating, and places individual over collective rationality, as explained in Hardin’s Tragedy of the Commons.
Consequently, states respond to systemic anarchy by seeking to maximize their profits, free-ride at all possible opportunities, and avoid making unilateral commitments to ensure the protection of collective goods (Hardin, 348).
Thus, the anarchical international system leaves states concerned with the effects of climate change in a peculiar situation. Although climate change threatens many states’ survival in the long term, the absence of a world government leaves states with no body to enforce necessary changes in behavior. In order to encourage collective rationality over individual rationality in dealing with the global commons problem, states worked together to create the Framework Convention on Climate Change.
Despite the creation of the FCCC—which serves as the foundation for the climate regime designed to make cooperation easier—there are still many stumbling blocks which are nowhere near resolved. The Framework Convention text was already brought down to what many describe as the lowest common denominator of commitment due to a requirement of consensus despite vastly diverging interests among the parties to the
FCCC negotiations. The subsequent Kyoto Protocol, which was supposed to strengthen the weak climate regime by giving states legally-binding commitments to reduce greenhouse gas emissions, enjoyed the support of many Annex I and II countries but 35
ultimately failed to garner ratification from the US—the largest emitter of greenhouse gas
emissions at the time, and therefore the treaty’s most important veto state.
Chasek et al. explain that “for every global environmental issue there exists one state or group of states whose cooperation is so essential to a successful agreement for coping with the problem that it has the potential to block strong international action”
(Chasek et al., 14). In the case of the climate change regime, the US took on the role as its veto state. Washington officials explained that the Kyoto Protocol was not feasible
because it excluded developing countries from commitments (meaning China, in
particular, could free-ride on US efforts to reduce emissions and gain an unfair economic
advantage). The free-rider problem is certainly an important issue which, for some states,
continues to plague cooperation—even within the FCCC regime. Because the free-riding
and relative gains concerns come as a result of international anarchy, such stumbling
blocks to cooperation are best studied at the systemic level of analysis.
The Global Commons and Collective Action Problems
As mentioned in chapter one, climate change is a transboundary global commons
issue which will ultimately affect every state (although countries will experience varying
changes as a result of disrupted weather patterns). While it is fairly easy to conceptualize
the atmosphere as a shared commons which transcends political boundaries, it is
extremely difficult to manage politically. Western liberalism, which emphasizes
individual ownership and the enclosure of property, is entrenched in the belief system of many of the most powerful states shaping climate treaties. This is problematic, as the 36
liberal paradigm is incompatible with global environmental issues such as climate
change, since the atmosphere cannot be fenced in; it is collectively shared rather than
individually owned. Consequently, any management of the global commons is difficult,
as many states exist in the Western liberal paradigm and therefore cannot easily resolve the shared problem of climate change (Harrison and Byrner, 303-304).
To clarify this problem further Robert Art and Robert Jervis explain that, in a
global commons problem, no one state owns the entire resource in question (which, in
this case is the atmosphere); instead, all states use (or abuse) it, and, because it is shared,
no state can be stopped from using (or abusing) it. The authors state that “a commons (or
public) good is therefore one that no single individual or entity owns, but that all need
and can use. For such goods, no individual or state has an incentive to minimize its
exploitation unless it is persuaded that others will act in a similar fashion” (Art and
Jervis, 259). Thus, if states do not believe that others will reduce their emissions to
prevent climate change, they will not take on action either. Such a situation is referred to
as a collective action problem.
Mancur Olson explains the basic concept of the collective action problem. He
begins by explaining that is it generally understood that individuals (or states) act out of
rational self-interest. When a group of individuals come together in order to serve a
common interest among all, it would be expected that the group acts in each individual’s
shared, common interest. However, since everyone in the group bears individual
interests which they may place above the common interest, there is, at times, a tension
between the individual and the group (Olson, 1-2). When the group fails to act in its 37
collective interest, a collective action problem exists. In the case of the climate change
regime, although the common interest is to prevent further damage to the global climate,
there are many divergent interests within the regime which may take precedence over
cooperation.
Because each actor is characterized by its own unique individual interests, even if
states would prefer to act in their collective interests they may still fear that one another
will defect on any agreed commitments. Members of a group share an interest in preserving a common good, but they do not share any interest in paying the costs for that
good. Olson states that each member “would prefer that others pay the entire cost, and
ordinarily would get any benefit provided whether he had borne part of the cost or not”
(Olson, 21).
Fears of free-riding keep many groups from reaching optimal levels of provision
for a common good. Olson explains that the “tendency toward suboptimality is due to the
fact that a collective good is, by definition, such that other individuals in the group cannot
be kept from consuming it once any individual in the group has provided it for himself”
(Olson, 35). Indeed, since climate change is a common good which no state can be
excluded from having, the free riding problem is serious. In other areas of international
relations, a state can be excluded from enjoying benefits if it defects on its commitment.
If a state chooses not to cooperate with a military alliance, for example, it will not be able
to acquire the additional security such an alliance offers. Thompson explains that free-
riding is not as much of a problem in other areas of international relations, as such “goods
are excludable, generating individual incentives to participate” (Thompson, 15). 38
Unfortunately, this is not true for the issue of global climate change, wherein states fear that if they choose to reduce their greenhouse gas emissions and pay the costs associated with preventing climate change, other states rationally choose to free ride and get the same benefits of a cleaner atmosphere without paying any costs. Olson warns that
when free-riding on the part of others is expected, states will avoid paying all the costs
and being the “sucker” by ending their unilateral efforts to provide for a common good,
resulting in the suboptimal provision of that good. Because, at the systemic level of
analysis, it is found that each state is characterized by a preference to free ride on the
efforts of others, collective action problems frequently arise in international relations.
Game Theory: Climate Change as a Prisoner’s Dilemma or a Stag Hunt?
Game theory is often employed by international relations scholars who seek to
understand why states cooperate and defect from commitments to other states. Game
theorists describe various situations in international relations through metaphors, such as
the Prisoner’s Dilemma or Stag Hunt. Because game theory assumes all actors to be
rational self-maximizing black boxes, devoid of any meaningful internal differences, it is
complementary with the systemic level of analysis.
The Prisoner’s Dilemma is a metaphor for international cooperation under
conditions of uncertainty. Game theorists use the Prisoner’s Dilemma to map out what
rational choices people/states will make given a specific amount of knowledge. Oye
explains that in the case of the Prisoner’s Dilemma,
“two prisoners are suspected of a major crime. The authorities possess evidence to secure conviction on only a minor charge. If neither prisoner squeals, both will 39
draw a light sentence on the minor charge (CC). If one prisoner squeals and the other stonewalls, the rat will go free (DC) and the sucker will draw a very heavy sentence (CD). If both squeal, both will draw a moderate sentence (DD).”
Thus, each prisoner will rationally order her preference in outcomes as being DC > CC >
DD> CD. Since both prisoners cannot be sure of one another, they will both defect in
order to avoid their least desired outcome: the sucker payoff (CD). Thus, bilateral
defection (DD) will almost always occur under the Prisoner’s Dilemma, although, as Oye explains “individually rational actions produce a collectively suboptimal outcome” (Oye,
72).
From a systemic analysis, the Prisoner’s Dilemma seems to accurately characterize states’ natural preferences for emissions reductions. Each state would prefer that all others reduce their emissions, thereby preserving a healthy atmosphere, but each state would also prefer that they themselves not absorb the costs associated with emissions reductions. If a state could free ride on other state’s emissions, they would receive the common good of averting climate change for free. The second best scenario for any given state would be mutual cooperation. If all states agree take on the costs to reduce emissions, costs would be more diffuse (plus comparative economic (dis-
)advantages would be eliminated), and everyone would receive a healthier atmosphere and prevent further climate change. The third best option for states dealing with climate change is mutual defection. If everyone defects, no one takes on the costs of reducing emissions—but climate change will create serious global problems (which may also be quite expensive!) that all states will eventually be forced to deal with. Finally, in the worst case scenario, a state will take on the costs of reducing emissions unilaterally 40
(which will lead to a comparative disadvantage economically) but will nonetheless not
receive much in return since averting climate change requires that emissions are
significantly reduced—something which one state alone cannot do. Game theorists warn that in most cases, states will avoid this last scenario (called the sucker payoff) in the
Prisoner’s Dilemma by defecting on an agreement—ensuring they receive either their first preference (DC) or third (DD). Even though mutual cooperation is ranked higher than mutual defection, most states will not want to take on the risk of being the sucker.
The Stag Hunt metaphor, first developed by Rousseau, represents a slightly different situation from the Prisoner’s Dilemma. In order to understand the Stag Hunt,
Kenneth Waltz asks that readers
“assume that five men who have acquired a rudimentary ability to speak and to understand each other come together at a time when all of them suffer from hunger. The hunger of each will be satisfied by the fifth part of the stag, so they ‘agree’ to cooperate in a project to trap one. But also, the hunger of any one of them will be satisfied by a hare, so, as a hare comes within reach, one of them grabs it. The defector obtains the means of satisfying his hunger but in doing so permits the stag to escape. His immediate interest prevails over those for his fellows” (Waltz, 167-168).
In Waltz’ example, individual rationality and collective rationality at odds with
each other. Unlike in the Prisoner’s Dilemma, defection does not have a greater payoff
than cooperation (instead, cooperation is at least equal to—if not preferable to—
defection). This is reflected in Oye’s preference ordering of the Stag Hunt, which holds
that each hunter with all available information will rationally order his preferences as
being CC > DC > DD > CD. Such ordering allows for a higher likelihood of cooperation,
as it places collective rationality above individual rationality. However, each hunter must
be sure that all others will work together in order for him to oblige as well, because his 41
cooperation along with the others’ defection will leave him with nothing (Oye, 72).
Thus, as Waltz’ example demonstrates, when actors do not trust one another, defection
often prevails in the Stag Hunt—even when all agree cooperation is the optimal choice.
Because each state fears the defection of others, a regime must be set up to avert
the individually-rational collective action problem. Regimes ensure that states are
involved in repeated (or iterated) interaction, as the shadow of the future makes
reputation important and defection less likely (Oye, 75-76). As Robert Axelrod explains,
players in an iterated game will not exploit one another’s cooperation, because this will
end any future cooperation between the two. Thus, it is more costly to defect than to
cooperate when there is an expectation of future transactions (Axelrod, 10).
The FCCC was created to provide an ongoing, iterated relationship between
states which agreed to the convention text. The text formalized a set of norms, guidelines, and goals, as part of the FCCC’s goal of coordinating international action and
making cooperation on climate issues easier. Therefore, although it was stated that the
Prisoner’s Dilemma most accurately describes natural international climate politics, the
creation of the FCCC’s regime resulted in better channels through which states could
share information, bargain, and communicate with each other—not unlike the hunters in
Rousseau’s Stag Hunt. Thus, it could be argued that the climate change regime
transformed the mitigation of climate change from a Prisoner’s Dilemma scenario which
favors free-riding to a Stag Hunt which favors and facilitates mutual cooperation.
In fact, it is apparent that many Annex I states prefer mutual cooperation and
understand the prevention of climate change to be a Stag Hunt. Countries such as 42
Germany, the Netherlands, and small island states pushed for a stronger FCCC text as
well as for more stringent guidelines at the subsequent COP meetings. However, it
cannot be forgotten that the United States made several attempts to undermine other
states’ more proactive efforts, and ended up opting out of the Kyoto Protocol. As a result, it seems the US continued to understand the mitigation of climate change to be a
Prisoner’s Dilemma in which the country preferred not to make costly changes in emission habits regardless of whether or not other countries did. Therefore, from a systemic level of analysis, it is apparent that the US preferred to either free-ride on other countries’ protection of the atmosphere or it preferred that no one do anything at all— indicative of a Prisoner’s Dilemma.
It is evident that the differences found between EU and US preferences cannot be adequately explained by game theory. Even if the EU conceptualized the slowing of climate change to be a Stag Hunt, game theorists would expect it to defect from its commitments as soon as it understood that Washington would not ratify the Kyoto
Protocol. But instead, the EU made meaningful reductions in greenhouse gas emissions
(particularly through its European Trade Emissions Scheme and its encouragement of green technology) while US emissions continued to increase. From a game theoretical standpoint, it appears the Europeans chose the sucker payoff (the last choice in both the
Prisoner’s Dilemma and Stag Hunt)—and yet they are not upset enough about this to respond by defecting as well. Instead, the EU continues to push for greater action to mitigate climate change. Thus, the systemic game theoretical model cannot wholly account for European behavior or for game variances between the EU and US. 43
Regimes
Regardless of the shortcomings of game theory, the Stag Hunt and Prisoner’s
Dilemma games do provide insight into collective action problems and states’ concerns dealing with free riding. Based off such an understanding of the international system,
there are several strategies created to improve cooperation, such as the codification of norms and the creation of codes of conduct which define what is cooperative and uncooperative behavior. Surveillance and verification mechanisms are important in ensuring the necessary transparency between states to foster cooperation and trust.
Further, issue linkage might also be an effect way of ensuring compliance, even in single- play games (since linked issues may be iterated) (Oye, 78). All of these strategies are employed by international regimes, which help states overcome collective action problems by reducing uncertainty as well as transaction costs (Keohane, 121).
There are many definitions of what a regime is. Chasek et al. provide a very comprehensive definition, explaining that a regime is a “system of principles, norms, rules, operating procedures, and institutions that actors create or accept to regulate and coordinate action in a particular issue area of international relations” (Chasek et al., 17).
Members of regimes are sovereign states, although private entities are often affected by and carry out the actions mandated by regimes. International regimes typically deal with issues which are transboundary or fall outside the jurisdiction of sovereign states, and
serve the purpose of allowing for cooperation and order despite the lack of a world
government (O. Young, 277). Regimes ensure continuous transactions between states, 44
and such iteration makes cooperation much more likely in the Prisoner’s Dilemma and
the Stag Hunt.
Oran Young explains that “the distinguishing feature of all social institutions,
including international regimes, is the conjunction of convergent expectations and
patterns of behavior and practice,” which often results in a social convention. Although
deviance or noncompliance with conventions is common, agreements such as the FCCC
and Agenda 21 are still important, as they provide legitimacy and guidance for the
climate change regime (O. Young, 278-279).
