Beyond the Carbon Curse: a Study of the Governance Foundations of Politics in , Canada and

by

Nathan C Lemphers

A thesis submitted in conformity with the requirements

for the degree of Doctor of Philosophy

Department of Political Science

University of Toronto

© Copyright by Nathan Lemphers 2020

Beyond the Carbon Curse: A study of the governance foundations of climate change politics in Australia, Canada and Norway

Nathan Lemphers

Doctor of Philosophy

Department of Political Science

University of Toronto

2020

Abstract

Without risking hyperbole, climate change is the greatest political challenge humanity has ever faced. The world must achieve net-zero emissions by mid-century if the most catastrophic damage is to be avoided. The prospect of environmental transformation is most remote for major -exporting countries. Yet amongst the world’s largest exporters of carbon, three countries are more likely to make a transition: Australia, Canada and Norway. Across these three countries, significant climate policy variation exists. Norway developed an early, broad, diverse and durable suite of climate policies compared to Australia and Canada. In this dissertation, I explain the climate policy variation of these three countries and why responses from sympathetic governments were able to make headway and entrench policies in some cases but not others. A novel analytical framework is created to explain these outcomes using within-case process tracing and a comparative case study. Data is obtained largely through interviews with 124 informants and primary document analysis.

II My central finding is that the governance foundations of climate policy are critical in explaining climate policy. State strength matters. A strong and democratic state has the potential to assuage the political risk facing economic and regime elites from climate policy. It can restructure policy networks to empower civil society so that transformative climate policy is more likely to be announced and implemented. State strength can explain why switching governments in Australia and to some degree in Canada, as opposed to Norway, meant slow shifts and easy reversal.

This dissertation contributes in several ways to the scholarship on comparative environmental politics and green state political theory. First, it foregrounds the role of the state in comparative environmental politics by emphasizing the unique and critical role that states play in providing the governance foundations needed to domestically decarbonize. Second, it theorizes linkages that can reconcile the green state literature with the economic growth imperative and the biogeochemical limits of the planet. Lastly, it provides theoretical insights into the transformative and democratic role of the strong state in addressing climate change by stressing inclusivity throughout the policymaking process.

III Acknowledgements

This dissertation was borne out of my ignorance and curiosity in how other countries with a similar reliance on fossil fuels production have managed climate policy. Many years later, it is safe to say I have more tools and wisdom than I did before. However, I did not get here on my own.

My former colleagues at the Pembina Institute inspired and encouraged my curiosity and got shit done, particularly Clare Demerse, Simon Dyer, Jennifer Grant, Julia Kilpatrick, Jeremy Moorhouse, Aarti Rana, Marlo Raynolds, Tim Weis, Ed Whittingham, and Dan Woynillowicz. Thanks also to my colleagues at Oil Change International, where I worked in my final year of my doctoral studies as I was wrapping up my dissertation. Hannah McKinnon, Matt Maiorana, Greg Muttitt, Kelly Trout, Alex Doukas, Collin Rees, Elizabeth Bast and Steve Kretzmann were a collective source of inspiration for me as exceptionally bright, committed and strategic activists on the leading edge of the climate movement.

A special award goes to my dissertation supervisor Steven Bernstein, who took me under his wing knowing I had not taken a political science course in my life. Steven provided generous and sage advice as he guided me through the crucible of doctoral research. My other dissertation committee members, Grace Skogstad and Lou Pauly, shared prescient and timely advice, giving me room to discover things on my own but guidance to anticipate and steer away from intellectual traps. Thanks also to my internal examiner, Matthew Hoffmann, who helped me focus my argument and reminded me of the normative dimensions to my work. Angela Carter, my external examiner, renewed my excitement in turning this dissertation into a timely book. I am deeply appreciated the feedback I received on my dissertation from other academics in Canada, especially Kathryn Harrison, Peter Dauvergne, Jennifer Clapp, Graeme Auld and Laurie Adkin.

To the administrative support of the Department of Political Science, notably Carolynn Branton, Mary-Alice Bailey, and Lou Tentsos, I salute you. Your behind-the-scenes work keeps the department afloat and its many graduate students able to navigate our time at the University.

IV My friends and colleagues at the University of Toronto’s Department of Political Science and the Environmental Governance Lab at the Munk School of Global Affairs were a cherished source of camaraderie and inspiration over the past six years: Steven Denney, Emile Dirks, Wayne Zhu, Laura Tozer, Heather Millar, Hamish van der Ven, Dave Gordon, Erica Petkov, Jacqueline Peterson, Eve Bourgeois, and Amy Janzwood.

While I was living in Toronto, I had the privilege to be a Junior Fellow at Massey College. The richly diverse conversations I had with the Massey College community fed the multidisciplinary part of my brain and provided a respite from the, at times restricting, confines of political science. The Round Room offered an appropriately dignified and somewhat intimidating venue for my dissertation defence.

For four years during my dissertation, I was a Pierre Elliot Trudeau Foundation Scholar. It is difficult to enumerate the number of kindred spirits and sources of inspiration I found within the Foundation’s community. There are too many to name them all here but at the core was my 2014 cohort of scholars and Josée St-Martin, the Foundation’s scholarship administrator.

For my Canada-based research, I have deep gratitude to Michael Horgan, my mentor through the Trudeau Foundation, who shared his insights as Canada’s Deputy Minister of Finance, Environment, and Natural Resources. He helped open the doors to many key interviews. Former Canadian High Commissioner to Australia Michael Small, Former Canadian Ambassador to Norway Jillian Stirk and Else Kveinen at Norway’s Ottawa Embassy provided valuable advice prior to my international fieldwork.

For 5 months in 2017, I had the privilege of living in Oslo. I was a Visiting PhD Student at the climate change policy think tank, CICERO, based at the University of Oslo. Guri Bang and Arild Underdal were instrumental in bringing me on board and making me feel at home. I’d like to thank the members of the climate policy team there, notably: Bård Lahn, Merethe Dotterud Leiren, Solveig Aamodt, Elin Lerum Boasson, Håkon Sælen, and Erlend Hermansen. Much gratitude to for your interview and your introductions to luminary Norwegians and for Nathalie Schaller for guiding Marie-Camille and I through the underground world of Franco-expat-parents in Oslo. Also in Oslo, I was a Visiting Research Fellow at the Norwegian Institute for International Affairs (NUPI). This connection would not have been possible without

V Mikkel Pedersen who found a home for me within the think thank’s Energy and Russia Group. My colleagues Indra Overland, Helge Blakkisrud, Roman Valkchuk, Elana Wilson Rowe, Jakub Godzimirski, Kristian Lundby Gjerde, Kristin Fjæstad, Malin Østevik, and Sigrid Valberg were an excellent collective sounding board on my initial research interviews and helped to educate me on Norway-Russian energy relations. Thanks to Elin Maria Fiane for your outstanding support with the NUPI library. Beyond those at CICERO and NUPI, thanks must be given to the broader community of scholars that welcomed my curiosity: Oluf Langhelle, Helge Ryggvik, Einar Lie, Klaus Mohn, Jon Birger Skjærseth, Tine Handeland, Fay Farstad, Dag Harald Claes, Peter Notre, Else Grete Broderstad, and Berit Kristoffersen. Many thanks to Synnøve Hageberg, the ever-patient librarian at the Norwegian Oil Museum in .

During my four months in Australia, I had the fortune of being based at the ’s Australia-German Climate and Energy College. It was Anita Talberg that initially recruited me and made me and my family feel immediately welcome in Australia. College Director Malte Meinshausen and his mötley crüe of PhD students provided an engaging and family-friendly environment to puzzle through Australian politics. Thanks to Annabelle Workman and Stephen Pollard for showing me it is possible to have two kids and stay sane while completing a dissertation. Robyn Eckersley, who had the odious task of being my local supervisor in Melbourne, provided excellent counsel on my research as it unfolded Down Under. I would be remiss not to thank the other academics who took the time to meet with me including: Peter Christoff, Paul Burke, Evgeny Postnikov, Christopher Wright, Frank Jotzo, Ross Garnaut, , Hugh Saddler, Kate Crowley, Chris Riedy, Tim Flannery, David Karoly and Jim Stanford. It did not take long after arriving in Melbourne for some of our local neighbours to befriend us. Thanks for making us feel at home so quickly. The efficient librarians at the National Library of Australia were very helpful. The staff of the Blackwater International Coal Centre in Central Queensland and the Hunter Valley Coal Industry Centre and local activists in both coal regions shared with me crucial local dimensions that did not emerge from my interviews with downtown elites.