Regime Structure
Although regimes are usually created with the common purpose of fostering
cooperation, they are often structured in unique ways. In order to help better explain how
regimes are structured, Young created three categories of regimes—the first being
spontaneous orders which naturally evolve without any conscious coordination or
consent. An example of such an order may be natural markets or language systems,
characterized by no high transaction costs or any type of formal restriction on any
participant’s liberty (O. Young, 282-283). Imposed orders are a second type of regime, which are backed by a hegemon or by the de facto imposition of a dominant power or group of dominant states. The Bretton Woods system of international monetary management provides a fitting example of a de facto imposed order backed by the United
States. These types of regimes typically do not involve explicit consent on the part of less powerful actors (O. Young, 284). 45
A final—and much more common—regime type is that of negotiated orders.
Regimes which fall under this category utilize bargaining to create consensus on major
elements of the regime, which are then expressed in formal terms. Further, consent is
explicitly stated by all members. The FCCC, which resulted from a long process of
bargaining between states across the world, was adopted by consensus and verbalized
many of the foundational principles and goals of the climate change regime.
Not surprisingly, there are several types of negotiated orders. Young
distinguishes between legislative bargains, wherein parties to the regime are represented in negotiations relevant to them, and constitution contracts, in which every party to the regime is involved in negotiations (such as the FCCC agreement). Beyond this, Young differentiates between comprehensive negotiated orders, which involve careful negotiations that are fairly final in form, and piecemeal negotiated orders, which leave details to be worked out later on the basis of practice or precedent. The climate change regime can be characterized as a piecemeal regime since, beginning with the FCCC, it has depended on subsequent COP meetings to iron out issues which cannot be agreed upon. While piecemeal regimes may be a bit more complicated, they are much more common than comprehensive negotiated orders because states often experience difficulty in reaching a consensus in international agreements.
In the case of climate change, hegemonic leadership may be useful in pushing for stronger environmental agreements, but negotiated orders are likely to be the most useful
since they can easily be amended and therefore stand up best to the constantly shifting
dynamics of the international system. In fact, as part of the FCCC agreement, states 46
agreed to meet at subsequent COP meetings in order to iron out any problems and come
up with new ways to manage the fight against climate change. Such COP meetings kept the climate regime flexible and responsive to its members.
Negotiated orders do include their fair share of flaws, however. Young explains that although “we find ourselves in an era featuring a growing emphasis on negotiated orders in the international realm” (no doubt as a result of the influence of liberalism), “we have yet to learn how to operate such orders in a cheap and efficient way, much less in a fashion likely to ensure equitable outcomes” (O. Young, 290). In other words, not only are negotiated orders expensive and characterized by difficulty in achieving consensus, but the outcomes of proposed policies often create winners and losers—resulting in a relative gains problem.
Concerns with Relative Gains Cause a Lowest Common Denominator Effect
As Young explains, once established, negotiated regimes continue to face difficulty as a result of relative gains. This is certainly true in the climate change regime, where there are clear winners and losers. Emissions reductions goals, specific rules on carbon trading and the use of sinks, as well as many other details of climate treaties result in unequal advantages and disadvantages between states. Some states will be better off than others as a result of a cleaner environment. Further, some states will pay higher adjustment prices to reduce their emissions than others. Alexander Thompson warns that
“when states bargain over distributive issues, political power rather than effectiveness or efficiency tends to determine the shape of resulting institutions” (Thompson, 9-11). It 47 should be noted, however, that such differences cannot be explained without looking at the domestic characteristics of states. Thus, relative gains matter at the systemic level, but outcomes resulting from relative gains fears cannot be adequately explained at this level because states’ internal characteristics (energy dependence, geography, etc.) must be examined.
When relative gains concerns begin to crop up, threatened states are likely to attempt to undermine any policies which may harm them disproportionately to others.
This often leads to a lowest common denominator-effect, wherein states’ commitments under a treaty are greatly diminished. Washington, for example, successfully prevented the inclusion of any specific targets or timetables in the 1992 FCCC—even though many other states were willing to take on loftier goals. A few years later, the US used its powerful position in the COP negotiations to ensure that flexibility mechanisms were included in Kyoto Protocol despite the objections of other Annex I and II states
(Thompson, 11).
Although several countries, such as Saudi Arabia, Kuwait, and other OPEC members attempted to weaken the FCCC and its Kyoto Protocol as well, they were not as effective as Washington. This is because the US was arguably the most important player in the climate change regime—ironically, because of its position as the world’s largest greenhouse gas emitter at the time (this distinction is now held by China)—meaning its support could make a huge difference in the promotion of policies and treaties. Instead, however, the US ended up taking on the role of an extremely powerful veto state, as
Washington officials cited fears over relative gains and free riding (since China would 48
not be subject to any emissions reductions) as being a top concern. Despite EU enthusiasm, the end results of the climate negotiations of the 1990s were watered-down agreements characterized by a lowest common denominator of commitment. It might be argued that, had the reluctant US and OPEC states not been included in the negotiations
for the FCCC and especially the Kyoto Protocol, the climate regime would be
strengthened.
Small Groups v. Large Groups in the Provision of Collective Goods
In order to diminish the lowest common denominator of commitment-effect, some
scholars argue that treaties should involve fewer players. David Victor argues that the
conventional wisdom, that “climate change is a global problem and thus requires a global
solution” is wrong. Victor explains that, at the time of his writing, the top six emitters (if
EU is counted as one emitter) account for 64% of world CO2 emissions, and that a
climate change treaty would be most effective if it could garner consensus just between
these six (Victor, 367). He suggests that smaller groups can make more decisive
decisions because they would contain less of an array of competing interests to bring the
treaty to lower commitments.
Olson appears to agree with Victor’s analysis, stating that “the larger the group,
the less it will further its common interest” (Olson, 36). Larger groups face major
structural problems with the provision of public/collective goods because each member’s
slice of the collective good will usually be smaller than it would be in groups with less
members, and this means that the costs of providing the collective good will often 49
outweigh the payoff from having it. In addition, transaction and informational costs are higher for large groups than they are for smaller groups, making the provision of a large- scale public good even more expensive (Olson, 49; Oye, 78-79).
According to Olson, in small groups there is a greater tendency to succeed in
providing a common good (Olson, 33). Usually, at least one member finds that the gain
from the collective good exceeds the cost, meaning they will take it on unilaterally if
necessary. Further, in small groups, each member usually gets a larger share of the
collective good than they would in larger groups, which helps elevate the importance of
the collective good in comparison to the often-privileged individual self-interest (Olson,
34). Robert Keohane also makes the case for smaller groups, explaining that “institutions
dominated by a small number of members—for example, the IMF, with its weighted
voting system—can typically take more decisive action than those where influence is
more widely diffused, such as the UN General Assembly” (Keohane, 124). This makes
sense, as the primary cause of large group failure had to do with the great divergence in
individual interests within larger groups, which end up overriding the collective interest.
Oye contends that “cooperation may decline as the number of players and probably
heterogeneity of actors increase” (Oye, 79).
Keohane, Olson, Oye, and Victor all seem to believe small groups are more
effective at providing for a collective good. In the case of global issues such as climate
change, however, a group which is too small will not be able to effectively provide
enough of a reduction in emissions to create a serious change. Consequently, Victor
argues that a treaty should involve as many countries as necessary to make collective 50 action rational—what he refers to as the “k group”—but not go beyond that because then the negotiations and implementation of a treaty only get too expensive and complex
(Victor, 367). This makes sense given the fact that just a few large countries are responsible for more than half of all global greenhouse gas emissions, and the Kyoto
Protocol seems to recognize this as well since it only requires Annex I countries to reduce emissions.
However, the “k group” approach has failed in the Kyoto Protocol thus far, as
Washington refused to ratify any treaty with legally-binding commitments if developing countries are exempted. In fact, Chasek et al. argue that the size of a group or regime is irrelevant when a strong enough veto state (such as the US) exists. Whether the veto state undermines the regime from within or outside the regime, it is still a threat to states within a small or large group (Chasek et al., 24). This is because, if the veto state is in the “k group,” it can use its leverage to bring agreements to a lowest common denominator—as the US did in the FCCC and COP 3 negotiations for the Kyoto
Protocol. Meanwhile, if the veto state is kept out of the “k group,” this may discourage otherwise-progressive states from making expensive emissions cuts because of free-rider and relative gains issues. Thus, Victor’s “k group” of countries which are to reduce emissions must either be expanded to include up-and-coming top emitters, such as India
(in order to ensure American and Chinese participation), or the idea of a “k group” must be abandoned in favor of another alternative to ensure cooperation.
51
The Systemic Level of Analysis
The systemic level of analysis provides great insight into how the structure of the
international system conditions states’ policy making. Systemic anarchy is implicated as a root cause for collective action problems dealing with global commons issues, such as
climate change. This is because, under international anarchy, states are conditioned to be
self-maximizers concerned with relative gains and free-riding, leading them to privilege
individual interests over collective interests. As a result, public goods are not provided
for at optimal levels—as described in the Prisoner’s Dilemma and Stag Hunt metaphors.
The systemic level of analysis is not only useful in describing why collective
action problems exist, however. A systemic analysis of international relations also shows
how cooperation can occur. Iterated games make defection costly and thereby promote
cooperation (under anarchy, a state’s reputation is important in fostering trust for future
transactions). Since states work together to overcome many problems in the international
system, issue linkage may also be a useful method to ensure cooperation.
An analysis of international regimes can be done at the systemic level as well,
providing insight into how regimes’ different characteristics interact with the conditions
of the international system. Such an analysis shows that regimes face various obstacles
to cooperation depending on their structure. Some regimes may find it easier to overcome
free-rider and relative gains issues, while others may experience more difficulty in
ensuring cooperation despite the ultimate reality of anarchy, as well as unequal outcomes.
These obstacles to cooperation, which ultimately come from international anarchy, cause 52
the lowest common denominator-effect on treaty commitments, and explain why the
FCCC and Kyoto Protocol were diluted despite the best intentions of many states.
To summarize, all states operate within the international system of anarchy. As a result, states are understood to be rational, self-maximizers ultimately concerned with their own survival. When they react to public goods problems in a way which seems irrational collectively, their behavior can be explained by understanding how the international system conditions states. Thus, seemingly irrational behavior may actually
be quite rational if examined from the appropriate lens.
Problems with the Systemic Level of Analysis
While the systemic level of analysis is celebrated for its broad generalizations
which are highly parsimonious, these same characteristics also create major problems
when the analysis is applied to specific cases. Singer explains that, since each state is
homogenized simply as a ‘black box’ concerned only with rational self-interest due to
conditioning by the international system, the theory cannot explain when states behave in
ways that do not correspond with their international interest (Singer, 81). For example, a
systemic analysis cannot explain why the EU (which, following the same logic as the US
cited, should be concerned with China’s free-riding) ratified the Kyoto Protocol. Further,
such an analysis does not explain why the EU, being comparable and competitive in
many ways with the US, would continue take on unilateral commitments after being
made aware of Washington’s refusal to ratify the treaty. 53
Game theory, which is used at the systemic level of analysis, does provide insight into why the EU was more cooperative in the climate change regime than the US, as the theory indicates that the EU understands climate change to be a Stag Hunt while the US may understand it to be more of a Prisoner’s Dilemma. However, game theory cannot explain why the US and EU understand climate change to be two different games despite their being members of the same regime.
Further, the systemic level of analysis assumes all states to be unitary actors— much like billiard balls—which respond only to external incentives. Consequently, factors internal to states (such as domestic political parties or industrial coalitions) are considered irrelevant in foreign policy-making (Moravcsik, 5). This assumption, however, does not hold up in the case of the Kyoto Protocol. It was apparent that
American political parties and interest groups were divided when, after the Clinton
Administration signed the treaty in 1997, the US ended up defecting on the Kyoto agreement because Congress refused to approve its ratification. Further, President
George W. Bush unsigned the treaty in 2001—disproving once again the assumption of the state being a unitary actor. In fact, such reversals of policy objectives had characterized the US throughout the previous decade, starting with President Bush Sr.’s campaign promises to combat climate change. Once in office, however, the president reversed his policy and sought to weaken the FCCC. Similarly, the Clinton
Administration went back and forth, first supporting the Berlin Mandate to exempt developing countries from binding emissions reductions, only to state that the US would not sign any treaty which did not include some type of ‘meaningful commitment’ on the 54
part of Annex II states. These examples, among many others, disprove a basic principle
of the systemic level of analysis, which holds that states are unitary.
Conclusion
General issues which stand in the way of global environmental cooperation, such as the nature of collective action problems, the tendency of states to privilege individual
interests over collective interests, and fears over free-riding can be well-explained by the
systemic level of analysis, which takes systemic anarchy to be the root cause of most
difficulties for cooperation in international relations. This level of analysis also
demonstrates that regimes like the one established by the FCCC are created to overcome
international problems by fostering communication and cooperation among states.
Further, such analysis is useful in describing the many variances between regimes, the
threat of relative gains concerns, and how those concerns can be alleviated. Further, the
systemic level of analysis’ game theory is valuable in characterizing states’ preferences
(with the EU perceiving climate change to be Stag Hunt and the US believing it to be a
Prisoner’s Dilemma). Understanding that the EU and US perceive climate change to be
different games helps in explaining why the two states have ranked their preferences in
different orders.
Where systemic analysis falls short, however, is in explaining why the two actors
believe the same issue to be different games. In fact, this seems to be a common trend in
systemic theory: it is helpful in broadly describing why international phenomena occur,
but it often fails to fully explain events in more specific examples. 55
Such problems with the systemic level of analysis led Moravcsik to argue that
“pure international theories, while attractive in principle, tend to degenerate under the collective weight of empirical anomalies and theoretical limitations into explanations that include domestic factors” (Moravcsik, 6). Because of the deficiencies in explanation found at the system-level, Moravcsik posits that it may be useful to supplement it with a state-level of analysis, which works to explain individual states’ characteristics that color their foreign policies.
Moravcsik is not alone in calling for such an approach. Waltz explains how an examination at the systemic level alone is insufficient through an anecdote. He explains:
"my wanting a million dollars does not cause me to rob a bank, but if it were easier to rob banks, such desires would lead to much more bank robbing. This does not alter the fact that some people will not attempt to rob banks no matter what the law enforcement situation is." He explains that in order to understand the motivation behind bank robbery, it is important to look at an individual's characteristics. However, a permissive environment for bank robbery will lead to an increase in the crime as well” (Waltz, 231).