I would like thank the 124 interviewees who shared their time and wisdom with me as I sought to solve what I think is particularly vexing public policy issue. A full list of interviewees can be found at the end of my dissertation. Not all those who I interviewed agreed to be named but you

VI know who you are. Thank you. A special citation goes to three stellar students from the University of Toronto who fastidiously transcribed my interviews: Kate McCullough, Brian Malczyk, and Gunnar Sonneson.

After returning from my field interviews, I was based in Ottawa and was kindly adopted by academics at the city’s two universities. Thanks to Nic Rivers for use of his office at the Graduate School of Public and International Affairs at the University of Ottawa while he was on sabbatical. Thanks to Graeme Auld for bringing me on as a Visiting Academic Researcher at Carleton University’s School of Public Policy and Administration. Glen Toner, Alexandra Mallett and James Meadowcroft all made me feel at home in the department. My gratitude goes to Stewart Elgie, Mike Wilson, and Geoff McCarney at the Smart Prosperity Institute based at the Institute of Environment at the University of Ottawa. They brought me on board as a Pre- Doctoral Fellow and ensured I had the resources to take this dissertation across the finish line.

This dissertation would not be possible without significant financial support from the Social Science and Humanities Research Council of Canada’s Joseph Armand Bombardier Canada Graduate Scholarship and, most importantly, the Pierre Elliot Trudeau Foundation Doctoral Scholarship. I also deeply thankful for funding from University of Toronto-based funding from the Department of Political Science, the School of Graduate Studies, and the Centre for International Experience, as well as funding from the Smart Prosperity Institute.

The kernels of this dissertation began nearly 8 years ago. Since then, I met and married my wife and became a father twice over. My family accompanied me in the field and helped ground me through the travails of a project of this magnitude. My parents and my in-laws both visited us during our year as academic hobos and helped ground and sustain our little family during my studies. My deepest gratitude is reserved for my partner and co-adventurer Marie-Camille. She was my chief counsel, critic, and cheerleader throughout the solitary endeavour that is a political science PhD. I only wish I can be as supportive for you as you have been with me.

VII

Table of Contents

Table of Contents ...... VIII

List of Tables ...... XIV

List of Figures ...... XV

List of Abbreviations ...... XVI

CHAPTER ONE: Introduction...... 1

1.1 Puzzle and Research Question ...... 4

1.2 Common Explanations ...... 5

1.2.1 Resource Curse ...... 5

1.2.2 Federalism ...... 8

1.2.3 Interest Group Politics ...... 9

1.2.4 Varieties of Capitalism ...... 11

1.2.5 Conclusion ...... 12

1.3 Theoretical Approach ...... 13

1.4 Argument ...... 15

1.5 Originality and Contribution of the Dissertation ...... 16

1.6 Plan for the Dissertation ...... 18

CHAPTER TWO: Research Design and Methodology ...... 20

2.1 Research Design...... 20

2.2 Case Selection ...... 21

2.3 Dependent Variable: National climate mitigation policy outputs ...... 25

2.4 Analytical Framework ...... 27

2.4.1 State Strength ...... 30

2.4.2 Elite Risk Perceptions ...... 35

VIII 2.4.3 Policy Networks ...... 38

2.4.4 Climate Policy ...... 42

2.5 Methods ...... 44

2.5.1 Process tracing...... 45

2.5.2 Comparative case study ...... 46

CHAPTER THREE: Norway Case Study ...... 48

3.1 Norwegian Energy Industry Development ...... 48

3.1.1 Hydropower development ...... 49

3.1.2 Oil and Gas Development ...... 50

3.2 Norway’s Climate Policy ...... 63

3.2.1 Brundtland Commission ...... 63

3.2.2 1988 Toronto Climate Conference ...... 65

3.2.3 1989 ‘Green Beauty Contest’ Election and the Emissions Stabilization Target ... 65

3.2.4 Carbon Tax ...... 67

3.2.5 Shifting the Burden of Emission Reductions ...... 72

3.2.6 Power Plants and Carbon Capture and Storage ...... 80

3.2.7 Emission Trading Development ...... 84

3.2.8 CCS and Gas Plants under Stoltenberg II ...... 86

3.2.9 REDD+ ...... 89

3.2.10 Electric Vehicles...... 93

3.2.11 Electrifying offshore oil and gas platforms ...... 97

3.2.12 2017-2018 CCS and Gas Plant Developments...... 100

3.3 Conclusion ...... 102

CHAPTER FOUR: Canada Case Study ...... 104

4.1 The Mulroney Government (1988-1994) ...... 105

IX 4.1.1 1988 Toronto Climate Conference ...... 106

4.1.2 Early Environmental Group Climate Advocacy ...... 107

4.1.3 1990 Green Plan ...... 109

4.1.4 1992 Rio Earth Summit ...... 113

4.2 The Chrétien Government (1993-2003) ...... 115

4.2.1 The Road to Kyoto ...... 117

4.2.2 National Task Force on Oil Sands Strategies...... 122

4.2.3 Federal Engagement on the ...... 123

4.2.4 Post-Kyoto Federal Climate Policy Under Chrétien ...... 126

4.2.5 Towards Ratification of the Kyoto Protocol ...... 129

4.3 The Martin Government (2003-2005) ...... 135

4.4 The Harper Minority Government (2006-2011) ...... 138

4.4.1 Harper’s Turning the Corner Climate Plan ...... 140

4.4.2 Civil Society Policy Networks During the Harper Government ...... 142

4.4.3 Industry Policy Networks under the Harper Government ...... 145

4.5 The Harper Majority Government (2011-2015) ...... 150

4.5.1 Joe Oliver Letter ...... 151

4.5.2 Federal Budget 2012 ...... 152

4.5.3 Oil Sands Export Pipelines ...... 156

4.5.4 Sector-by-Sector Climate Regulations ...... 157

4.6 The Trudeau Government (2015-2018) ...... 161

4.6.1 Pan-Canadian Framework on Clean Growth and Climate Change ...... 164

4.6.2 Clean Fuel Standard...... 165

4.6.3 Methane Regulations ...... 165

4.6.4 Carbon pricing ...... 167

X 4.6.5 Reducing carbon emissions through hydrocarbon extraction ...... 169

4.7 Conclusion ...... 172

CHAPTER FIVE: Australia Case Study ...... 175

5.1 The Hawke and Keating Governments (1988-1996) ...... 177

5.1.1 Early Leaders in Climate Change Science ...... 177

5.1.2 Bipartisan Support for Climate Action ...... 178

5.1.3 Early Industry Response to Climate Change ...... 180

5.1.4 Nascent Federal Climate Policy ...... 180

5.1.5 Early Think Tank Advocacy on Climate ...... 181

5.1.6 Labour Unions Stake Out Position on Climate Policy ...... 182

5.1.7 Rising Industry Pressure ...... 184

5.1.8 Rio Earth Summit and Australia’s Response ...... 186

5.1.9 National Greenhouse Response Strategy ...... 186

5.1.10 Preparations for the Berlin Conference of the Parties ...... 188

5.2 The (1996-2007) ...... 193

5.2.1 Preparing for the 1997 Kyoto Protocol ...... 194

5.2.2 ABARE ...... 197

5.2.3 Kyoto Protocol ...... 200

5.2.4 Post Kyoto Climate Policy ...... 201

5.2.5 Shifting Alliances Post Kyoto ...... 203

5.2.6 Failure to ratify the Kyoto Protocol...... 207

5.2.7 Continued Influence of Major Emitters ...... 208

5.2.8 Public opinion rallies to support climate action ...... 211

5.2.9 Howard supports national ETS ...... 214

5.3 The (2007-2010) ...... 217

XI 5.3.1 Rudd’s Carbon Pollution Reduction Scheme...... 220

5.3.2 Spills ...... 225

5.4 The (2010-2014) ...... 228

5.4.1 Multi Party Climate Change Committee ...... 230

5.4.2 Clean Energy Future Package ...... 232

5.4.3 Industrial Rent-seeking ...... 236

5.4.4 Environmental NGOs during Clean Energy Future development ...... 240

5.4.5 Impacts of Gillard’s Clean Energy Future policy ...... 242

5.4.6 Rudd briefly regains control of Labor Party ...... 244

5.5 The Abbott, Turnbull and Morrison Governments (2013-2018) ...... 245

5.5.1 Industry backs repeal of climate policies it supported ...... 246

5.5.2 Abbott’s Direct Action Plan ...... 249

5.5.3 Turnbull becomes Prime Minister ...... 251

5.5.4 Preparing for the Paris COP 21 negotiations ...... 252

5.5.5 Vehicle Fuel Efficiency Standards ...... 253

5.5.6 The Finkel Review and the National Energy Guarantee ...... 253

5.5.7 Morrison spills Turnbull ...... 255

5.6 Conclusion ...... 256

CHAPTER SIX: Comparative Analysis ...... 258

6.1 Analytical Framework Comparison ...... 258

6.1.1 State Strength ...... 259

6.1.2 Risk Perceptions ...... 263

6.1.3 Policy Networks ...... 264

6.1.4 Climate Policy ...... 266

6.2 Climate policy trajectories and emission reductions...... 268

XII 6.3 Looking Forward: the Potential of Decarbonization...... 279

6.3.1 Norway...... 279

6.3.2 Australia ...... 282

6.3.3 Canada ...... 284

6.4 Conclusion ...... 286

CHAPTER SEVEN: Conclusion ...... 288

7.1 Argument and Empirical Contribution ...... 289

7.2 Theoretical Implications ...... 291

7.3 Policy Implications and Recommendations ...... 295

7.3.1 Strengthening the Green State ...... 296

7.3.2 Reducing Elite Risk Perceptions ...... 302

7.3.3 Democratizing Policy Networks ...... 303

7.4 Avenues for Further Inquiry ...... 304

7.5 Concluding Thoughts ...... 305

List of Interviewees ...... 307

References ...... 313

XIII List of Tables

Table 2.1: Operationalization of national climate policy ...... 26

Table 6.1: Summary of state strength components by country ...... 259

Table 6.2: Summary of economic and regime elite risk perception components by country ..... 263

Table 6.3: Summary of policy network components by country ...... 265

Table 6.4: Summary of climate policy components by country ...... 267

XIV List of Figures

Figure 1.1: 2100 Warming Projections ...... 3

Figure 2.1: Causal chain of the analytical framework ...... 29

Figure 2.2: Conceptualization of state strength...... 31

Figure 2.3: Examples of diminished subtypes of state strength...... 35

Figure 6.1: Climate policy trajectories for Australia, Canada, and Norway...... 269

Figure 6.2: without land use, land use-change and forestry ...... 271

XV List of Abbreviations

ABARE Australian Bureau of Agriculture and Resource Economics

ACAP Advanced Countries of the Asia Pacific

ACCI Australian Chamber of Commerce and Industry

ACF Australian Conservation Foundation

ACTU Australian Council of Trade Unions

AIGN Australian Industry Greenhouse Network

AIG Australia Industry Group

AIP Australian Institute of

AP6 Asia Pacific Partnership on Clean Development and Climate

AREA Alliance for Responsible Environmental Alternatives

BCA Business Council of Australia

BCNI Business Council on National Issues

CAPP Canadian Association of Petroleum Producers

CAW Canadian Auto Workers

CCRES Canadian for Responsible Environmental Solutions

CCS Carbon capture and storage

CDM Clean Development Mechanism

CEO Chief Executive Officer

CEP Communication, Energy and Paperworkers Union of Canada

XVI CFMEU Construction, Forestry, Maritime, Mining and Energy Union

CHA Comparative historical analysis

CICERO Centre for International Climate and Environmental Research, Oslo

CME Coordinated market economy

COAG Council of Australian Governments

COP Conference of the Parties

CSIRO The Commonwealth Scientific and Industrial Relations Organization

ENGO Environmental non-governmental organization

EPIC Energy Policy Institute of Canada

ETS Scheme

EV Electric vehicle

GDP Gross domestic product

HI Historical institutionalism

IISD International Institute for Sustainable Development

IPCC Intergovernmental Panel on Climate Change

IS3C Industry Steering Committee on Climate Change

JI Joint Implementation

JUSCANZ Japan, the United States, Canada, Australia, and New Zealand negotiating bloc

LME Liberal market economy

LNG Liquified natural gas

XVII LO Landsorganisasjonen i Norge (Norwegian Confederation of Trade Unions)

MTOE Million tonnes of oil equivalent

NAFTA North American Free Trade Agreement

NEB National Energy Board

NEG National Energy Guarantee

NEP National Energy Program

NGO Non-governmental organization

NGRS National Greenhouse Response Strategy

NHO Næringslivets Hovedorganisasjon (Confederation of Norwegian Enterprise)

NICFI Norway’s International Climate and Forest Initiative

NOK Norwegian krone

NRCAN Natural Resources Canada

NRTEE National Round Table on the Environment and the Economy

OECD Organization of Economic Cooperation and Development

OLF Norwegian Oil Industry Association

PDO Plan for Development and Operations

REDD Reducing emissions from deforestation and forest degradation

SDFI State’s Direct Financial Interest

SUM Centre for Development and the Environment

TJ Terra joules

XVIII UN United Nations

UNFCCC United Nations Framework Convention on Climate Change

USW United Steelworkers

VCR Voluntary Challenge and Registry

WCED UN World Commission on Environment and Development

WWF World Wildlife Fund

XIX CHAPTER ONE: Introduction

Of all the political challenges facing the world, climate change is undoubtedly the most severe. In a 2018 speech, United Nations (UN) Secretary General, António Guterres (2018), called climate change the “defining issue of our time […] an existential threat […] and we are at a defining moment.” What Levin et al. (2012) called a “super-wicked problem,” climate change is compounded by many of the existing challenges facing humanity: rising inequality, an erosion of democratic institutions and state legitimacy, and an economic system that does not acknowledge local or global ecological limits, to name a few.

Climate change is not a novel nuisance. Policymakers were first alerted to these threats three decades ago. In 1988, climate scientists, politicians and bureaucrats assembled for the first time in Toronto for the World Conference on the Changing Atmosphere to discuss the potential danger of climate change. In 1990, the Intergovernmental Panel on Climate Change (IPCC) issued its first report on the scientific understanding of global warming and the likely outcome for our world. In 1992, the UN Framework Convention on Climate Change was signed at the Earth Summit in Rio de Janeiro by all UN members, who pledged to reduce dangerous anthropogenic greenhouse gas emissions—the chemical culprit behind global warming. National governments, regional governments and municipalities have all enacted climate policies. A long list of intergovernmental bodies, transnational organizations and private sector firms has also developed climate policies.

Yet, thus far, the world has resoundingly failed to reduce its emissions. In 2017, global greenhouse gas emissions from fossil use and industry amounted to 36.2 +/-2 gigatonnes of carbon dioxide equivalent (GtCO2eq), an increase of 63 per cent since 1990 (Le Quéré et al. 2018). Indeed, despite all the gains in and energy efficiency, global fossil energy growth is outpacing global decarbonization efforts (Jackson et al. 2018).

After three decades of insufficient action, the catastrophic impacts of climate change are no longer hypothetical. Human activities have currently caused warming of 1ºC above pre-industrial levels and are on track to reach 1.5ºC between 2030 and 2052 (IPCC 2018). Due to two severe coral bleaching events since 2014 and cyclones, the Great Barrier Reef has lost half of its coral

1 cover in the northern range (AIMS 2018). In 2017, weather and climate change-related disasters in the United States cost an estimated $306 billion US in damages. Since 1980, 241 weather and climate change-related disasters in the United States cost an estimated $1.6 trillion US (NOAA 2019}.1

Climate change is a threat multiplier. A climate change-induced El Niño event in 2015-2016 triggered regional disease outbreaks around the world (Anyamba et al. 2019).2 Climate change has enhanced armed conflict risks in ethnically fractionalized countries (Schleussner et al. 2016), and worsened food insecurity in vulnerable regions (Wheeler and von Braun 2013).