Chasek et al. add that “although the structure of an issue in terms of economic interests may indicate which states are most likely to join a veto coalition, domestic political pressures and bargaining usually tip the balance for or against regime creation or strengthening.” This leads the authors to conclude that “a theoretical explanation for global environmental regime formation of change, therefore, must incorporate the variable of state actors’ domestic politics” (Chasek et al., 26). Consequently, the next chapter will examine characteristics internal to the EU and US in order to better understand the phenomena which remain unexplained at the systemic level of analysis. 56
CHAPTER 3
Before the FCCC was even negotiated, it was apparent that the EU and US would take on polar opposite roles in the climate change regime—with the Europeans pushing
for stronger commitments to fight climate change and the Americans demanding more
lenient measures. At first glance, such a divergence in policy objectives between the two
actors is somewhat surprising, since both the EU and US are fairly similar economic
superpowers whose basic beliefs come from the paradigm of Western liberalism.
The US role as a veto state in the climate regime is also perplexing, given the country’s history. Since the 1960s, the United States had been a leader in both climate science and in the formulation of environmental policy. The US leadership in environmental issues was evident all the way up through the 1987 Montreal Protocol to limit chlorofluorocarbons (CFC) usage globally, since the chemical was causing ozone deterioration. While the US was chiefly responsible for the Montreal Protocol, the
European Community (EC) was quite fragmented as its various member states disagreed on aspects of the treaty. However, this situation was completely reversed just a few years later, when the EC (eventually becoming the European Union in 1992) suddenly took over as the international environmental leader while the US began to hold back on the more ambitious goals being proposed by the Europeans (Vogler & Bretherton, 8).
As demonstrated in the previous chapter, the systemic level of analysis cannot adequately explain why the EU and US adopted opposing roles in the climate regime. In order to understand why the Europeans suddenly became pro-active supporters of the 57
global environment in the 1980s and 90s while the US attempted to stall efforts to curb climate change, it may prove useful to examine both actors at the state (or domestic) level
of analysis.
State Level of Analysis
How and why nations pursue diverse interests and goals is often examined
through a state level of analysis. Singer explains that, while the systemic level of
analysis attributes identical goals to all national actors, the state level of analysis allows
researchers to understand the many factors which contribute to states’ varying interests
and policies (Singer, 85). On this level, states are differentiated by their internal
characteristics, such as style of government, resources, geography, ideology, culture, and
history (Hilsman, 54). The state level of analysis also acknowledges that various groups
within the state (such as the media, political parties, lobbies, and interest groups) play
large roles in affecting decision making (Hilsman, 70). Of course, such an analysis is
more complex than a systemic approach, but, because it examines states in-depth, it has
greater explanatory power (Singer, 87).
Instead of analyzing treaty outcomes which result from the international structure,
the state level of analysis will be used to examine how actors’ internal characteristics are
reflected in their negotiating positions. An analysis of the domestic level shows that each
state’s policy preferences affect the bargaining process, which undoubtedly shapes the outcome of international agreements. In keeping with such an approach, this chapter will 58
examine the differing EU and US negotiating positions, why such positions were chosen,
and also how policy preferences played out in climate treaty bargaining and outcomes.
The Framework Convention on Climate Change
The run up to the 1992 Framework Convention on Climate Change marked the time period when it first became apparent that the EU and US reversed roles in international environmental policy goals. Although it was NASA scientist James
Hansen’s testimony to the US Congress in 1988 which really kick-started the global effort to manage climate change, the American government ended up taking a back seat in international negotiations to develop a climate regime (Paterson, 1). President Bush— who initially seemed to advocate the development of a strategy to fight climate—quickly dropped the issue from his radar while the European Community became very proactive in creating what it hoped to be a strong climate regime.
The European Union Negotiating Position
By 1993, the EU Council of Ministers had already stated the importance of environmentally-sound policies and mandated the EU engage in sustainable development.
This set an early precedent for the EU in future environmental decision-making, indicative of the Union’s leadership in the climate change regime (Jaeger et al., 195).
Christian Egenhofer explains that since its founding, “the EU has identified climate change as one of the most important challenges” it faces, and repeatedly stated that 59 temperatures on Earth should not go above two additional degrees Celsius from pre- industrial levels (Egenhofer, 453).
During negotiations leading up to creation of the UNFCCC, the EC countries met to discuss what the Community’s goals should be. After their own negotiations, the countries agreed to an overarching EC negotiating position which called for legally binding emissions goals to be imposed upon all industrialized, or Annex I, countries
(exempting developing Annex II countries). The EC specifically proposed that carbon dioxide be a main target of reductions, and called for binding commitments to stabilize all greenhouse gas emissions at 1990 levels by the year 2000 (Paterson, 73).
The United States’ Negotiating Position
The Intergovernmental Negotiating Committee discussions, which took nearly a year and a half to complete, were a tiring exercise of objections and compromises—often over minute wording. One of the biggest challenges was posed by the Washington.
Being not only the last world superpower, but also the largest emitter of carbon dioxide emissions, the US was the most important actor in shaping the Convention. Without the superpower’s signature, the Convention would be nearly futile.
Although the North American country had been one of the leaders in the development of climate science, the Bush Administration did not wish to lead climate change policy. In fact, despite comments during his 1988 campaign wherein George
H.W. Bush claimed he would “confront the greenhouse effect with the White House
Effect,” the administration ended up nearly crippling the FCCC. The President refused to 60
accept IPCC scientific findings, arguing that the science for climate change was too premature and uncertain to allow for sweeping reforms. Breaking with other
industrialized countries during the INC negotiations, the Bush Administration would
oppose binding targets and timetables to reduce carbon dioxide emissions, and would also come out against industrialized states’ special assistance (both financial and technological) to developing countries (Schroder, 34-35).
The Resulting Framework Convention on Climate Change
Article 4 of the FCCC outlines states’ commitments under the Convention—
although many countries and NGOs argue it is too lenient. In addition to calling on all
(Annex I, as well as Annex II) parties to publish national assessments of greenhouse gas
emissions and sinks, Article 4 also asks parties to implement programs to reduce greenhouse gas emissions and share emissions reductions technology. The Article includes an “aim” of reducing emissions to 1990 levels by 2000—a point which is heavily ridiculed since Annex I countries are not breaking with the Convention as long as they somehow attempt to lower emissions. Finally, to make up for the Convention’s modest effort to combat climate change, Article 4 calls for future COP meetings to review and revise the commitments outlined in the Convention at subsequent sessions
(Schroder, 22-23).
Thus, the Convention text represented a huge win for Washington, calling on states to merely ‘aim’ toward 1990 GHG levels by 2000. Because it did not legally bind any parties to reductions, the US Senate ratified the FCCC unanimously after the Rio 61
Earth Summit (Harrison, 98). Although by the time of the FCCC’s implementation in
1994, all major industrialized (Annex I) states agreed that Convention commitments signed at Rio were not strict enough, it could be argued that the FCCC was still useful as it managed to garner the support of the most important player in international climate change—the US. While flawed, the Convention established a climate change regime which was agreed upon by countries across the globe, and which included a clause to take greater steps to reduce emissions at future COP meetings (Paterson, 70).
COP meetings and the Clinton Administration
As outlined in chapter one, the COP meetings helped to fill out some of the holes in the FCCC while also preparing parties for a subsequent treaty which would including legally-binding emission reduction targets for states. While the EU remained steady in its push for greater commitments to curb climate change, the Clinton Administration had difficulty ensuring domestic support in many of its efforts to reduce emissions.
In 1993, shortly after the FCCC was signed, the Clinton/Gore ticket defeated
Bush for the presidency, and the international community expected that the new administration would lead the US in a stronger fight against climate change. Not only was the presidency now held by a Democrat, but the vice president, Al Gore, was already renowned as an environmentalist, having sponsored the first Congressional hearings on climate change (Harrison, 98).
After just a few months in office, Clinton and Gore collaborated to present one of their first proposals to Congress: the BTU (British Thermal Unit) tax, which would 62 increase taxes on fossil fuels. If enacted, the proposal would “raise $72 billion in taxes over five years to help cut the deficit, while leading to reduce greenhouse gas emissions by stimulating more efficient consumption of energy” (Agrawala 120-121). In May, the
BTU tax managed to get passed in the House by a narrow margin, but it was doomed by the time it arrived in the Senate Finance Committee in June. Intense lobbying from various interest groups—which argued the tax would decrease American competitiveness abroad— ensured the BTU tax’s rejection, and resulted in a much weaker 4.3 cent per gallon tax, which was offset by lower gas prices anyway (Harrison, 99).
The failure of the BTU tax, which could not pass Congress (even with Democrats holding both the House and Senate), was indicative of the difficulties the Clinton
Administration would be faced with due to bipartisan domestic rejection of the climate regime’s goals. In October 1993, the administration’s Climate Change Action Plan
(CCAP) was released, calling on voluntary, non-legislative measures to reduce emissions to 1990 levels by 2000 (Schroder, 36). The CCAP was widely criticized by environmentalists who believed it to be too weak, and nearly all hope for stronger domestic environmental legislation was destroyed when the Republicans took control of both the House and Senate in 1994—creating an even bigger roadblock for the Clinton
Administration’s environmental agenda. (It should be noted, however, that the Clinton
Administration did enjoy quite a few environmental achievements, such as increasing the number of pollutants companies must publish reports on; passing the Safe Drinking
Water Act; collecting the highest amount of fines due to illegal polluting; and also well as 63 reforming processes involved in environmental regulation, making it much easier for the
EPA to ensure laws to protect the environment are upheld) (“EPA History”, 2009).
While some domestic interests in the US were able to block a fair amount of environmental legislation in Congress, climate change policy remained an important international issue. The first Conference of Parties (COP1) of the FCCC was held in
1995, shortly after the Republican Congressional takeover. After much disagreement between the US and OPEC countries (which continued to reject legally-binding commitments and timetables) and the EU and developing countries (which wanted to strengthen the FCCC) both sides ultimately compromised on the Berlin Mandate. The
Mandate, which was signed by the parties at the COP, stated that Annex I countries must lead the fight against global warming, no new commitments should be put on developing countries, and also that the current non-binding targets were insufficient.
After Gore made a statement supporting the COP1’s Berlin Mandate, the 1995
Republican Congress and industry lobbyists began to heavily criticize the vice president for supporting a policy which excused developing countries from taking on commitments, arguing that the US comparative advantage would be diminished. Because of the pressures being exerted by lobbyists and Congress, the administration quickly reversed its position on developing countries’ commitments at the COP2 (despite agreeing to the Berlin Mandate in 1995). While the systemic level of analysis would understand this policy reversal to be non-rational (since it assumes states to be unitary actors conditioned by the international system—not domestic factors), such analysis of 64 the state level proves that the Clinton Administration’s abandonment of the Berlin
Mandate was a rational response to domestic interests.
Compromising between international forces and domestic lobbies, the new US negotiation position called for all countries—including Annex II states—to reduce emissions. At the same time, US negotiators called for no legally-binding measures in the short-term (before 2010), and also continued their request that any environmental treaty incorporate flexibility mechanisms for parties having difficulty reaching emissions goals. The Clinton Administration supported schemes that allowed for emissions credits trading, emissions offsetting (wherein industrialized states fund projects in Annex II countries), and also greater trading flexibility with “borrowing” and “banking”
(Agrawala, 122). The borrowing and banking proposal would allow emissions that surpassed reduction requirements during one timeframe to be banked and then used to offset emissions that went over allotment during another timeframe. Borrowing would occur when emissions surpassed allotment during one period, meaning they must be reduced further by the same amount during a subsequent period of time in order to draw even (Schroder, 39).
The COP2 meeting resulted in the Geneva Ministerial Convention, which called for legally binding targets to be established at the COP3 meeting in Kyoto, Japan.
Although the US signed onto the Geneva Ministerial Convention, it continued to stipulate that flexibility and trading mechanisms be incorporated. Despite approval from both the
US and EU, the Convention was not adopted due to objections by Russia, Australia, and 65
the OPEC countries— but it was nonetheless effective in outlining the goals of the future
COP3 meeting (Schroder, 62-63).
Interest Groups in the United States
Interest groups are quite powerful in the US, and certainly played a huge role in the development of Congress’s stance on the Kyoto Protocol. Already having plenty of money and political influence at their disposal, lobbies and interest groups are further
enabled by the slow pace of international negotiations. After initial negotiating positions
are declared, there usually is ample time for lobbies to exert their influence upon
Congress, which, in turn can apply pressure on the administration. This is exactly what
happened in 1997 before and during the COP3 negotiations toward an international
climate Protocol to the FCCC (Agrawala, 132).
To address the Clinton Administration’s growing support of strengthening the
FCCC at the COP3 in Kyoto, American industrial lobbies and interest groups sprang to
action. Mirroring the intense lobbying of Congress to defeat Clinton’s BTU tax, a variety
of interest groups— made up of the oil, gas, coal, automotive, and manufacturing
industries— came together, and poured millions of dollars into ad campaigns which
called on Clinton not to sign the US onto any climate treaties. The Global Climate
Coalition, for example, spent $13 million on a campaign against the Kyoto Protocol. The
Coalition worked to cast doubt on climate science, argued that gas prices would rise if a
treaty would be signed, and that the US would also lose jobs. Further, the interest group 66 pushed the idea that it was unfair developing countries would be exempted from any obligations (Agrawala, 129).
It is not surprising that Republicans supported the arguments presented by groups such as the Global Climate Coalition, but even most Democrats were also inclined to agree with the interest groups, fearing a climate treaty would threaten the economic welfare of their constituents. Once trade unions started to get involved in the anti-Kyoto treaty movement, nearly all of the Democrats in Congress quickly fell in line with the
Republicans (Harrison, 99-100). In fact, the bipartisanship which would eventually be used to block international climate treaties was quite remarkable—particularly since the
Democratic Clinton Administration generally supported efforts to curb greenhouse gas emissions through international agreements.
In parliamentary governments, such as those found in Canada and Europe, parties are much more disciplined and nearly all members are likely to toe the party line (as part of a “circling of the wagons” as Kathryn Harrison describes it). In the US, however, politicians are held more accountable to their constituents (and, in many cases, interest groups) rather than their political parties, explaining why some Democrats would choose to go against their party’s environmental concerns if they were up against local economic issues (Harrison, 97).
The 1997 Byrd-Hagel Resolution is a good example of this phenomenon within
American politics. Senator Robert Byrd co-sponsored a resolution declaring Congress would not ratify any international treaties with legally-binding emissions targets for the
US if the agreement did not also commit developing countries to binding targets and 67 timetables ("Byrd-Hagel Resolution (S. Res. 98)"). Working with Republican Chuck
Hagel, Byrd (a Democrat) sought to formally state his intention to check the power of the executive branch (which was dominated by his own party), in order to block the upcoming climate treaty the President was expected to sign onto. This was especially interesting, because not only is Byrd a Democrat, but he is also from what had been, up until then, a traditionally Democratic state—West Virginia. Even more important than party affiliation, however, is the fact that West Virginia is heavily dependent upon coal mining, and the economic situation in the state forced both Byrd and the general populace of the state to support a historically-Republican cause (Agrawala, 127).
In July of 1997, in a 95-0 vote, the Byrd-Hagel Resolution was passed. Harrison explains that the unanimous vote for the Byrd-Hagel Resolution was quite amazing, since
“such a strong display of bipartisanship is rare in the US Congress.” Further, “that the
US Senate was on record as opposing ratification of any treaty that did not include binding commitments for developing countries would present a formidable obstacle for the Administration in years to come” (Harrison, 100). This certainly was true during the
Kyoto negotiations, as Congress aggressively labored to destroy the Clinton
Administration’s capacity to sign onto the Protocol by affixing anti-environmental policy clauses to bills, while also defeating all types of legislative proposals and bills which even mentioned climate change or fuel efficiency standards (Harrison, 103).
Thus, US negotiators helping to draft the Kyoto Protocol found themselves in a catch-22. Most domestic forces (particularly Congress) were entirely against any type of climate treaty which did not include legally binding targets for developing countries. 68
While in the international arena, most states were pushing for a climate treaty which was tougher on Annex I parties but excused developing countries from commitments.
Because most of the international actors negotiating with the US were governed by parliamentary systems, they did not face the type of immense pressure being exerted upon the Clinton Administration by Congress.
The Kyoto Protocol
The EU Negotiating Position
Subsequent COP meetings following the FCCC established the need for legally- binding emissions commitments. By the 1997 COP3 when the Kyoto Protocol was to be discussed, the EU had already strategically pushed for higher emissions targets and stricter mechanisms than it could possibly achieve, in an attempt to bring more reluctant states (such as the US) to a compromise which was closer to the goals the Union actually wanted (Schroder, 98).
The EU Environment Council announced that all Annex I countries should reduce emissions by 15% of 1990 levels by the year 2010 in a legally-binding commitment to be finalized at the COP3 meeting (Schroder, 32-33). The council’s proposal that all Annex I parties commit to the same, undifferentiated target was quite controversial, since this did not take into account economic or industrial factors. A country such as Japan, which was already much more energy efficient in 1990 than the United Kingdom, for example, would have experience much greater obstacles in reducing emissions 15% below its own
1990 levels than the less-efficient Brits would in cutting their emissions. But while 69 undifferentiated targets proved to be divisive enough of a proposal, the EU really outraged other Annex I countries when it proposed that its members be allowed to work in an “EU Bubble” of differentiated targets, as long as the Union collectively reached to
15% below 1990 levels (Agrawala, 122).
Peter Newell explains that the ‘bubble’ allowance was necessary in order for all the EU member states to agree the overarching EU negotiating position (Newell, 14).
Since energy issues are related to fiscal policy, the EU requires unanimous consensus among member states before it can adopt a policy position (Schroder, 52). Although
European countries in general are proactive on climate change issues compared to the
US, its member states boast varying levels of commitment to reducing emissions. While wealthier countries in the North support strong environmental treaties, other states— particularly those in the less-developed South—have been more hesitant. Newell explains that “states such as Greece, Spain, and Ireland have argued that they are entitled to a growth in emissions in order to reach a level of development enjoyed by other EU members” (Newell, 14). The EU secured Southern support, therefore, by adopting an umbrella emissions target differentiated within the EU “bubble,” allowing southern states lower emissions requirements in return for higher targets by more developed countries in the North. Despite some internal wrangling, the EU eventually came to a unitary negotiating position intended, in part, to increase US participation and commitment in the treaty.
70
The United States’ Negotiating Position
As usual, Washington’s stance was much less ambitious than that of the
Europeans. While the EU called for reductions of 15% below 1990 levels of emissions by 2010, the US proposed stabilization at 1990 levels during the 2008-2012 timeframe.
The proposal made by the Americans had many significant consequences. In some ways, it represented a more proactive shift in environmental policy, as the US negotiators dropped previous COP2 refusals of short-term emissions targets. Further, the 2008-2012 target was perhaps more achievable than the EU’s rigid demand of reductions by 2010.
A multi-year timeframe allows for the averaging of the effects of differing energy needs and economic circumstances.
The Clinton Administration’s calls for 1990 levels by 2008-2012 show, however, a significant drop in ambition. The administration’s 1993 CCAP, which had already been criticized for its spinelessness, called for emissions reductions (albeit voluntary) to 1990 levels by 2000—eight to twelve years before the dates the US was arguing for at Kyoto.
It became apparent in the Clinton Administration’s negotiating position that the
Republican Congress’ blocking of nearly all proposed environmental initiatives over the years had worn thin any hope the White House had for US participation in an international climate treaty.
To garner some domestic support, the American negotiating position included a demand that greenhouse gas sinks be calculated into the overall estimates of emissions reductions, and also that the Protocol include flexibility mechanisms, such as Joint
Implementation, the Clean Development Mechanism, and emissions trading. Finally, in 71
what still remains today as the biggest roadblock in international climate treaty
negotiations, the US insisted that developing countries participate (much to the dismay of
every nearly other country across the world). While it is unlikely that the Clinton
Administration really wished to impose binding commitments on Annex II parties, the
Senate’s Byrd-Hagel Resolution stipulated that any treaty which excluded developing
countries from obligations would not be ratified. In an attempt to compromise between the Senate and the international community, US negotiators declared that developing countries must participate in the Protocol if the US is to sign onto the treaty (Agrawala,
122-123).
The Resulting Kyoto Protocol
When the Kyoto Protocol was finally adopted, it was agreed that Annex I parties
were to reduce their emissions 5% below 1990 levels, with differentiated targets given to
individual states (Schroder, 64). The EU was assigned an umbrella target of 8% below
1990 levels and the US 7% below. The Protocol outlines the greenhouse gasses involved
as well as the flexibility mechanisms (Joint Implementation, the Clean Development
Mechanism, and emissions trading), and prescribes a 2008-2012 timeframe for
commitments to be met.
Although the Kyoto Protocol was adopted by a consensus of the COP3, states
would still need to sign and ratify the treaty in order to bring it into effect. In 1998, after
the Protocol was opened for signatures, the US Clinton Administration (along with most
Annex I parties) signed onto the treaty in preparations for ratification (“Status of 72
Ratification”, UNFCCC website). By 2002, the EU, Japan, and Canada (along with
several other Annex I and Annex II parties) ratified the Kyoto Protocol, but the US
Congress refused to do the same (“Kyoto Protocol: Status of Ratification”, UNFCCC
document). Even though President Clinton had already signed onto the treaty and supported its ratification, he did not possess the institutional ability to ensure the adoption of the Protocol.
Harrison states that the US government structures are to blame for the death of
Kyoto, explaining that “the ‘checks and balances’ of the US system diffuse authority and thus present multiple veto points for policy change” (Harrison, 96). Consequently, after
Clinton signed onto the Kyoto Protocol, he still needed two thirds of the Senate to
support the treaty for ratification. Unfortunately, approval from the Senate was nearly
impossible to achieve after the 1997 Byrd-Hagel resolution. The treaty was pronounced
dead in the US Congress just after the COP3 meeting, when the Senate passed another
declaring the Protocol was not in compliance with the Byrd-Hagel Resolution, and
therefore could not be ratified (Harrison, 103).
Domestic Characteristics Complicate International Climate Treaties
In order to understand why the EU and the US came to such differing roles and
preferences in the international climate regime, it is useful to examine each actor’s
individual characteristics at the state level of analysis. As already noted, domestic
interest groups played a heavy role in influencing Congress to block the ratification of the 73
Kyoto Protocol. Consequently, it is apparent that understanding an actor’s internal
characteristics is important in providing an explanation for international outcomes.
There are many competing interests within every country, but only some have the
power to shape international politics. Domestic public perceptions of the threat of
climate change and the validity of climate science are likely contributors to the policy
stances of an international actor. Further, energy dependence is typically indicative of
policy preferences as well, as a state with an abundance of fossil fuels is unlikely to support an agreement which will decrease consumption of such fuels and hurt its
economy. Since energy is necessary for industrialized economies, there are many
powerful interest groups which represent various sectors affected by energy policy.
These groups use their resources to sway public opinion in their favor, as well as pressure
policy makers. Thus, in analyzing varying policy preferences between two actors, it is
important to examine differences in domestic perceptions about climate change and its
ramifications, as well as energy dependence and the goals and tactics powerful interest
groups.
Perceptions of Threat and the Validity of Climate Science
One of the reasons that the EU and US policy proposals differed so greatly is as a
result of their perceptions of climate change science. First of all, it appears that most
European political parties generally accept the IPCC’s findings, as they have not been as
bombarded by messages of climate change skepticism promoted by American interest
groups and political parties. European states and domestic interest groups may also 74
perceive climate change to be a serious issue because of geographic factors. Many EU
states hold large coastlines which would be threatened by sea level rise associated with
climate change, and the Netherlands, which is famously known for being below sea level,
would face insurmountable challenges to its survival if sea levels rise (Paterson, 175).
Additionally, some argue that, as former colonizers of many of the sub-Saharan African
and small island states particularly threatened by climate change, European countries fear
they would be forced to take in large refugee populations from the states which they are
historically ties to (Paterson, 85-86). Thus, the EU faces many serious challenges if there
are major changes in the global climate, and most European citizens believe that climate
change is a real issue.
The US, on the other hand, appears not to be as concerned about the effects of
climate change. This may be partially due to political and interest groups whose
skepticism on climate science and the IPCC is reinforced by various lobbying campaigns
on the part of other interest groups and political parties. The first Bush Administration, as well as the Republican Congress and various interest groups actively sought to undermine the scientific claims of the IPCC. In fact, 50% of the scientists which were asked to testify in front of the Republican Congress in 1997 disagreed with the IPCC’s findings— even though the science was becoming more and more widely accepted within the scientific community. This data proves that climate change skeptics were being overrepresented in Congressional hearings, leading many Americans to question what is actually considered to be mainstream science (Harrison, 100). That same year, Gallup
polls indicated that only four in ten Americans believed global warming was occurring at 75
the time (Gallup and Saad). Based on the differing EU and US preferences in climate
policy and the regime in general, it can be inferred that the perception of both threat and
the validity of climate science are contributing factors in an actor’s policy stance.
Understanding that European interests took climate science more seriously than their American counterparts may explain why the EU has pushed for stronger measures
in the climate regime than the US. In other words, domestic perceptions of threat—as
well as institutional belief in an organization (such as the IPCC)—are likely to prove
important in shaping international politics.
Energy Dependence
In addition to perceptions of threat, there is strong evidence which indicates that energy dependence is a key determining factor of an actor’s policy preference in the climate regime. It can be expected that actors which possess an abundance of fossil fuels domestically would oppose the curbing of their usage. Meanwhile, it is also logical that
actors which pay high prices importing fossil fuels or have their own domestic alternative
energy sources would be more inclined to support a global reduction on greenhouse gas-
emitting fossil fuels. The linkage between energy dependence and policy preference is observable throughout the negotiations of treaties in the climate change regime, and can be used to explain variations between the EU and the US.
US interests were often against the establishment of a strong FCCC, as it has become apparent that countries which do not export energy but enjoy their own sustainable supply of fossil fuels are also like to be anti-Convention. (An exception to 76
this general rule is made for countries with an abundant supply of non-fossil fuel energy,
as such states are more likely to favor strong emissions standards). Paterson explains that countries that produce their own energy often have well-funded lobbyists who fight to
protect the industries. This can help to explain why the US refused to agree to any
binding emissions targets, since the US was the second largest oil and gas producer and
the world’s top coal producer in the early 1990s (Paterson, 79-81). In fact, it is estimated
that the country possesses enough coal to last another 400 years, giving it a great
comparative advantage in energy-intensive industries (Schroder, 57).
Because of its abundance of cheap fossil fuels, the US is describe by many to be a
‘gas-guzzler’ culture—particularly in comparison to highly efficient countries such as
Japan and Germany, as well as countries which use alternative energies, such as France, which uses nuclear power (Paterson, 79-80). By forcing inefficient industries to cut back
on the usage of coal (as well as other fossil fuels), the US comparative advantage in
energy-intensive fields will diminish. Germany emits much less CO2 per unit of energy
and would benefit if the US committed to lowering greenhouse gas emissions, because it
would then gain the comparative advantage (Schroder, 57).
The economic implications of the US large coal supply divided the relatively more environmentally-friendly Democratic Party. While the Clinton Administration was hoping to negotiate a Kyoto Protocol the US could ratify, the President was faced with opposition from within his own party. Democratic Senator Robert Byrd co-sponsored a resolution declaring Congress would not ratify any international treaties with legally- binding emissions targets for the US if the agreement did not also commit developing 77 countries to binding targets and timetables ("Byrd-Hagel Resolution (S. Res. 98)").
Working with Republican Chuck Hagel, Byrd sought to formally state his intention to check the power of Clinton’s executive branch in order to block the upcoming climate treaty the President was expected to sign onto. Apparently Byrd decided that even more important than party affiliation is the fact that West Virginia is heavily dependent upon coal mining, and the economic situation in the state forced both Byrd and the general populace of the state to support a historically-Republican cause (Agrawala, 127).
While the availability of cheap fossil fuels certainly goes a long way in explaining
US policy preferences in international climate treaties, the EU favors much different policies as a result of its energy dependence. It is logical that countries which import most of their fossil fuel energy (or use energies which do not emit greenhouse gasses) are more likely to support strong environmental agreements—and this is certainly the case within the EU. First of all, basic economics would indicate that the balance-of-payments incentive and reduction of reliance upon OPEC helps to explain Western Europe’s interest in a strong Convention to reduce CO2 emissions (Paterson, 79). But understanding the EU’s support of greenhouse gas emissions reductions may also be better understood by examining Europe’s recent history—a variable which has greatly affected the region’s energy dependence.