Based on the IPCC AR5 Working Group III report, in the absence of any additional climate policies (i.e., the ’baseline scenario,’ RCP 8.5), global average temperatures would rise by 4.1 to 4.8°C above pre-industrial levels by 2100 (IPCC 2014). This would have a devastating impact on life on the planet. Global mean sea level rise could be up to a metre by 2100. Over the same time frame, ocean acidity would likely double, arctic temperatures could be over 10C higher and global glacial volume could decrease by 35 to 85 per cent.3

Fortunately, the world came together in 2015 to sign the Paris Agreement, although there remains much debate over the medium and longer term impact of the Agreement. This international agreement committed to keeping global average temperatures to well below 2ºC above pre-industrial levels and pursue “[…] efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change” ("Paris Agreement" 2015: 3). A 1.5°C world is still a climate-changed world: global mean sea level would likely still rise by 48 cm by 2100 (Rasmussen et al. 2018); the frequency of warm extremes could increase 129 per cent (Dosio et al. 2018); rainfall extremes could rise up to 17 per cent (Betts et al. 2018), and over a quarter of a billion more people likely exposed to water scarcity compared to today (Betts et al. 2018). Even if anthropogenic

1 These are only counting weather events that produced more than $1 billion US in damages (2018 dollars). 2 This included increased incidence of plague and hantavirus in New Mexico and Colorado, cholera in Tanzania, and dengue fever in Brazil and Southeast Asia, among others. 3 This does not include the potential ice loss from Greenland and the Antarctic ice sheets.

2 greenhouse gas emissions were to cease completely today, long-term changes in the climate system will persist for centuries to millennia (IPCC 2018).

Unfortunately, current climate policies in place are predicted to result in a 3.1 to 3.5°C increase (Figure 1.1). Aggregating all of the country-level pledges and targets, if achieved, would result in a 2.7 to 3.0°C warming. Clearly, this is far from the intended goal. Far more action needs to be taken to achieve the Paris goals, which would require effectively reducing net global greenhouse gas emissions to near zero by 2050.

Figure 1.1: 2100 Warming Projections. Source: Climate Action Tracker (2018)

In short, preventing the worst of climate change makes necessary a colossal undertaking. The political response to this environmental crisis requires far more ambition that what has currently been pledged or implemented. For this response to be effective, a better understanding is needed of the politics behind climate policy action and inaction over the past thirty years—a key goal of this dissertation. In the following section, I will outline the empirical puzzle and research question of this dissertation followed by a discussion on potential explanations. Subsequently, I

3 describe the theoretical approach and argument and then briefly convey the originality and contribution of this research project. This chapter concludes with a detailed plan for the remainder of the dissertation.

1.1 Puzzle and Research Question

For many major fossil fuel-exporting nations, the prospect of domestic decarbonization is inconceivable. The likelihood of ambitious climate policies is next to nil for countries like Russia, Venezuela, Nigeria or Saudi Arabia. Indeed, these resource cursed states are the least likely countries in the world to willingly transform their carbon-based economy. The extreme dependence on fossil fuel-related revenue along with embattled or non-existent democratic institutions make a transition to a clean energy economy a very remote possibility. Yet within the league of major fossil fuel-exporting nations, there are a handful of countries that could make the transition willingly. Australia, Canada and Norway are among the few advanced economies and liberal democracies that are also large exporters of fossil fuels. These three countries have political institutions and relatively diversified economies that could possibly lay the foundations for low-carbon future.

That is not to say these three countries have chosen the same path. Significant climate policy variation exists. Norway is an indisputable climate policy leader among its fossil fuel-producing peers of Canada and Australia. The Nordic nation is an outlier: an early climate policy innovator that has steadily expanded its suite of climate policies. A carbon tax on its oil and gas industry has been in place since 1991, and is now one of the highest carbon taxes in the world. A global leader in climate diplomacy, carbon offsetting and electric vehicle usage, Norway's climate policies have long been far ahead of other major fossil fuel-producing states. Canada and especially Australia are both late to the game and have historically had climate policies that are narrow in scope, limited in means and unstable. Unlike Norway, in these two countries climate policy development has been slow and easily reversed.

This dissertation endeavours to explain the climate policy of Australia, Canada, and Norway. The research question it confronts is this: What explains the differences in the climate policies of these three similarly situated fossil fuel exporters? In responding to this question, my dissertation

4 also explains why responses from sympathetic governments were able to make headway and entrench policies in some cases but not others.

I argue that the governance foundations of climate policy can explain the policy outputs in Australia, Canada, and Norway. The strength of a state matters. A strong state can address elite concerns, reshape policy networks and forge ambitious climate policy. A strengthening of the state need not threaten its democratic institutions. A semi-autonomous state can also deepen its democratic commitment and enhance its legitimacy. It can tilt the policymaking process away from powerful vested interests, increasing its independence, and favouring voices that both accept the decarbonization challenge and present solutions. Before elaborating on this explanation, I will review other potential explanations to show their limit and why I turned to my explanation.

1.2 Common Explanations

Within political science there is a rich literature in which to probe for potential explanations. In particular, this section examines the extant literature on the resource curse, federalism, interest group politics, and varieties of capitalism. This survey is far from exhaustive and additional literatures are examined in Chapter Two where I outline the analytical framework, and in my concluding chapter. However, from my encounters with both political scientists and policy practitioners, these four explanations are the most frequent.

1.2.1 Resource Curse

The thesis of the resource curse is that countries with large mineral and petroleum wealth are more likely to suffer negative economic, social, and political consequences than those countries without comparable sectors. The resource curse has been subject to sustained debate from the late 1990s through the 2000s (e.g., Auty 1993; Dunning 2008a; Haber and Menaldo 2011; Karl 1997; Luong and Weinthal 2006; Morrison 2009; Ross 2001; Smith 2007).4 Over time, this

4 In a recent review of the resource curse literature, Ross (2015) advances that three main debates remain: a) the conditions under which a curse appears, b) the mechanisms that cause these conditional effects, and c) if the resource curse is real or illusory, that is, if it is statistical noise or counterbalanced by positive effects.

5 debate has become more precise, differentiating the impact of various commodities, and becoming more sensitive to timing and variations among examined countries (Ross 2015). However, there has been very little focus on environmental outcomes (Friedrichs and Inderwildi 2013; Gelb 2014) or which policies can counteract the resource curse (Ross 2015).

By only having a limited number of variables, the resource curse literature is prone to omitted variable bias and endogeneity, which becomes problematic when attempting to explain complex, multi-factor issues such as climate policy. Furthermore, there is a strong focus on domestic conditions to the exclusion of international factors such as trade, immigration, and investment (e.g., Bearce and Laks Hutnick 2011; Friedrichs and Inderwildi 2013; Ross 2001)5.

The so-called carbon curse is a recent environmental extension of the resource curse thesis. This theory proposes that those countries with substantial fossil fuel endowments tend to have carbon intensive development pathways (Friedrichs and Inderwildi 2013). In other words, countries cursed with major fossil fuel industries have little hope of decarbonizing their economy. Friedrichs and Interwildi (2013) put forward four explanations for this phenomenon: the strength of emissions extracting fossil fuels, the crowding out of manufacturing and renewable energy, weak energy efficiency incentives, and uneconomic fossil fuel consumption subsidies. This carbon curse is not prima facie surprising for many fossil fuel-rich developing countries (e.g., Nigeria, Venezuela, or Saudi Arabia). No analyst would expect to see climate policy leadership from these unquestionable petro-states. Indeed, this is precisely what Friedrichs and Interwildi (2013) find in their analysis.

But what about wealthy and democratic fossil fuel-producing states? These are the states with substantively more stable, transparent and accountable political institutions and with a more highly educated and empowered citizenry. Evidence marshalled by Friedrichs and Interwildi (2013) suggests that even fossil fuel-rich developed countries are susceptible to the curse. Certainly, this is the case for Australia and Canada. Norway on the other hand, as identified by Friedrichs and Interwildi (2013), is an outlier that has managed to escape the carbon curse. As

5 The obvious exceptions to this singular focus on the domestic realm being Karl (1997) and Sovacool (2011).

6 will be explored in Chapter Six, given that Norway has not reduced total greenhouse gas emissions from 1990 levels, it is questionable if Norway truly has escaped the carbon curse.

Regardless, the carbon curse theory does not explore the politics behind the hex. While the level of emissions-intensity, the presence or absence of certain policies, and macroeconomic phenomena are important factors, they do not shed a light on the politics at work in these countries. Furthermore, the conception and explanation of the carbon curse by Friedrichs and Interwildi (2013) is rooted in technical—not political—explanations and carries many of the aforementioned analytical challenges associated with the resource curse literature. Beyond accurately noting that Norway had strong institutions prior to the development of oil, that the state generously funds the research, development and deployment of green technologies, and that strong environmental norms are present in Norway, the authors do not provide insights into how or why these institutions or policies helped Norway to elude the curse. By neglecting politics, the authors cannot comment on the appropriateness of these technical policies for fossil fuel- producing countries or generate insights on how to navigate the politics surrounding the implementation of these policies.