Urs Steiner Brandt and Gert Tinggaard Svendsen explain that when the 1973 oil crisis resulted in a quadrupled price for oil, the EU countries, which were extremely reliant upon oil imports, felt huge economic effects. Meanwhile the US, which was able to supply most of its energy itself, did not feel as drastic of a pinch. Hoping to prevent 78
such economic hardship in the future, the EU countries decided to promote the development of new and more efficient technologies through the use of extensive subsidies. In addition to subsidizing new and more efficient energy technology, the EU countries are also subject to much higher taxes on oil to discourage its use (Brandt and
Svendsen, 331-332). (Meanwhile, the US had been giving tax breaks and subsidies to the oil industry, totaling $11.9 billion in 1995 (Newell, 100).)
Of all the EU countries, Denmark took on the largest commitment to reduce greenhouse gas emissions. The state voluntarily chose to reduce greenhouse gas emissions 21% from 1990 levels under the Kyoto Protocol, aware that it was highly probable the US would free ride. Denmark did not choose to take on one of the largest commitments merely out of moral obligation, however, as the country had economic interests in doing so as well. Because the Danish government had began to subsidize wind energy in the aftermath of the 1973 oil shocks, there was a large investment in such technology which eventually allowed Denmark to become the biggest wind turbine producer, exporting an average of 70-90% its turbines worldwide. Thus, if global fossil fuel usage would be reduced, Denmark would be able to sell more of the technology it pioneered to countries seeking to reduce their greenhouse gas emissions.
It should be noted that Denmark is not the only EU country which holds an economic interest in promoting wind energy, however. Brandt and Svendsen explain that
“the share of the market held by each country in 2000 was 51% for Denmark, 18% for Spain, 16% for Germany, and 15% for the rest. Thus, the market is clearly dominated by EU wind turbine producers who have more than 85% of the market share, as many in the ‘Others’ group are also located in the EU” (Brandt and Svendsen, 331-333).
79
Similar alternative energy interests in France, which is an exporter of nuclear energy, and
highly-efficient industrial interests in Germany allied to push the EU in favor of more
stringent reductions commitments (Brandt and Svendsen, 335). Further, EU industrialists
promoting green energy and industry built an alliance with environmentalists seeking to
reduce global greenhouse gas emissions (Brandt and Svendsen, 332).
Heike Schroder explains that,
“because of the international nature of the climate convention, a shift toward energy independence could occur while ensuring EU member states’ comparative advantage is not reduced. In fact, many already-efficient EU states’ comparative advantage would increase (in the short-term, at least) if the US were forced to participate in emissions reductions as well.”
In other words, the Kyoto Protocol provided an opportunity to allow European countries
appear cooperative in the international community while simultaneously promoting their
own economic agenda. Thus, the Europeans were not entirely motivated by altruism or
idealism; instead, rational self-interest motivated the EU to support stringent greenhouse
gas reduction commitments in the climate regime (Schroder, 56).
Interest Groups and Lobbying
Energy dependence issues are inextricably linked with economic issues, which are
often dealt with through lobbying on the part of interest groups. Thus the domestic
political and industrial culture of an international actor is likely to shape policy
preferences in a climate change regime. Schroder states that there are many ‘losers’ of climate change agreements, including the very wealthy fossil fuel, auto, chemical and energy-intensive industries—as well as their labor unions (Schroder 47). These ‘losers’ 80 will undoubtedly use as many of their resources to block any policy which would harm the economically from being approved. Of course, as the case of Denmark demonstrates, not all industries worked to lobby against stringent climate change treaties, but pro- environment lobbying on the part of industry is more likely in Europe because of the continent’s energy dependence.
As previously mentioned, historical difficulties as a result of dependence upon foreign energy provide an explanation for the willingness on the part of EU industrial interests to support policies to reduce greenhouse gas emissions. Ian Rowlands explains that after the 1973 oil crisis, prices continued to rise throughout the next decade.
However, Germany’s economy, for example, still managed to grow despite decreased energy usage during this time, as German industries began to use energy more efficiently.
He explains that “the country’s energy intensity decreased significantly during the 1970s and 1980s, from 2.97 TCE/GNP in 1970 to 2.12 TCE/GNP in 1990 (an improvement of
29 per cent)” (130).
As a result, when policies to reduce greenhouse gas emissions were introduced later, German industrial interests understood that such policies may provide an opportunity to increase productivity and efficiency. Further, Germany would benefit from world-wide emissions reductions targets because it could then sell its highly efficient technology to more wasteful countries (Rowlands, 130). It should be noted that similar market incentives garnered support for international environmental treaties in the past. In fact, it is generally established that Washington pushed for the global elimination 81
of the use of CFCs in the Montreal Protocol because American companies found substitutes for CFCs and would enjoy a global market if CFCs were outlawed.
While there were German lobbyists calling for greater emissions standards for the global climate regime, there were also quite a few whose interests diverged with those of the highly-efficient industry sector. Dissent often came from the coal industry, which had grown in recent years but would be stalled under stricter emissions reductions commitments. Thus, while many German interest groups were in favor of reductions, support was not unanimous (Rowlands, 131-132).
In addition to the lobbying of German coal interests, the two largest EU business coalitions, UNICE (the Union of Industrial and Employers’ Confederations of Europe) and EUROPIA (the European Petroleum Industry Association), lobbied against any type of carbon tax and higher efficiency standards in the EU at large as well as individual member states if such measures were to be taken unilaterally. However, Schroder explains that “European industry has not opposed the EU’s commitment to enhance action on climate change at the international level, enabling the EU to hold a strong position throughout climate change negotiations” (Schroder, 47). Apparently, the
Union’s industry groups were only concerned about their competitiveness with countries outside the EU, meaning that global emissions standards would be acceptable as long as all other industrialized competitors were held to the same standards. Carlo Jaeger et al. add that “there is a strong current in European public opinion which perceives high energy efficiency as attractive both in terms of quality of life and economic competitiveness.” After the experiences of Denmark, Germany, and France, Europeans 82 understand that the short-term cost of developing new energy and technology may be richly rewarded by long-term economic and environmental gains (Jaeger et al., 197).
Further, some argue that it is easier for the Union, which is run in large part by appointed bureaucrats, to maintain greater autonomy from business interests. Schroder explains that “in the EU, the channels remain rather opaque because it is not a state – although it has developed many of its features” while meanwhile “US industrial lobbies represent their interests through various channels, in which public opinion plays an important role” (Schroder, 55). Consequently, the EU government is often criticized for having a democratic deficit and being too ‘detached’ from its citizens, as bureaucrats are less worried about political ramifications of policy decision (Jaeger et al, 196). Thus, despite differences internal to states and even among states at the EU level, the Union eventually agreed to a strong (but differentiated) emissions reductions goal for both the
FCCC and subsequent Kyoto Protocol.
Anne Gullberg states that lobbying is much more intensive in the US, as differences in the political structures indicate that “campaign contributions are of greater importance in the United States than in Europe” (Gullberg, 2959). While most voters in
European elections vote for a party which selects a candidate, voters in the United States are more likely to vote for an individual (regardless of party), making campaign finance a much higher priority. Further, because of historical differences between the EU and US,
Americans are much more opposed to regulations than Europeans who are accustomed to larger degrees of government interference and taxation in the energy industry. 83
In a country where lobbyists have great influence and access to policymakers,
many of the anti-climate policy coalitions are huge and very well-funded when compared
to environmental groups. The Global Climate Coalition, for example, was comprised of
50 US corporations and trade associations, made up of oil, gas, coal, chemical, and
automobile interests who worked together with the major PR firm, Burson-Marsteller, to
undermine the threats of climate change. In fact most of these groups consult with PR
firms and give themselves green-sounding names (the Greening Earth Society, Global
Climate Coalition, the Advancement of Sound Science Coalition) in order to gain
credibility with the American public (Beder, 2).
While the public was fairly divided on the science behind climate change, its
reluctance to deal with the issue may come as a result of perceived economic costs, however. The first Bush Administration (as well as the second) was joined by several of the most powerful interest groups in the country in emphasizing that a reduction in fossil fuel usage would cripple the US economy. In a widely-circulated 1990 study by the
Council of Economic Advisers, it was estimated that emissions cuts of 20% by the year
2100 would cost the US between $800 billion and $3.6 trillion (Rowlands, 134). Such high numbers were frequently used to justify Washington’s weak policy goals in the
UNFCCC and Kyoto Protocol. Later, in the three months between September and
November of 1997, the fossil fuel industry spent $13 million on anti-Kyoto commercials
on television, radio, and newspaper ads, warning Americans that binding commitments
would harm the US economically if developing countries weren’t held to the same
commitments (Schroder, 48). The efforts of the fossil fuels interest groups were aided by 84 the Coalition for Vehicle Choice (which included Ford, GM, and Chrysler) which also ran anti-Kyoto advertisements in 1997 (Beder, 2). Further, the National Association of
Manufacturers publicly argued that if the Kyoto Protocol would be ratified by the United
States, the price of energy would increase, moving jobs to developing countries which would not be held to the same commitments. Thus, the Kyoto Protocol would harm
American workers and businesses, while raising prices as well in an economic disaster.
Meanwhile, the American Petroleum Institute (API) was plotting to create a
Global Climate Science Data Center to relay doubts on climate change science.
According to a 1998 New York Times article, the API was hoping to raise $5 million to fund the center, which would greatly benefit the oil industry by undermining efforts to reduce greenhouse gas emissions. There are many other campaigns which focused on casting doubt on climate change science, as public relations specialists understand that doubt immobilizes support for expensive changes (Beder, 1).
One of the most effective tactics used by interest groups seeking to undermine
IPCC findings is the employment of scientists who are skeptical of climate change, whose dissenting opinions are well-funded and broadcasted widely (Beder, 2). Sharon
Beder explains that these scientists’ “arguments have directly contributed to the defeat of proposals to cut greenhouse gas emissions in California and Colorado,” adding that “US
Congressmen have also used their testimony to justify cutting climate research budgets and to discredit the scientific findings of the Inter-governmental Panel on Climate
Change” (Beder, 3). This strategy was quite successful during the run up to the Kyoto meeting, as Beder points out that US Gallup polls in November 1997 found that “37 per 85
cent of those surveyed through that scientists were unsure of the cause of global
warming” (Beder, 1).
Even if the interest groups were not effective in convincing the entire American
public that climate change is nothing but a mere “theory,” their economic arguments
provided a fall-back which carried great weight. Thus, in addition to the ad campaigns
mentioned earlier, interest groups would sponsor studies to assess the economic impact of
an international climate treaty. The API, for example, funded the International Impact
Assessment Model (IIAM) to evaluate the economic costs of climate change policies.
The Model found that it would save Americans money if emissions were reduced later
rather than sooner, and also finds that emissions targets would be very expensive. The
Heritage Foundation and the Global Climate Coalition—amongst many other industrial
lobbying groups—published similar findings, all indicating that reducing emissions is too
expensive for business, workers, and families in the United States (Beder, 5).
The State Level of Analysis
Understanding their various domestic characteristics helps explain why the
Europeans and Americans assumed such diverse negotiating positions on climate treaties.
Although the US was an environmental leader in the Montreal Protocol banning CFCs
globally, it is apparent that economic incentives were key to its leadership position.
While American companies had alternatives to CFCs, the US has not developed a reliable alternative for fossil fuels, giving the country little incentive to push for a reduction in
greenhouse gas emissions. In fact, the US is extremely dependent on fossil fuels in 86 production, and since it has a relative abundance, the US enjoys a large comparative advantage over the EU in energy-intensive industry. This led American businesses to heavily pressure Congress and also use their influence on the American people, by fostering doubt in climate science and fear over economic ramifications of emissions reductions. The result of such intensive lobbying on the part of industrial interests in the
US is a social and political environment inhospitable to environmental efforts.
The Europeans, on the other hand, seem to be in an almost opposite situation.
The EU does possess a few emerging alternatives to vast fossil fuel dependence—and therefore stands to profit off of a world-wide reduction in greenhouse gas emissions.
European businesses and citizens see a global decrease of fossil fuel usage to be an opportunity for exporting their new and efficient technology abroad. Further, the Union’s unique structure enabled it to ensure that Southern member states could increase or at least take on lesser commitments since emissions targets were assigned to the EU as a whole, allowing for differentiation within the bubble. Meanwhile, economic incentives allowed for a greater acceptance of the IPCC’s findings which encouraged the public to accept short-term costs for long-term environmental and economic benefits.
The state level of analysis goes a long way in explaining the divergence in policy preferences between the EU and US in climate change regime. It is apparent that the systemic level of analysis, which holds that all states are merely reactionary “black boxes,” is inadequate. However, analysis at the state level does not fully explain the international system within which the EU and US (as well as other parties to the climate regime) negotiated. Such analysis understands foreign policy as coming from the 87
domestic politics of a state, since “state behavior does not respond to the international
system; it constitutes it.” (Moravcsik, 5-6). However, this assumption does not hold
under empirical evidence. For example, the Clinton Administration’s decision to sign the
Kyoto Protocol obviously was not an accurate reflection of domestic interests
(demonstrated by the fact that it was immediately rejected by the Senate). Further, the
state level of analysis ignores systemic anarchy, which greatly conditions states’ actions.
Consequently, the state level of analysis cannot explain fears over free-riding (as expressed by the US with regard to developing countries), nor can it explain why the climate regime is uniquely structured to encourage cooperation (although it does, at times, fail to do so). Additionally, an analysis at the domestic level is not particularly helpful in explaining why international treaties often result in a lowest common denominator effect due to their structure—although it may show why some states may be interested in crafting a diluted agreement.
Thus, it is apparent that, as with the systemic level of analysis, the state-level is also imperfect. While more thorough and detailed, the state level of analysis often lacks the scientific parsimony found at the third level of analysis. It is much more difficult to generalize about states on the second level because they possess a vast amount of differences. Further, Singer warns that, just as the systemic level of analysis may overemphasize the impact of the system on the state, the state level may ignore important systemic conditions which constrain state action (Singer, 83). As a result, Moravcsik attempts to reconcile the problems found at the systemic and state levels in what he refers to as the “two-level-game approach.” 88
Conclusion
The domestic level of analysis employed in this chapter helped in explaining why the US displayed such reluctance in the climate regime while the EU constantly pushed for more stringent measures to fight climate change. Type of energy dependence, public perception of threat, interest groups, and government structure were key variables which differed between the two actors.