The resource curse literature, generally, and the carbon curse literature, in particular, provide a highly structural and largely economic explanation to my research question. While not necessarily wrong, these explanations provide an incomplete political understanding for why Australia, Canada, and Norway have such divergent climate policy pathways. By leaving out the politics and focussing on very resistant to change structural factors, this type of analysis can also lead to defeatism, where emission-reducing climate policy in countries like Australia and Canada is viewed as next to impossible. Despite these shortcomings, the motivating question behind the carbon curse theory remains highly pertinent. Can major fossil fuel producing countries alter their development pathways and decarbonize their economies? This dissertation explores the politics at work behind the carbon curse by explaining the variation in climate policy among Australia, Canada, and Norway. In doing so, my research also starts to address the oft- overlooked environmental aspect of the resource curse and attempts to overcome the defeatist view that meaningful climate policy is not possible in fossil fuel-producing states. My analysis will extend the conceptualization of the carbon curse to include political causal mechanisms at work in Australia, Canada, and Norway.

7 1.2.2 Federalism

While there are many similarities among the three cases, an important difference is that Australia and Canada are federal states and Norway is a unitary state. The constitutional division of powers between federal and subnational governments has three germane implications for this analysis. First, it could be argued that federalism in the two Commonwealth countries may result in earlier and broader climate policy implementation at the sub-national level (Victor, House, and Joy 2005). Further, insufficient public attention and significant opposition from regulated entities creates strong risks for incumbent federal politicians. As a result, the federal government ‘passes the buck’ of environmental protection to sub-national governments (Harrison 1996). There is some evidence to support this claim; although, it is by no means conclusive as there still remains significant variation in the sub-national and national climate policies of Canada and Australia.

Second, different types of federalism could result in different national policies. It is plausible that cooperative or competitive federalism could change the timing, scope and durability of national policies (Simeon 1972). However, there exists enough similarities between the division of power regarding the environment and the fossil fuel and power generation sectors for both Australia and Canada to suggest that the type of federalism cannot explain the variation in climate policy of those two countries.

Third, political actors can more likely use divide-and-rule strategies in federations. In principle, the division of powers between national and constituent governments presents a check on the power of the national government (Hamilton 1961). It also enables political actors, particularly fossil fuel-dependent regions and major emitters, to stoke animosity between governments in order to delay or weaken climate policy by exploiting additional veto points. This animus weakens the ability of both national and some sub-national government to implement climate policy and arguably results in a weaker state. This is an insight I will build upon in the analytical framework I adopt.

In sum, federalism can partially explain climate policy variation between unitary and federal states but it does not explain the policy variation between Canada and Australia. Federalism,

8 however, can impact state strength by dividing power among governments, providing an opportunity for strategic divide and rule.

1.2.3 Interest Group Politics

Blame the fossil fuel industry for this mess. There is no shortage of journalistic and academic accounts on the oversized role of the fossil fuel industry in climate and energy policy (e.g., Meyer 2010; Schulman 2014; Coll 2012; Pearse 2007; Sampson 1975; Hoggan and Littlemore 2009). These accounts are easy to communicate and intuitive. It is not controversial to argue that fossil fuel companies are extremely powerful and are climate policy opponents. These explanations centre on the unrelenting rationality of the private sector to maximize near-term profit and shareholder return without any regard to the long-term global consequence of peddling carbon. For example, these accounts depict avaricious interest groups violating laws, propagating junk science, and using money and elite networks to shift political outcomes in its favour in order to achieve these short-sighted economic goals. This body of work views interest groups as highly rational actors with fixed preferences and instrumental rationality. There is a considerable rational choice literature within political science and economics that informs this perspective (e.g., Olson 1965; Shepsle and Bonchek 1997; Becker 1976; Stigler 1971).

According to some interest group accounts (e.g., Esping-Andersen 1990; Schmitter, 1979), economic interests can explain the climate policy variation among Australia, Canada and Norway. Canada and Australia are pluralist states, where the state’s interests are determined to a significant degree by industrial interest groups. Norway is a corporatist state where the state controls the major industrial interest in the country, the oil and gas industry. According to this logic, for all three countries, the shared economic interest of protecting and growing the fossil fuel industry can explain the resultant climate policy. Interest group explanations are similar to Blyth’s (2007) depiction of ‘powering’ where agents have predetermined and structurally given interests.

However, there is more to the story of climate policymaking than what this approach suggests. That is not to say economic interests are not important. Of course, economic interests are fundamental. That story has been told. In practice, political processes and outcomes are much more complicated.

9 Fixed economic interests alone do not explain some crucial variation across and within the cases of Norway, Canada and Australia. They do not explain why economic elites will sometimes advocate for a climate policy and at other times advocate for the abolition of the same policy. For instance, this was seen in the debates around carbon taxation in Canada and Norway or Australia’s Gillard-era climate policies, where socially constructed understandings of the climate policy risks shifted over relatively short period of time. Interest group accounts also do not explain why pluralist states at times go ahead with policy that clashes with the interests of powerful non-state actors. Canada’s approach to Kyoto Protocol target setting and ratification faced strong headwinds from industry but ultimately was made policy. In general, interest group explanations often over-emphasize the role of industrial actors and under-appreciate the role of institutions, ideas and social movements in shaping political outcomes. While many scholars have addressed this shortcoming (e.g., Ostrom 1991; Jones 2003), this simplistic understanding of politics endures and sells books. Beyond the fossil fuel industry, at times there are other important actors such as environmental groups, labour unions and Indigenous organizations. This underscores the need for a networked understanding of interest intermediation.

Despite the uniform and often monolithic depiction of economic interests, significant diversity exists. Fossil fuel companies exhibit a range of economic interests, which manifest in different approaches to climate policymaking (Skjærseth and Skodvin 2004). Ørsted was once Danish Oil and Natural Gas and is now a renewable energy power generator. That company is difficult to compare with Exxon, which strongly resisted climate policy efforts in the United States for decades (Supran and Oreskes 2017). Further, fossil fuel industry efforts to sabotage climate policy can irrationally work at cross-purposes with its attempts to expand production, as will be shown with the pipeline debates of the 2010s in Canada. Also, due to Australia’s highly carbonized power generation, electricity-intensive industries have actively engaged climate policy development and not only those companies that directly extract or burn carbon. Lastly, the supposedly common and static economic interests of industrial polluters or pluralist and corporatist states does not illuminate why Norway has managed such different climate policy than the other two countries or why climate policy has changed over time within the cases.

As will be explained further in the analytical framework, beyond powering, there is also puzzling and persuading that occurs as countries develop and implement climate policy. Ideas are also

10 present throughout the policymaking process. Rather than interests and ideas being standalone concepts, they are compound (Blyth 2007). By incorporating ideas, I understand the state not as an empty vessel to be filled with fixed economic interests but as an actor in its own right that can frame climate policy ideas, shape elite risk perceptions, and structure policy networks.

This is not to diminish the extreme influence that the fossil fuel industry has in major fossil fuel- exporting nations; however, context matters. The argument and analytical framework proposed in this dissertation acknowledges this particular industry’s disproportionate power but does not fixate on it. As the debate among political science scholars on rational choice has shown, the best answer is likely to be found by bridging theoretical approaches.

1.2.4 Varieties of Capitalism

Another potential explanation for the diversity in climate policy across Canada, Norway, and Australia can be found in the varieties of capitalism literature. This firm-centred institutionalist approach views each economic actor rationally and strategically advancing their interests within a political economy of complementary, path dependent institutional systems. Hall and Soskice (2001) describe two ideal types of capitalist models that vary on the degree to which political economies are coordinated. A coordinated market economy (CME) depends on non-market relations, collaboration among state and non-state actors, credible commitments and deliberate actions by firms. CMEs are the polar opposite of liberal market economies (LME). LMEs see competing firms operating at arms-length, with competitive relations with state and labour, and formal contracting.

Using these categories, Australia and Canada are LMEs and Norway is an CME. Based on the varieties of capitalism framework, the difference in the climate policy among these three countries is explained by the different capitalist models present in these countries. The coordinated, non-market relationships found in Norway have been instrumental in shaping its early, broad, diverse and durable climate policies. This approach would assert that climate policy reflects the comparative institutional advantage of a national economy.

This approach raises several concerns. Its functionalist and static character is less helpful for explaining policy change and thus less useful in generating insights on how states can

11 endogenously improve climate policy and the policymaking process to result in better outcomes. Further, the varieties of capitalism approach assumes that firms are active agenda setters for climate policy, protagonists advancing climate policy. However, as the case studies suggest, firms were more often than not reactive antagonists to state and environmental groups, who typically played an agenda setting role. Lastly, the national orientation of the approach undertheorizes the role of subnational governments, such as the impacts of federalism, and the position of the country within the global economy. This can downplay domestic contestation and black box global economic or political developments.

Despite these concerns there are several insights from the varieties of capitalism approach that are included in my analytical framework. First, institutions are crucial in overcoming coordination problems. Institutional design has a key role in navigating the contestation of climate policymaking and reducing uncertainty for actors. Second, institutions structure strategy. While institutions do not determine strategy—actor identities and interests are shaped by broader economic and social structures—they can help guide how actors engage in the policymaking process.

1.2.5 Conclusion

Based on this survey of common explanations, several key conclusions can be reached. The resource curse literature lends to this dissertation its problem definition by linking governance to natural resource endowment. However, this literature is overly structural and does not provide a sufficient political explanation to the research question. Federalism, while helpful to explain some of the variation between Norway and the other two countries and is subsumed in my analytical framework under territorial reach, provides an impoverished explanation on the policy variation between Canada and Australia. Accounts of interest group politics, compelling as they may be, provide an incomplete understanding of the challenges faced by fossil fuel exporters and potential policy remedies. These static approaches do not provide a sufficient explanation for within and across case policy variation nor do they seriously consider the role of ideas and institutions in climate policymaking. Lastly, the varieties of capitalism literature fails, among other things, to grapple with the role of subnational governments, which is crucial in explaining Canadian climate policy.

12 Building on this analysis of common explanations, I broadly adopt a historical institutionalist approach for this research project, which is explained in the subsequent section. This approach is sufficiently ecumenical to allow me to bring in insights from these diverse literatures and to develop a nuanced, time and place-bound explanation to my research question.

1.3 Theoretical Approach

At a high level, this dissertation adopts a historical institutionalist (HI) approach. HI provides a rich and active literature on how institutions and policies evolve or resist change. It concentrates on the co-evolution of policies and policy stakeholders over time, examining how previous decisions and events have shape subsequent political dynamics (Skocpol 1995). It is a polity- centred approach that does not consider institutions in isolation from interests and history, unlike many of the approaches discussed in the previous section.

This dissertation is not a classical application of HI but there are some key tools and concepts that are useful in this historical explanation of climate policy change in Australia, Canada, and Norway. The concepts of critical junctures and path dependency are important in this dissertation and are incorporated into the analytical framework, detailed in Chapter Two. Moments of institutional change are examined in the three cases along with the long periods of institutional stability. My research considers a three-decade time span, far longer than the many studies on climate politics that focus on brief points of institutional instability (i.e., energy crises or a change in government). These shorter studies, while useful, sometimes fail to capture the enduring political dynamics, while giving too much emphasis to agency of key actors or to exogenous factors. Indeed, a focus on the sea change in climate policy during the Gillard government in Australia or the Trudeau government would likely overlook potential explanations, overemphasize contingency, or minimize the enduring failure to reduce emissions. A longer time horizon enables the analyst to reflect on the recursivity that happens as earlier climate policy decisions impact subsequent climate policy over time. This feedback dynamic is incorporated into my analytical framework.

This dissertation carefully assesses the role of power in the development of climate policy in the three cases. By doing so, it will rise to the challenge of some political scientists who lament the analytical avoidance of power in the discipline (Esping-Andersen 1990; Hacker and Pierson

13 2010; Korpi 2006; Moe 2005; Pierson 2015). Contemporary analysis of power in both comparative politics and international relations, especially among realists, has been notable for its absence or its portrayal as highly direct and the attribute of specific actors (Barnett and Duvall 2005; Hacker and Pierson 2010).6 As will be explained in the analytical framework, by examining state strength, elite risk perceptions, policy networks, and climate policy, the power politics of climate policymaking are placed in a larger context. Following Barnett and Duvall (2005), beyond the commonly examined and more direct structural or compulsory power (e.g., distribution of votes and money), power can also manifest more diffusely through institutional and productive power. This is seen in my focus on policy networks, elite risk perceptions and the causal mechanism of framing.

While historical institutionalism represents the broad tent under which this analysis takes place, this dissertation also makes space for interest-based and ideational reasoning. As highlighted in the previous section on common explanations, interest-based explanations on their own are insufficient to explain the climate policy variation within and among the cases. Interests can be informed certainly by economic considerations but they are also subject to change over time and are shaped by ideas and understandings of risk. Blyth (2001: 3) states, “Interests must be defined in terms of the ideas agents themselves have about the causes of the uncertainty they are facing. Ideas are important precisely because they reduce uncertainty, give content to interests, and make institutional construction possible.” Following Blyth (2007), my approach does not separate ideas and interests and instead conceptually combines them through my treatment of state strength, elite risk perceptions and policy networks. States are instrumental in managing the uncertainty or risks perceived by elites. Given the acute challenges posed by climate change and by policy aligned with mitigating climate change, an emphasis on state strength and its massive risk-bearing potential is crucial. States also play an important role in interest intermediation. Elite risk perceptions provide focus on how elites wrestle with uncertainty surrounding climate policy and how elites respond to the frames used by states when advancing climate policy. Policy networks are where political actors collectively puzzle over ideas and persuade each other on the

6 Block and Piven (2010) surmise that this negligence of power is because of a) limiting methodologies, b) marginalization of critical and conflict-oriented social scientists by the academic establishment in political science, and c) intellectual timidity.

14 best course of action. The deliberative function of policy networks is theoretically important for a moment in history when institutional voids are being created by a weakening of the state and the growth of civil society, among other factors (Hajer 2003). For a novel and complex issue like climate change, the institutional void is particularly large. In this context, theoretical consideration of the role of policy networks and the perceptions and engagement of non-state actors enriches an explanation of climate policy variation; whereas, viewing climate policymaking through a lens of fixed economic interests needlessly impoverishes an explanation.

This dissertation marries insights from the sub-fields of political economy, comparative politics and public policy to create a novel analytical framework explained in Chapter Two. No one theory will fully explain the phenomenon under investigation. In so doing, this dissertation follows in the tradition of border crossers such as Karl (1997) or Bates (1987), albeit in their shadows. It also is an example of the analytical eclecticism approach to the study of politics, which is grounded in pragmatism, widely-scoped problems, and complex causal stories that “extricate, translate, and selectively recombine analytic components—most notably, causal mechanisms—from explanatory theories, models, and narratives embedded in competing research traditions” (Sil and Katzenstein 2010: 411).

1.4 Argument

This section briefly summarizes the argument of this dissertation, which is explained in more detail along with the analytical framework in Chapter Two. Whatever the initial drivers of concern on climate change in each country, my analytical framework explains why responses from sympathetic governments were able to make headway and entrench policies in some cases but not others. This explanation can also account for why switching governments in Australia and to some degree in Canada, as opposed to Norway, meant slow shifts and easy reversal.

I argue that the governance foundations of climate policy can explain climate policy variation. In short, state strength matters. A strong state can placate elite concerns, restructure policy networks and create ambitious climate policy. In so doing, a semi-autonomous state can also deepen its democratic commitment and enhance its legitimacy. It can increase its independence from powerful vested interests and tilt the policymaking process to favour voices that both accept the decarbonization challenge and present solutions. That is not to say climate policy is only the

15 product of domestic politics. Exogenous factors, such as the influence of major trading partners, also shape domestic policy decisions.

Norway, a relatively strong state, has the territorial reach, autonomy from powerful interest groups, and bureaucratic capacity that Australia and Canada lacked. The Nordic country’s main trading partner is the EU, an ostensible climate policy leader. Consequently, Norway could calm elite concerns over the political risk from climate policy, and open and stabilize its climate policy networks. The result: Norway was able to lead early and create broad, diverse and durable climate policies.

Canada and Australia are relatively weak states with major trading partners that are known as climate policy laggards. As a result, these two states could not allay elite concerns on even timorous climate policy. Policy networks were unstable and often constricted. The resultant national climate policy was late, narrow, and volatile.