These differences in internal characteristics often overlapped. In the US, for example, interest groups were established by a coalition of businesses which have similar types of energy dependence, and these interest groups lobbied Congress in an attempt to lower the perception of threat from climate change. Although these domestic characteristics intertwine, it is important to note that they are vastly separate from actor to actor. In fact, all of the domestic variables studied in the EU were almost exactly opposite of those in the US. For example, the US had cheap fossil fuels available while the EU’s coal and gas had to be imported at very high prices. Further, the US institutions were uncertain about the validity of climate science in the 1990s through mid-2000s, while most European political parties and organizations took the threat of climate change very seriously during this time.
Such internal differences certainly had great effects on the EU and US international negotiating positions in the climate regime, and are undoubtedly responsible for the great difference in policy preferences. Therefore, the state level of analysis is necessary in accounting for the variances between the EU and US. Such praise of 89
analysis on the state level should not be confused with an effort to discount the
importance of the systemic level of analysis, however. At the systemic level, it is possible to make generalizations about actors and how they are conditioned to interact within the international system. Forces from both the international system and domestic characteristics affect international policy-making within the climate regime, and therefore it is important to examine both together. The two levels of analysis will be combined in chapter four by employing the two-level game approach. 90
CHAPTER 4
Climate change—like many other issues regarding international environmental
politics—has created a serious collective action problem. As Hardin’s Tragedy of the
Commons (and the Prisoner’s Dilemma and Stag Hunt) demonstrates, individual
rationality is usually placed above collective rationality as a result of fears over free- riding. Consequently, the management of global environmental issues (and climate change, in particular) usually ends up being suboptimal or nonexistent.
Regimes are often created to facilitate the cooperation necessary to take meaningful action on international issues. Since the signing of the FCCC text which was foundational to the climate regime, however, the organization has faced huge obstacles.
Many of the hurdles to cooperation in the regime come as a result of the nature of climate politics: greenhouse gas emissions responsible for climate change are very closely related to economic wealth. Chapter three explained that cheap fossil fuels have been a backbone of the US economy, and that business interests worry that a mandatory reduction in emissions could be expensive. Thus, climate regime agreements which bind ratifying states to reduce emissions create winners (such as the Europeans which already have various economic incentives to reduce their dependence on expensive imported oil) and losers (such as the American energy-intensive industries). Consequently, the climate regime faces obstacles resulting from relative gains, and such concerns caused the US— the largest emitter of greenhouse gas—to abstain from participating in the Kyoto
Protocol. 91
Many have criticized the Kyoto Protocol for failing to garner US support. Others have criticized the treaty (and the climate regime, in general) for being too lenient. In order to understand how the regime and its treaties may be strengthened in the future, it is necessary to understand where its largest and most immediate problems (the lowest common denominator-effect of negotiations and the lack of universal support for a strong regime) come from. The two-level game approach is very useful in answering these questions, and also in providing a general understanding of how climate policy is created.
The Two-Level Game Approach
As chapters two and three demonstrate, each level of analysis provides unique insight into understanding international phenomena, but restricting the analysis of international events in such a way can result in large gaps in understanding. Analysis on the domestic level rests on the assumption that decision-makers are “passive political registers, summing the franchise-weighted vectors of domestic interests and moving in the indicated direction” (Moravcsik, 15). Meanwhile, on the international systemic level, statesmen are assumed to be responsive only to the mandates of the international system.
Moravcsik endorses the idea of a two-level game approach, which uses a combination of the systemic and state levels of analysis to understand international negotiation and decision making (Moravcsik, 23). He defines the two-level game approach as a theory of international bargaining which takes the statesman to be the main actor (Moravcsik, 16). Incorporating both levels into such an ‘interactive approach’ to international relations allows researchers to better understand how statesmen make 92 decisions which may not seem sensical at either the domestic or systemic level in isolation—but are logical when both sets of competing interests are accounted for together (Moravcsik, 17).
The systemic level, for example, holds that all states are unitary actors, and therefore cannot explain why the Clinton Administration signed the Kyoto Protocol while
Congress failed to approve its ratification. In fact, US policy-making cannot be understood without examining its internal government structure, which is done at the domestic level of analysis. This second level would show that, while the executive branch handles the negotiation of international treaties and can sign the country onto an agreement, it must be approved by a two-thirds majority in the Senate to be formally ratified.
Nevertheless, the state level has short-comings as well and cannot explain why the administration signed the Kyoto Protocol in the first place, regardless of the fact that domestic interests (which, according to this level of analysis, constitute international relations) had made it clear they were against the treaty. When both of these analyses are combined, however, it becomes apparent that the Clinton Administration was attempting to juggle international interests in favor of a strong environmental agreement with domestic interests, which favored a weak (or nonexistent) treaty. Although the power of the executive branch was used to sign the US onto the Kyoto Protocol, the Senate’s rejected the treaty unanimously. In this instance, the two-level game approach is the only method of analysis which provides a full understanding of US decision-making with regard to the Kyoto Protocol. 93
In the case of the EU, the systemic level cannot explain why the European states
supported the Kyoto Protocol. Under the Protocol, China, an emerging economic
competitor, is not held to any immediate standards—one of the main reasons the US
refused to ratify the treaty. The state level of analysis uncovers incentives which push the
EU to ratify the treaty regardless of Chinese commitments, however. Because most
European states are working to reduce their dependence upon imported fossil fuels
anyway, encouraging the US (a country even more dominant in the international
economy than China) to make similar reductions gives the EU a comparative economic advantage. Had all industrialized states ratified Kyoto and taken up strong commitments, the EU may have enjoyed short-term relative gains at the expense of the US.
Further, analysis at the domestic level shows that EU member states had a unique negotiation and approval system in place which may have contributed to the ratification of the Kyoto Protocol. Unlike all other countries, EU member states do not negotiate at
COP meetings; instead, they bargain with one another to establish an umbrella negotiation position used by the EU to represent its member states during international negotiations. During the negotiations for the blanket EU position on the Kyoto Protocol,
it was agreed that Union would demand differentiation between member states—meaning
some states would take on larger emission reduction goals than others. This was useful in
shoring up EU-wide support for the treaty, which was signed and later ratified by both the
EU itself and the individual European countries’ parliaments (I. Young, 11).
Both case studies of the EU and US demonstrate that the international system
shapes outcomes in the climate regime and individual agreements. Additionally, it is 94
apparent that characteristics internal to actors shape policy preferences as well.
Multiparty negotiations are confounded by varying domestic interests, and the ratification
of treaties is further complicated by differing systems of approval. Fortunately, the two-
level game approach allows for a comprehensive examination of how both forces within
the state and international system react with one another to produce policy outcomes.
Criticism of the Two-Level Game Approach
Although it appears that the two-level game approach has provided the best analysis of EU ratification and US non-ratification, not all scholars agree his combination
of the systemic and domestic levels of analysis is appropriate. Many international
relations theorists, such as Singer, argue that each level of analysis mutually exclusive
(Singer, 91). He specifically advises researchers choose one level of analysis, avoiding
“vertical drift” which destabilizes the point of focus (Singer, 78). However, Moravcsik
points out that both the systemic and domestic levels of analysis are incomplete when
taken alone. He points out that “pure international theories, while attractive in principle,
tend to degenerate under the collective weight of empirical anomalies and theoretical
limitations into explanations that include domestic factors” (Moravcsik, 6). This is
certainly apparent in the case of the Kyoto Protocol, whose ratification process cannot be
adequately explained by international factors alone. Instead, the two-level game
approach combines the mutually-constitutive domestic and systemic levels for a deeper
explanation of state decision-making. 95
Although there is a degree of contention surrounding how the levels of analysis are best employed, the two-level game approach has proved to be the most fitting for an analysis of the Kyoto Protocol. The United States and the EU play similar roles in the international system, but their diverse domestic characteristics differentiate the final outcomes of their decision-making processes. A comprehensive analysis of the Kyoto
Protocol proves international bargaining and cooperation is shaped not only by other states in the international system, but also by each state’s domestic characteristics.
Chapter three showed that geography and energy dependence were hugely important factors in determining states’ policy preferences. Only by employing the two-level game approach can many of the complexities of the Kyoto Protocol be understood.
Findings
As demonstrated earlier in this chapter, analysis of the state and international levels in a two-level game approach provides great insight in answering the main two questions of this thesis: first, why did the FCCC agreement and Kyoto Protocol get pushed to the lowest common denominator of commitment, and second, why are some states more proactive in preventing climate change than others? Neither question can be adequately understood by examining the domestic characteristics of a state or the international system in isolation since both are affected by the two-level game of global environmental politics.
It is apparent that the international system contributes to the lowest common denominator effect witnessed in the formation of the FCCC and Kyoto Protocol. 96
Although regimes are designed to help overcome the obstacles of systemic anarchy, they
cannot fully protect states from free riding and relative gains concerns. States concerned
with free riding and relative gains are likely to push for less-ambitious commitments in order to their keep cost of compliance lower. This was the case with the US, which
ultimately failed to ratify Kyoto because developing countries were understood by
Congress to be free riders due to their exemption from emissions reduction commitments.
Further, analysis at the domestic level shows that the US is heavily dependent on fossil fuels, explaining why the state would be concerned about relative gains resulting from international limits on emissions.
Due to domestic fears of free riding and relative gains, the US has taken on the systemic role of veto state to the climate regime—constantly lowering ambition during the negotiation of treaties and then, in the case of the Kyoto Protocol, refusing to ratify.
The US role as veto state is highly problematic, however, because a systemic analysis shows that it has the most influential role in the climate regime since the country is also the largest emitter of greenhouse gas emissions.
To summarize, the domestic characteristics of some states, such as the US, push their heads-of-state to undermine the collective ambition of members of the climate regime. Simultaneously, systemic fears of relative gains and free riding also helped in driving the FCCC and Kyoto Protocol to the lowest common denominator of commitment.
The two-level game approach is also valuable in answering why some states have been more willing to take on the costs of curbing climate change than others. Since the 97
EU and US are fairly similar political and economic entities with widely divergent policy
preferences, they made ideal candidates for comparison in this question. Analysis at the
systemic level shows that the Europeans understood mitigating climate change to be a
Stag Hunt while the Americans believed it to be a Prisoner’s Dilemma. Since both
believed climate change to be a different game, they had different policy preferences.
However, the systemic level cannot explain why the EU and US believed the issue to be
different games; instead, analysis at the domestic level proved necessary for further
explanation.
By examining the internal characteristics of the EU, it becomes apparent that most
European businesses and citizens understood they had something to gain economically from a strong climate regime and Kyoto Protocol. Consequently, European interest groups did not take on huge advertising campaigns to discredit the science of climate change or economic ramifications of restrictions on fossil fuel usage. Thus, European citizens perceive climate change to be a valid threat and trust the IPCC’s findings more so than their American counterparts, who have been bombarded by messages from the
Global Climate Coalition and American Petroleum Institute, questioning the science of climate change and the economics behind emission reductions commitments.
The American public and Congress were subject to extensive lobbying efforts on
the part of interest groups because many powerful businesses in the US (being highly
dependent on cheap fossil fuels), stand to lose economically from restrictions on
greenhouse gas emissions—at least in the short term. These well-funded interest groups
ran extensive ad campaigns to sway the American public, which in turn worked with 98
lobbyists in pushing Congressional members to reject the Kyoto Protocol. Analysis of
the EU and US indicates that actors’ motivations in the climate regime are heavily
influenced by the structure of their domestic economies.
Of course, other factors are also important in determining whether or not states
support a strong climate regime. Geographical features of a state are hugely indicative of
preferences in the climate regime, since densely-populated low-lying and coastal
countries will not survive rises in sea levels. Many EU countries (such as the
Netherlands) and small island states across the globe have been the staunchest supporters
of increasing commitments to fight climate change. Meanwhile, larger (and higher)
states such as the US, do not perceive the threats of climate change to be nearly as grave.
Further, variances in government structure also account for differences between the EU and US. While the EU is composed of Parliaments which are less open to lobbyist
influence, the US Congressional members have close relationships with lobbyists and receive much of their campaign contributions from interest groups.
In summary, because the US had serious relative gains concerns which can be explained at the domestic level of analysis, it became a veto state and ultimately undermined the climate regime. Meanwhile, the EU has acted to counter the US, by constantly pushing for more ambitious steps to combat climate change. It is important to note that not all of the European focus on mitigating climate change is altruistic, however, as EU businesses, governments, and citizens are well aware that they stand to gain a major comparative advantage should all states (including the US) be subject to cuts in greenhouse gas emissions. 99
Chapters two and three demonstrate that both the domestic and systemic levels of analysis are incomplete when applied alone. Instead, empirical analysis shows that both domestic and international forces act as constraints in the making of foreign policy, leading to the conclusion that in reality, statesmen wield a ‘double-edged sword’ wherein they are forced to juggle with domestic and international interests simultaneously, as
Moravcsik suggests. In Europe, the international consensus to mitigate climate change fell in line with EU member states’ internal economic and political preferences as well, allowing the Union to take a leading role in the climate regime. In the US, however, domestic interests opposed international efforts to curb climate change. Unfortunately, when the Clinton Administration attempted to compromise between the international community and its domestic forces, the administration failed to secure the ratification of the treaty Clinton had signed. Apparently, international bargaining in the climate regime is a two-level game, for which domestic and international interests must be accounted.
The Future of the Climate Regime
Understanding that bargaining and negotiation processes involved in the climate regime are affected by both international and domestic forces may help to create better policy responses. For a regime to be able to achieve its aims, member states’ domestic constituencies must generally approve of the institution’s policies. Most states within the climate regime are generally supportive of its principles, mandates, and treaties.
However, the US is the most influential state in the regime because it is both the global hegemon and also because, out of all Annex I countries, it emits the highest amount of 100
greenhouse gasses responsible for climate change. (Although, it should be noted that
China is the top global emitter, and is emerging as one of the most influential states in the
climate regime as well, although it is currently considered an Annex II developing
country). Nonetheless, the climate regime must ensure that it has American support if it
is to be of any consequence in fighting climate change (Bang et al., 287). Unfortunately,
since many of the most powerful domestic forces within the US hold interests which run
counter to the regime’s collective interest, the country has been able to undermine the
group’s efforts to fight climate change.
In order to better understand American power in the climate regime, it is useful to
examine hegemonic stability theory. Duncan Snidal outlines two differing categories of
hegemonic stability. In some cases, the hegemonic state is benign—meaning the hegemon takes on all of the costs of international cooperation although every state
receives benefits from it. Ian Rowlands explains that in this benign version, the hegemon
“uses its power to make all members of the international society better off” (Rowlands,
14). Ensuring peace and security are two examples of benign hegemonic leadership.