As explored in Chapter Six, despite the variation in state strength, all three countries had a similar outcome: a failure to reduce absolute greenhouse gas emissions. The expansion imperative of fossil fuel production trumped state or civil society interventions to substantively reduce emissions. However, this is not a uniform story of path dependence and carbon lock-in. Norway’s emission increase was an order of magnitude less than Australia’s. Even though Norway’s territorial reach and bureaucratic capacity are already high, there remains potential to further increase the third aspect of state strength: autonomy from non-state actors. For example, if Norway had signalled to elites that it was reducing the country’s dependence on oil and gas exploration and production, if it had assured these elites that a decline of the industry could be fairly managed and if networks could have been broadened further to include the civil society voices that supported a transition away from oil and gas extraction, then domestic decarbonization could potentially have been achieved. Instead, business-as-usual governance prevailed.

1.5 Originality and Contribution of the Dissertation

This dissertation makes five contributions to the scholarship on comparative environmental politics, comparative public policy, and green political theory. In the concluding chapter, I

16 expand upon these contributions. First, it creates a new analytical framework for explaining climate policy outputs. This framework attempts to move the literature beyond single-variable accounts of interest groups or lock-in on climate policymaking in petro-states and towards a more nuanced and complete understanding that also considers the role of state strength, the social construction of risk, and policy network structure. This framework is detailed in Chapter Two of the dissertation. This framework enables a new understanding of the foundational work needed before decarbonization is possible for fossil fuel exporting countries. This broader understanding has implications not just for scholars but also climate policy practitioners. The growing calls for a so-called Green New Deal begins to touch upon the transformational institutional changes that are needed in states to respond to the climate crisis (Friedman 2019; Barbier 2019). This research can add to that growing debate.

Second, this dissertation responds to the call for a comparative turn in climate change politics (Purdon 2015), with the first-ever comparative analysis of the national climate policies of Australia, Canada and Norway. While other studies have compared the climate policies of Australia and Norway (Eckersley 2013; Farstad 2016; Mildenberger 2015), Australia and Canada (Barnsley 2006; Gordon and MacDonald 2014), or have made national to subnational comparisons on specific climate policy instruments (Partington and Horne 2013; Jones 2014; Harrison 2015), there have been no comparative case studies of these three countries.7 Furthermore, very few studies adopt a three-decade time span to understanding climate politics (with major exceptions being Mildenberger 2015). This enables the analyst to step back from contingent or exogenous events and focus on the enduring or slower-moving political, economic and social forces shaping climate policy development and implementation.

Third, this research project contributes to the growing need to bring the state back into comparative environmental politics. The state has infrequently been the unit of analysis within comparative environmental politics (Purdon 2015; Bäckstrand and Kronsell 2015; Duit 2014). As national governments and international organizations struggle with governing climate change,

7 Partington and Horne (2013), in a report for a Canadian environmental policy think tank, compared the carbon pricing of Australia and Norway with the Canadian provinces of Alberta and British Columbia. However, their analysis did not examine non-carbon pricing climate policies or the resultant emissions impacts.

17 recent scholarly work has focussed on non-state, sub-national or transnational governance (Hoffmann 2011; Bulkeley, 2010; Bulkeley, 2014). This dissertation emphasizes the important role states play in establishing the governance foundations required to domestically decarbonize.

Fourth, this dissertation provides theoretical linkages that reconcile the green state literature with the need for constant economic growth and the biogeochemical limits of our planet. Green state scholarship, explained in more detail in the concluding chapter, has often skirted around how to reconcile these two often competing imperatives. This project’s discussion in Chapter Six attempts to bridge these important factors.

Fifth, this study contributes to green political theory by providing insights on the democratic and inclusive role of a strong state in addressing environmental issues (e.g.,Bäckstrand and Kronsell 2015; Eckersley 2004). The green political theory literature has a dominant anti-state orientation that under-theorizes the positive role a strong state can play in decarbonization. The findings of this dissertation underscore the need for the state to meaningfully include a diverse range of civil society actors in the policymaking process and to ensure this structured involvement does not limit environmental deliberations in the public square.

In short, this dissertation represents an original scholarly analysis that makes several important empirical and theoretical contributions to the understanding of climate policy and politics.

1.6 Plan for the Dissertation

The dissertation is structured as follows. In Chapter Two, I describe the overall research design for the dissertation. Next, I justify the case selection: Australia, Canada and Norway. Subsequently, I conceptualize and operationalize the dependent variable, the key outcome of interest in this project. Then, I present the analytical framework, which builds a causal chain that can explain the variation of the dependent variable. I conclude by outlining the specific methods, within-case process tracing and comparative case study, used in Chapters Three, Four, Five, and Six.

Chapters Three, Four and Five are the empirical core of my dissertation where, using within-case process tracing, I apply the analytical framework to the development and implementation of climate policy in Norway, Canada and Australia, respectively.

18 Chapter Six is the comparative case study. First, I examine the overall similarities and differences among the three countries as seen through the analytical framework. Next, I connect climate policy outputs with climate policy outcomes by examining how the policy trajectory of these three countries have impacted national greenhouse gas emissions. The chapter finishes by providing a forward-looking commentary on the ability of each country to transition to a low- carbon economy. These reflections are informed by the insights gathered from the within-case process tracing and the comparative case study.

Chapter Seven concludes the dissertation by revisiting the main argument and outlining the empirical contribution. Next the theoretical implications of the argument are explored. Then the policy implications and recommendations are discussed before suggesting areas for additional research and then sharing a few concluding thoughts.

19 CHAPTER TWO: Research Design and Methodology 2.1 Research Design

This dissertation employs a comparative historical analysis (CHA) methodological approach using within case process tracing and comparative case analysis methods. CHA is an appropriate methodological approach given its a) attention to large-scale and complex outcomes, b) problem- driven case-based research focus, and c) emphasis on the process and the temporal aspects of politics (Thelen and Mahoney 2015). Process tracing is the primary method of within-case analysis in CHA (Falleti and Mahoney 2015) and along with comparative case analysis is described in more detail in the subsequent section on methods.

The approach of this dissertation to hypothesis generation is abductive. The analytical framework presented later in this Chapter resulted from iteratively moving between deductive theoretical reasoning and inductive insights derived from my content expertise and time spent in the field. Before I went to Norway, my first field visit, I developed initial hypotheses derived from the existing literature on the political economy of climate change, policy networks and the policy process, surveyed in Chapter One. Next, I interviewed informants based on the hunches contained in these hypotheses. Based on the result of these interviews, I refined these propositions and sought feedback from Norway-based political scientists and my dissertation committee. This phase effectively functioned as a plausibility probe (Eckstein 1975).

A key objective of this early work was to narrow the range of hypotheses and to help provide focus and coherence to an analytical framework. In so doing, some hypotheses could be dropped and others brought forward. From my time in Norway, I also decided the tension between climate policy success and failure to decarbonize should form part of the empirical puzzle. As a result, hypotheses linking these policy outputs and emission outcomes were formulated. However, in the end, emission outcomes were dropped as a second dependent variable in the analytical framework in an effort of simplification. A discussion on the relationship between climate policy and emission outcomes was shifted to the second half of Chapter Six.

Another outcome of my time in Norway was a confirmation that multiple levels and units of analysis needed to be studied. At the micro-level, elite risk perceptions of climate policy were

20 examined. At the meso-level, the structure of policy networks was studied. And at the macro- level, the linkages with broader political economy concerns were investigated. An explanation that moved beyond simplistic interest group accounts or deterministic political economy analysis must consider the multiple levels and units of analysis.

The time period under investigation, 1988 to 2018, was also an intentional choice to eschew a jejune analysis. I chose a three-decade time span because this longer account of climate politics is able to better capture enduring political dynamics. A focus on short-term moments when institutions are underdetermined, for instance during Australia’s Rudd and Gillard governments, can place a disproportionate emphasis on these relatively rare policy windows. Also, the lag time between policy announcement and implementation can often outlive a particular government. My analysis begins in 1988 since high profile political events that year—namely the World Conference on the Changing Atmosphere in Toronto but also at U.S. Senate committee hearings on global warming—alerted policymakers to the threat of climate change. In 1988, Australia, Canada, and Norway were all known as global leaders in climate change science or environmental policy. Regardless of the initial drivers for these countries engaging on the emerging threat of global warming, at that time, all three governments were highly sympathetic to acting on climate change.

As I conducted my research in Canada and Australia, the hypotheses and analytical framework were further refined. Of course, cases used to generate hypotheses cannot be used to test hypotheses. Consequently, the future application of shadow cases or additional case studies outside of Australia, Canada and Norway will be critical to test the explanatory power of the analytical framework.