Under other circumstances, however, a hegemon might be categorized as
malevolent. In this case, the hegemon acts out of concern for its own short-term interests
instead of the collective, long-term interest of the international society. In this
‘malevolent version’, the hegemon receives benefits, often at the expense of all other
states. In both the malevolent and benign cases, the hegemon has the power to transform
international relations in an issue-area, and, while the Europeans may have acted as a
benign hegemon to balance Washington (and further their own interests), it is apparent 101
that the US responded to its domestic interests by adopting a malevolent form of hegemonic leadership (Rowlands, 15).
Guri Bang et al. use the two-level game approach to explain why the US has
chosen the malevolent version of hegemony. The author states that, if Washington is to
meaningfully re-engage the climate regime, “the government must strike a bargain
internationally that can meet the approval of its legislature” (Bang et al., 287). In other
words, the economic consequences of participation in the climate regime cannot be high
enough to provoke strong dismay on the part of American business interests close to
Congress. Unfortunately, however, domestic US forces throughout the 1990s and most
of the 2000s understood the costs of American participation to be too high, and have
therefore ensured that Washington’s role in the regime be miniscule. Since the US is still
the second highest emitter of greenhouse gas emissions, however, its hegemonic status
within the climate regime is characterized as malevolent due to its abstention from major
regime agreements.
The Development of a Global Carbon Market through Emissions Trading
One of the easiest ways to ensure the ratification of climate treaties reducing
greenhouse gas emissions is to make sure the state’s industrial sectors will approve of
new climate policies. Emissions trading may be a way to satisfy both the environmental
interest of the international climate regime as well as the capitalist interests of American
businesses and citizens, who generally have a stronger belief in the management abilities
of the market as opposed to the state (Bang et al., 295). 102
During the negotiations for the Kyoto Protocol, Washington pushed for the inclusion of three flexibility mechanisms: joint implementation, the Clean Development
Mechanism, and emissions trading. Flexibility mechanisms—particularly emissions trading—allow states and businesses to reduce emissions in the most market-efficient ways. The inclusion of such industry-friendly measures is necessary to garner domestic support for the climate treaty in countries such as the United States. Meanwhile, such measures are also compatible with the international climate regime’s goals of reducing emissions. Consequently, many countries are now looking to emissions trading as a means of appeasing both domestic and international interests in the two-level game of international climate politics.
Emissions trading is often done through “cap and trade” programs, which are considered to be the purest embodiment of the “polluter pays principle” set forth in the
Earth Summit’s Rio Declaration on Environment and Development (Chasek et al, 33).
Chasek et al. explain that the polluter pays principle “seeks to ensure that the costs of environmental action, economic and other, will be borne by those who created the need for that action” (Chasek et al., 241). Ideally, cap and trade schemes ensure that an actor pays a large price for their pollution, in order to encourage the development of new technology as well as a decrease in environmentally degrading activities.
Such an emissions trading scheme involves several processes. Although cap and trade programs are often very complicated, the first step in establishing such a scheme is to put a cap on emissions. Scientists, policy makers, environmental and business representatives would ideally be involved in setting the cap. Next, depending on whose 103
pollution is being targeted by the program, states, businesses, or people are allotted a
certain amount of emissions allowances per year. The amount of allotted emissions does
not exceed the overall cap, which would be tightened every year to bring emissions lower
and lower over time. Christian Egenhofer explains that, if properly regulated and
enforced, cap-setting systems ensure that emissions will be lowered, since only so many
carbon credits/permits are distributed to corporations (Egenhofer, 454).
However, since it is very unlikely that every unit would be able to reduce its
emissions immediately in order to remain within their allotment, trading is an essential feature of this plan. If for some reason a unit cannot meet its goal of emissions reductions, it may purchase emissions allotments from another unit which has surpassed its goal. For example, say France was committed to reduce its greenhouse gas emissions by 800 million tons, but only reduced its overall emissions by 600 million tons.
Meanwhile, Canada had a goal of reducing its emissions by 500 million tons but surpassed its goal by 200 million tons. In such a case, France could purchase the 200 million surplus tons from Canada. Thus France would make up for the extra 200 million tons of emissions it released into the atmosphere while rewarding Canada of surpassing its goal (Ravindrath and Sathaye).
As the example illustrates, cap and trade programs are extremely effective because they use market incentives to lower emissions while ensuring the overall goal of emissions reductions occurs. Since cap and trade programs are market-based, Egenhofer explains that “ultimately, it provides for a mechanism by which emitters—factory operators, oil refineries, power plants etc.—can identify the most cost-effective ways to 104
reduce their emissions” (Egenhofer, 454). Thus, technological innovation is likely to
increase under a cap and trade program, as units will desire cleaner technologies which
allow them to remain under their emissions quota, enabling them earn extra income by selling their surplus allotments. In the case of the US Acid Rain Program’s sulphur trading scheme, investment in new technology increased as power plants sought to avoid paying the penalties of going over their allotments. As a result, flue gas desulphurization technologies advanced and proliferated rapidly, while simultaneously dropping in price
(Sorrell and Skea, 12-13).
US Acid Rain Program
Although the United States did not ratify the Kyoto Protocol, it was nonetheless a leader in establishing the first emissions trading programs in the 1970s (Egenhofer, 454).
The US Acid Rain Program, established under Title IV of the Clean Air Act, was the first major emissions trading scheme undertaken by the United States. The market-based scheme was created in order to help the US meet its goal of reducing SO2 emissions 10
million tons below 1980 levels (US EPA, “Reducing Acid Rain”). Sorrell and Skea
describe the US Acid Rain Program as the “largest, most ambitious and most successful
tradable permit scheme yet introduced” (Sorrell and Skea, 6). In fact, the Acid Rain
Program was so successful that it has become the “reference point” for other similar
trading schemes (Egenhofer, 454).
The EPA’s website states that the first phase was wildly successful, as “emissions
data indicate that 1995 SO2 emissions at these units nationwide were reduced by almost 105
40 percent below their required level” (US EPA, “Reducing Acid Rain”). Denny
Ellerman et al. posit that the main reason units emitted so much less than they were allotted had to do with growing use of both low-sulphur coal and the technology for flue gas desulphurization (often referred to as “scrubbers”) (Ellerman et al., 28-29).
In Phase II, which started in the year 2000 and will continue indefinitely, the cap on SO2 was tightened to 8.95 million allowances to be allocated to utility plants annually.
Tightening the cap has created greater scarcity, thereby driving prices up and forcing polluters to pay more. The positive effects of changes in Phase II are furthered as the program has expanded in scope, as well. Now, 2,000 units are covered by the Acid Rain
Program—including smaller plants which operated on coal, oil, and gas. So far, the program has been quite successful in achieving its goals of preventing pollution and encouraging the development of more efficient technologies. The EPA’s website states that “together these measures ensure the achievement of environmental benefits at the least cost to society”—a theme which will be repeated in all cap and trade programs, including the European Emissions Trading Scheme (US EPA, “Reducing Acid Rain”).
In recent years, it has been suggested that the Acid Rain Program be expanded to include reductions in other greenhouse gas emissions—such as CO2. Much of the infrastructure is already in place, and since the program has already been quite successful in reducing SO2 emissions, there is a firm foundation from which new projects to fight climate change can be added. If the connection between the Acid Rain Program and carbon trading is strengthened, perhaps US industrial leaders will realize that they can achieve the same results with technology to reduce CO2 emissions as they did with SO2 106
emissions. Then, once industrial interests begin to favor emissions trading, the American
public and Congress will likely follow suit, meaning the competition between American
domestic interests and international interests will be greatly reduced in international
climate policy-making. In other words, the American head-of-state will continue to wield
a “double-edged sword” in international policy-making, but future climate agreements
may enjoy the support of both international and American domestic forces.
European Emissions Trading Scheme
The US Acid Rain Program has already been used as a model for other emissions
trading schemes dealing with climate change—such as the European Emissions Trading
Scheme (ETS). The EU emissions trading program has resolved most of the difficulties
faced in the two-level game of climate policy, as it allows for a reduction in emissions
(pleasing the EU and international community), while simultaneously allowing
businesses to develop their own unique technologies to reduce emissions in a market-
friendly fashion which allows them to remain competitive.
The EU created the ETS to reduce CO2 emissions under a cap and trade program
in order to ensure compliance with the Kyoto Protocol. Egenhofer explains that, since the
Kyoto commitments are expressed in absolute terms, emissions trading is a very useful
instrument because it sets a definitive cap on all emissions. The ETS was also ideal for
the EU, as it enjoyed the support of both European business interests and environmental
NGOs. As a result, it was quickly adopted by the EU Council of Ministers and European
Parliament in 2005 (Egenhofer, 453-454). 107
The ETS covers over 10,000 polluting facilities across 27 EU member states,
comprising 45% of the EU’s CO2 emissions. Power plants which are at least 20
megawatts in capacity are covered by the ETS, as well as oil refineries and plants involved in iron, steel, paper, ceramics, glass, lime, cement, and brick production.
Unfortunately, transportation, which accounts for 25% of all EU greenhouse gas
emissions, is not included (Parker, 1). Nonetheless, the ETS is quite impressive, being
the first program to trade greenhouse gas emissions allowances across borders
(Egenhofer, 453).
The European Emissions Trading Scheme has had two phases, both guided by
National Allocation Plans (NAPs), which each member state must submit to the
European Commission for review (Parker, 3). Phase 1 ran from 2005-2007 and was
characterized by “teething problems,” as Egenhofer puts it (Egenhofer, 455). The
difficulties experienced during Phase 1 were expected, and were used as a learning
experience before Phase 2 (which ran from 2008-2012, the first Kyoto commitment
period) began.
Allowing for a trial run before the first Kyoto commitment period also reflected
EU-cognizance of the delicate two-level game of climate politics wherein domestic and international interests must be satisfied. The first phase uncovered many unforeseen problems, giving time for the EU, individual member states, and businesses to find solutions to before real emissions reductions had to occur during the first Kyoto commitment period. Since it was essentially a learning experience, the first phase allowed for domestic industrial interests to adapt to Kyoto restrictions in an economical 108
way while allowing the EU (being accountable for ensuring compliance with Kyoto) to
adapt its policies to guarantee the fulfillment of its emissions reduction goals during the
first official Kyoto commitment period. As a result of the lessons learned during Phase 1,
Phase 2 NAPs were much stricter as they had to guarantee Kyoto compliance (Parker, 3).
Phase 1
The myriad of problems encountered during Phase 1 of the ETS provide insight
for future phases and trading schemes. The largest underlying problem was a lack of
verified data about business’ emissions histories and future projections. The collusion
between big power companies and the lack of information led to an inflated cap, which was confounded by allocation problems. Although these problems led to a carbon market failure during the first phase, they provided a necessary and valuable learning experience which allowed for the betterment of Phase 2.
In order to set a legitimate cap on emissions, governments needed data on companies’ projected emissions. This ended up becoming a major obstacle during Phase
1, as only three member states had verified data. All of the other governments asked for a voluntary data collection effort on the part of industries, which meant the data had to be cross-checked—although in most cases officials were still unable to verify that the data they received was fully accurate. The absence of accurate data made the process of cap- setting and emissions allotment quite difficult.
Inflated projections of how much CO2 would be emitted in the future led to the allocation of surplus allowances, which made it possible for industries, on average, to 109
emit 5% more annually. Thus, one ton of carbon dioxide started out costing € 30 but dropped to € 1 per ton by May 2006, leading to the failure of the carbon market
(Egenhofer, 456). Most of these problems come as a result of poor data and the fact that
electric companies opportunistically inflated their data on projected emissions in order to get higher amounts of carbon allotments. Meanwhile, these same businesses also inflated their prices in order to make up for the ‘costs’ associated with Phase I of the ETS. The subsequent higher prices, along with over-allotment of emissions allowances, led to windfall profits for many of the major power companies (Parker, 27).
Poor data was not the only reason for allocation problems, however. Cap-setting
and carbon credit allocation was left with the member states, as the implementation of most agreements is left to individual states, and, in the case of ETS, such member state autonomy helped garner greater state and industry support. Thus, implementation at the member state-level is indicative of the two-level game, as heads-of-state must balance the
EU’s plan to effectively reduce emissions with their domestic constituency’s desire to control certain aspects of the plan.
Individual member states must have a strong role in cap-setting and allocation because each state has unique economic structure, levels of development, and varying energy industries. However, the EU Commission was left in an odd situation because, while member states determine their own energy policy, the EU is simultaneously responsible for ensuring emissions reductions commitments are met and carbon market distortions are avoided—a dilemma indicative of a two-level game (Egenhofer, 455-456). 110
Because heads-of-state had to appease their domestic business interests, however, market distortions ended up becoming a major problem as a result of differentiation of allocation between states, as companies across borders were all part of the same carbon market. Thus, while a power plant which produces electricity out of natural gas would receive 105% of the required allowances for operation in Germany, the same plant would receive only 82% in Denmark, and 0% of the required allowances in Sweden, as Sweden does not provide any allowances for power plants which do not provide both electricity and heat. As a result, Egenhofer warns that, “allocation rules have an impact on investment decisions, and can significantly distort competition if they remain unchanged”
(Egenhofer, 456).
Although there were many problems during Phase 1 of the ETS, these difficulties should be looked at as beneficial lessons which would make Phase 2 run much more smoothly (Egenhofer, 454). This learning period established the infrastructure necessary for Phase 2, when goals actually had to be met for Kyoto compliance. Specifically, Phase
1 led to the establishment of emissions monitoring mechanisms, as well as registries and inventories for carbon allowances. Larry Parker notes that “much of the publicized difficulties the ETS experienced in the first phase can be traced to inadequate emissions data”—a problem which was greatly reduced by the establishment of new infrastructure.
Further, it should be noted that Phase 1 was actually productive, as well. Parker explains that in the electric utility sector, “70% of firms stated that they were pricing in the value of allowances into their daily operations, and 87% into future marginal pricing decisions,” and that “all industries stated that it was a factor in long-term decision- 111
making” (Parker, 2-3). The obstacles overcame in Phase 1 allowed for an experienced
and successful Phase 2.
Phase 2
Phase 2 began in 2008 and will run through 2012—following the same dates as the first Kyoto Protocol commitment period. It was extended to cover all six greenhouse
gases, as well as all sectors (energy, industry, waste, agriculture, and others) which are covered by the Protocol (Monni et al., 529). The second phase has improved greatly, as the European Commission made many changes in procedure after observing Phase 1.
After recognizing the problems in gathering data off which to base Phase 1 caps and allotments, the Commission published a set of ‘objective’ projections. These projections were used by all member states in an attempt to increase consistency and standardize allocation rules between states, thereby reducing market distortions. Further, the European Commission was able to get member states to push their emissions caps lower in the second phase, to about 9% below the cap of the first phase (Egenhofer, 458).
As member states became stricter about allocation, the purchasing of emissions allowances for polluting industries has become even more expensive due to scarcity. As a result, Phase 2 of the ETS has been very successful and in November 2008, Parker released a Congressional report stating that 22 out of the 25 EU member states committed
to emissions reductions were projected to meet them (Parker, 8-9).
112
Criticism of the European Emissions Trading Scheme
Despite the successful beginning of the second phase of the ETS, the program is
still subject to quite a bit of criticism. Some point out that, because allocation periods are
shorter than investment cycles (the first phase was three years and the second phase is only five years), the market is less predictable. It is argued by some that this unpredictability discourages the investment in greener technologies in the long-term.
However, this argument could be turned on its head: in the US case, the technology for scrubbers which reduce sulphur emissions was heavily invested in because businesses were uncertain of how low the cap would be set. Thus, they invested heavily in new technology in order to avoid the feared expenses of the first phase of the US Acid Rain
Program.
Additionally, critics of ETS explain that power companies, as well as other industries, have found ways to circumvent the costs of polluting by passing the price of their carbon emissions on to consumers. Since these companies do not end up feeling a budgetary pinch, there are no economic incentives to encourage them to invest in technology or reduce their emissions (Egenhofer, 457, 2007). Such a problem already occurred in the first phase of the ETS, in fact, as power companies received windfall profits by increasing the price consumers pay for electricity while also receiving inflated emissions allowances. Thus, this criticism of the ETS is valid and must be dealt with through the use of better data and tighter business regulation (Egenhoffer, 455, 2007).
113
Emissions Trading versus a Carbon Tax
While there are a lot of differing views on how to implement cap and trade programs, not all international relations scholars, economists, and environmentalists even support the idea of emissions trading. One alternative is a carbon tax, which, it is argued, also encourages the development of new technology as a result of increasing expenses associated with polluting actions (Yale Environment 360, 1). Proponents of the carbon tax argue that such a plan creates the same economic incentives for the reduction of greenhouse gas emissions as cap and trade programs do, but that taxation is much simpler than a bureaucratic system of capping emissions, allocating allowances, and monitoring usage.
Robert N. Stavins, Director of the Harvard Environmental Economics Program, explains that while a carbon tax may seem more straightforward than a cap and trade program, in reality it is subject to political pressures which “will most likely lead to exemptions of sectors and firms, which reduces environmental effectiveness and drives up costs, as some low-cost emission reduction opportunities are left off the table.”
Stavins acknowledges that political pressures will certainly effect the allocations of allowances under cap and trade schemes as well, but that the overall cap means that environmental effectiveness will not be sacrificed. Thus, encouraging all countries in the climate regime to utilize a carbon tax to reduce emissions is dangerous because only the cap and trade system ensures that emissions will be reduced by a specific amount every year, as taxes can never fully guarantee emissions reductions (Yale Environment 360, 6).
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Implications of the European ETS and US Acid Rain Program for Future Cap and Trade
Programs
Although there will always be critics, the European ETS and US Acid Rain
Program provide much hope for future cap and trade programs. Since emissions trading schemes are market-based, business interests are more supportive of such policies to reduce emissions. If industrial leaders in the US begin to view the ETS as a successful carbon trading initiative (as many economists already do), then they may be more likely to support a national (or even international) effort to trade carbon dioxide emissions—as they have been successfully doing with sulfur dioxide for years. Many of the most influential European business leaders and government officials believe carbon trading to be beneficial for the EU economy, as it promotes the development of technologies which may prove very lucrative in the future. If business interests in the US come to the same conclusion as their European counterparts, then it is likely that a majority of the domestic forces within the US will be mobilized to support agreements to reduce emissions.
Should US domestic interests fall in line with the international collective interest, then the problems which come from two-level games in international policy-making will be greatly diminished.
Fortunately, the EU and US emissions trading programs have proved to be quite successful. Even though have faced some initial difficulties, they have also remedied many problems in the second phase of their operation. The most important lesson, Parker asserts, is that of the necessity of credible data. He explains that the “lack of credible
EU-wide data on emissions was a direct cause of the ETS phase 1 allowance market 115
collapse in 2006” (Parker, 25-26). At first cap and trade programs may struggle because of a lack experience, but that after a while, problems can be solved in order to create a fairly competitive carbon market. The success of cap and trade programs is certainly inspiring, as most policies associated with climate change are not successfully enforced.
In fact, the EU’s successful program may encourage more reluctant states, such as the
US, to adopt similar programs. It now seems that cap and trade may be one of the key policies promoted by the climate regime in the future.
In fact, Article 25 of the ETS Directive allows for a future extension of the ETS into a larger framework which would incorporate other states, regional bodies, or even the entire globe. It would be rational to extend the ETS globally, as larger markets
reduce prices and are more efficient, and also because global carbon trading would have a much more powerful environmental impact. Monni et al. add that “if a maximum number of countries participate in emissions trading, the emissions reductions will become more cost-efficient” (Monni et al., 536).
Linking up multiple pre-existing trading schemes will likely prove difficult, however. As observed even within the EU, other proposed cap and trade systems (as well as already-tried cap and trade systems) have varied drastically, as far as commitments, allocation of credits, monitoring, reporting, and even industrial coverage.
States will want to control as much of the carbon market as possible in order to ensure their domestic business interests are satisfied, but such differences could make various schemes incompatible with one another or at least create expensive transactions costs and market distortions. If market prices are allowed to vary between different schemes, then 116
when they are eventually merged into a global carbon market there different markets will
create winners and losers (Egenhofer, 459).
Egenhofer explains that the only way to overcome this obstacle is if all states and
their internal sectors agree on international market values, creating a global carbon
market that would naturally form without the linking of previously-existing domestic schemes. Already within the EU, states have agreed that harmonization of allocation policies is important, and also have expressed interest in having the European
Commission assign either an overall EU cap or a sectoral cap—quite a significant gesture, as it demonstrates that member states are now willing to give up some of their
power on the domestic-level to the higher level of European Commission in order to
establish a better ETS. From a business perspective, such a move is not very surprising, however, as harmonization and time would allow for greater predictability on market prices, as well.
Contraction and Convergence
Egenhofer acknowledges, however, that only once an international agreement which binds all states to emissions reductions will the EU—or any government, for that
matter—be willing to take on much more serious, long-term commitments to reducing
carbon emissions (Egenhofer, 460). There are many proposals being talked about in the
international community, such as the idea of idea of Contraction and Convergence,
formulated by Global Commons Institute, which has garnered the attention of European,
Asian, and African political parties, as well as the UN. 117
Contraction refers to cap-setting. The IPCC or UNFCCC would set caps on
greenhouse gas emissions which would tighten each year. These caps would be phased
in or varied as per development, allowing some states to emit more than others in the short term. Over time, however, countries across the globe would converge their emissions per capita at a safe level, ensuring environmental protection as well as equity.
In fact, equity is a foundational principle for Contraction and Convergence. The
Global Commons Institute notes that wealthiest 33% of people in the world make up 90% of all GHG emissions. Poorer countries (like those in sub-Saharan Africa) are suffering enormous effects from climate change, although the entire continent emits a fraction of
the amount of green house gasses the United States emits. If Contraction and
Convergence were implemented, very poor countries (which emit under allocation) could
sell their surplus carbon credits to wealthier states that pollute more. It is hoped that this
trading would create somewhat of an equalizing affect, as poorer countries would profit
from the sale of their unused carbon credits—all while drastically cutting harmful
greenhouse gas emissions (Global Commons Institute, “Contraction and Convergence”).
Although a truly international cap and trade program would be very complicated
and therefore has not yet been implemented, the US Acid Rain Program and EU
Emissions Trading Scheme demonstrate that programs such as Contraction and
Convergence may not be that far from implementation in the future. In fact, the use of
economic programs appears to be the only way to effectively enforce international
climate change treaty commitments, since states are unwilling to enforce commitments
set out in climate change treaties militarily. 118
Thus, emissions trading is likely to be the program of choice in the future, as it is market-based and therefore allows for businesses to determine individualistic, cost- effective ways to decrease emissions. Further, cap and trade programs encourage technological innovation and give incentives to exceed emissions reductions targets, as units can profit from the sale of surplus credits. Most importantly, if properly regulated and enforced, cap and trade systems ensure that emissions will be lowered, since only a limited amount of allocations are given to units.
Conclusion
The climate regime faces huge obstacles in fulfilling its goal of mitigating climate change. Many of these obstacles come because, in the making of international environmental policy, statesmen wield a ‘double-edged sword’ which forces them to juggle domestic and international interests simultaneously. While international systemic issues—such as free riding and relative gains concerns—make cooperation between states difficult, domestic factors—such as industrial characteristics, type of energy dependence, and power of interest groups—further complicate policy-making in a two- level game.
The leaders of most Annex I countries have been able to get their domestic forces on board with the goals of the climate regime and have ratified the Kyoto Protocol, although the most important state—the US—has not. Since it is the largest Annex I emitter of greenhouse gasses (and the second largest emitter globally), the US must be involved if an international agreement to reduce emissions is going to be meaningful. 119
However, participation will not occur until interests within the US begin to understand reducing emissions as something that could bring economic benefits to American businesses.
During the months leading up to the COP3 meeting in Kyoto, several American energy-intensive industries pulled their wealth together to create interest groups which spent exorbitant amounts of money on campaigns to undermine the validity of climate science. Meanwhile, because of the country’s government structure, these same interest groups were closely linked to the politicians in Congress—and their concerns were often over-represented in the legislature (this is evidenced in the fact that, for every one climate science proponent which came to testify before Congress, there was another which devalued climate change as a threat—despite the fact that a huge majority of scientists already agreed that climate change is occurring) (Harrison, 100).
Meanwhile in the EU, energy dependence was quite the opposite of the US. Most
Europeans are importers of expensive fossil fuels, and many EU countries have developed alternative energies to keep costs down. Thus, many European businesses support any treaty which would diminish the use of fossil fuels globally, as this would give the EU a comparative advantage over gas-guzzler countries, such as the US, which would have to adjust their industries (perhaps by purchasing European technology).
Further, European countries with low-lying, coastal areas understand their very survival to be at stake if sea levels rise. In fact, since European interest groups did not raise a huge fuss over the goals of the climate regime, most EU citizens were not targeted by 120
groups seeking to undermine the IPCC’s reports, so the perception of threat from climate change was higher in the EU.
While there are a great many differences which account for the opposing policy
preferences of the EU and US, it seems that they all stem from the basic difference in energy dependence. Domestic interests mobilized around this key issue, determining
whether the actor would perceive climate change to be an international Stag Hunt or
Prisoner’s Dilemma. Each actor’s perception of the game influenced its ordering of
preferences, which was reflected in degree of support for the Kyoto Protocol and climate
regime in general. Even though it is in the international interest to support the climate
regime, the US rejected it as a result of forces internal to the state. Meanwhile, the EU
did not face as large of a disparity between the domestic and international interests being
juggled in the regime, and therefore was able to become a leader in the international
institution.
Although the EU may be a slightly ahead in the development of alternative
energy, experience with the US Acid Rain Program shows that US businesses would
quickly develop new technology if forced to do so. Thus, the implementation of cap and
trade program targeting CO2 and other greenhouse gas emissions may push hesitant US
industrial interests to become more innovative, and eventually (once American
alternatives to fossil fuel usage are developed), US industrial interests may partner with
environmental interests in favor of a stronger environmental regime. Should such a
scenario come about, then US internal interests will correspond with the international
interest of mitigating climate change, and US heads-of-state will not have to reconcile 121
their decision-making between two competing levels of interest. Instead, American
domestic groups will push for stronger participation in the climate regime.
While such a partnership may seem impossible, many EU member states have
witnessed an alliance between environmental and business interests which have been
supportive of the ETS. Further, H.R. 2454, The American Clean Energy and Security
Act (AKA the Waxman-Markey Bill) proposes a national cap and trade program to
reduce greenhouse gas emissions and enjoys support from both the industrial and
environmental sectors. Although a regional cap and trade program (called the Regional
Greenhouse Gas Initiative, or RGGI) already exists within the US and includes ten states
(“Regional Greenhouse Gas Initiative”, 2009), the Waxman-Markey Bill covers the entire
country and has broad support from both national corporations and environmental groups.
Major names, such as the Environmental Defense Fund, NRDC, Audubon Society, the
American Lung Association, Florida Board of Governors, General Motors, Whirlpool
Corporation, General Electric, Dow Chemical Company, Du Pont, and many others have all formally expressed their support for the Bill ("Chairmen Waxman and Markey
Introduce “The American Clean Energy and Security Act”). While the Bill just barely passed the House in a vote of 219-212 in August of 2009 ("H.R. 2454: American Clean
Energy and Security Act of 2009."), such a broad range of support from key industries indicates that US industrial forces may be shifting away from their previous anti-climate
policy positions. Now in the Senate, the bill has the potential to be passed into law.
Such great support for the Waxman-Markey Bill demonstrates that the US may be coming around to viewing the climate regime more favorably. If American business 122
interests see a potential profit in reducing emissions, the US government will respond by
pushing for stringent targets in the climate regime. American heads-of-state will have
much less difficulty balancing international and domestic interest (since they would be
aligned), minimizing the problems of the double-edged sword in two level games of
foreign policy-making. Further, if the US is no longer a veto state, then the climate
regime’s lowest common denominator problems will be alleviated for the time-being. Of
course, it is expected that eventually India and other rapidly-developing countries will
join China in surpassing the US in greenhouse gas emissions and, since the most
important actors are those with the most global influence and those which emit the most greenhouse gasses, they may take over the US role as hegemonic veto states. The climate
regime will be a constant struggle because economic development is linked to greenhouse
gas emissions, but for now, attaining American support is the biggest obstacle. Figuring
out how to deal with the developing countries cannot occur until after all Annex I
countries have made serious commitments to the regime—something which does not
seem too far off now that major US industrial interests are backing a domestic cap and
trade plan. 123
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