2.2 Case Selection

The cases are selected using several methods. Mill’s (1872) joint method of difference is employed.8 All three cases are most similar, for reasons described below, but also most different, when considering the climate policy outputs and the state strength of Norway compared to

8 More commonly known as the most similar and most different case selection method (Przeworski and Teune 1970).

21 Australia and Canada. Following Seawright and Gerring (2008), this dissertation also selected cases based on the deviant case method. As demonstrated by Friedrichs and Interwildi (2013), Norway represents a deviant case among major fossil fuel producing nations: the Nordic oil and gas exporter has managed to escape the carbon curse.9

Many similarities exist among these three countries. All three states have relatively small, highly educated populations and low population densities (United Nations 2019). All three are constitutional monarchies. Freedom House ranked Norway, Canada and Australia as countries with the strongest human and democratic rights in the world, with respective aggregate rankings of 100, 99, and 98 out of a total of 100 (Freedom House 2019). The Polity IV score of each the three countries is +10 on the regime authority spectrum of -10 (hereditary monarchy) to +10 (consolidated democracy) (Marshall and Gurr 2014).

In terms of environmental policy, all three countries were global leaders in the mid-to-late 1980s. Australia was at the forefront of climate change science. Norway, thanks to the leadership of Prime Minister Brundtland, was pioneering the concept of sustainable development. Canada was spearheading innovative acid rain policy and was instrumental in creating a global treaty to address the rapidly depleting ozone layer. Thus, whatever the initial drivers for concern on climate change or the environment, these countries all began engaging in 1988 on climate change policy with highly sympathetic governments.

With respect to economic similarities, all three countries have large, advanced economies. The respective GDPs (2017 $US) for Australia, Canada, and Norway are $1.323 trillion, $1.653 trillion, and 398.8 billion (World Bank 2019). The respective gross domestic product (GDP) per capita (2017 $US) for Australia, Canada and Norway is $53,799, $45,032, and $75,504 (World Bank 2019). These three countries are all adjacent to the world’s largest economies: Australia is

9 The initial analytical motivation for selecting these countries was in light of comparisons I observed of Canada with Saudi Arabia, Nigeria or Venezuela. These comparisons often originated from the oil and gas industry or individuals with ties to conservative political parties and then proliferated in traditional and social media. Canada’s oil sands was described as ethical and clean compared to oil from kleptocratic regimes; therefore, the argument follows that the world needs more Canadian oil (Levant 2011). This struck me as an inappropriate comparison. Also around this time in Canada, comparisons were made with Norway (Campbell 2013), which appeared to be a more apt comparison. As a result, I sought to better understand what would constitute an analytically useful comparison with Canada.

22 relatively close to India and China, Canada is adjacent to the United States, and Norway is next to the European Union. In short, globally, they are among the countries most likely to have a strong climate policy regime and domestic decarbonization, given their wealth, industrialized economy, highly educated workforce, rule of law, and strong and durable political institutions. Indeed, when policymakers first became alerted to climate change in the late 1980s, all three countries were known as international climate policy leaders.

To complicate matters, all three countries are also major fossil fuel producers and exporters, making climate policy and decarbonization more difficult. According to the International Energy Agency, in 2016 Australia produced 15 million tonnes of oil, 72 million tonnes of oil equivalent (mtoe) natural gas, and 292 mtoe of coal; Canada produced 158 million tonnes of oil, 146 mtoe of natural gas, and 30 mtoe of coal; and Norway produced 79 million tonnes of oil, 102 mtoe of natural gas, and 0.5 mtoe of coal (IEA 2019). In terms of exports, in 2016 Australia exported 10 mtoe of oil, 2 million terra joules (TJ) of natural gas, and 252 mtoe of coal; Canada exported 144 mtoe of oil, 3.2 million TJ of natural gas, and 18 mtoe of coal; Norway exported 69 mtoe of oil and 4.5 million TJ of natural gas (IEA 2019). While the quotient of which fossil fuel dominates is different in each country, they all share a strong reliance on fossil fuels for economic growth and export earnings. To summarize, these shared characteristics of the cases can essentially be held constant and enable a closer examination of the variables of interest.

Clear variation also exists across my variables of interest and in some key background characteristics. Across the three case countries, there is significant variation in the dependent variable: national climate mitigation policies. This dependent variable is explained in more detail in the subsequent section. When considered among peer countries, Canada and Australia have historically had the least ambitious climate policies (IEA 2012). The findings of Friedrichs and Interwildi (2013) are not surprising regarding the lack of early, broad and durable climate policy for Canada and Australia. In contrast, since the early 1990s Norway has implemented an ambitious suite of climate policies that has increased in stringency over time (Burck, Marten, and Bals 2016; IEA 2011). Norway is arguably a deviant case for the carbon curse theory and is therefore valuable for a) heuristic purposes, b) identifying new theoretical variables, and c) advancing new causal mechanisms (George and Bennett 2005).

23 As will be shown in the subsequent section on the analytical framework and throughout the empirical and comparative chapters, there is clear variation in the independent variable of state strength, and the intervening elite perceptions of business and political risks of climate policy, and the structure of policy networks. Norway is a relatively strong state compared to Canada and Australia. Norway’s elites were consistently much less reticent to pursue climate policy than elites in the other two countries, whose appetite for climate policy seemingly shifted with the government of the day. Lastly, Norway’s policy networks were far more open and stable than those in Canada and Australia.

Despite many similarities across the cases, there remain several antecedent conditions that vary across the cases. For instance, Australia and Canada have dominant settler cultures that are relatively diverse compared to Norway’s homogenous non-settler population.10 Norway’s political economy can be described as a coordinated market economy (Hall and Soskice 2001), democratic corporatism (Katzenstein 1985), or corporate pluralism (Karl 1997). Norway shares with its Nordic brethren the tripartite model of state-labour-industry relations (Engen, Langhelle, and Bratvold 2012). What makes Norway unique among Northern European countries is the particularly strong role of the state in the domestic economy, partly a historical legacy of a weak business class and an enduring reliance on foreign capital for industrial development. Canada and Australia are both liberal market economies (Hall and Soskice 2001). In Australia, unions had traditionally played a much stronger involvement in policymaking due to the electoral success of the Labor Party. In Canada, the labor-aligned has never formed government and thus unions, given the absence of a corporatist system, have played a less central role than in the other two cases.

To summarize, Australia, Canada and Norway are both a representative sample and provide useful variation on several dimensions. The most similar, most different, and deviant case selection methods help to inform and justify the choice of these three countries.

10 The Sami are the largest Indigenous population in Norway. Norwegians consider themselves neither settlers nor technically Indigenous. Regardless, Norwegians have far-longer continual residence in Norway than settlers in Australia or Canada.

24 2.3 Dependent Variable: National climate mitigation policy outputs

This section outlines and justifies the dependent variable of this project and details how it will be conceptualized and operationalized. As stated earlier, this dissertation seeks to explain how Australia, Canada and Norway developed their respective national climate policies. To sharpen the analytical focus of this dissertation, the climate policy under examination will be national greenhouse gas mitigation policies. Attention is given to emission mitigation and not climate adaptation policies because of the imperative to reduce emissions now and because far more mitigation policies have been debated and implemented compared to adaptation policies in the three case countries.11

The national orientation, moreover, is not meant to exclude the important sub-national climate policies implemented, especially in the federal systems of Australia and Canada. Some relevant subnational climate policies will be discussed, for example in fossil fuel-dependent Alberta, Canada. However, the national focus is meant to bound the discussion in an analytically comparable scale and to create a manageable scope for the dissertation.12 Given the three-decade timespan for the analysis, including subnational actions is simply far too ambitious. As mentioned above, the scope of this dependent variable is not limited to a single policy instrument but focuses on the broader suite of climate mitigation policies.

Other comparative studies of climate policy that examined at least two of the three cases have focussed on a single climate policy without any linkage to actual emission reductions (Mildenberger 2015; Harrison 2015). While there clearly are benefits to studying a single climate policy, what often gets lost is the bigger picture. For instance, an examination of carbon pricing may yield important insights on how to design a carbon tax; however, it cannot generate insights on how other climate policies may work at cross-purposes.

11 Of course, as the Introductory Chapter noted, effective climate adaptation policies are also very important as countries around the world are already experiencing the impacts of climate change. 12 I collected detailed data and wrote an account of Alberta’s climate policies but in the end it created an unreasonably long chapter on Canada.

25 If public policy is defined as “the deliberate decisions and actions—and non actions—of a government or an equivalent authority toward specific objectives” (Weible and Sabatier 2018: 2), then having no climate policy or a policy to expand the fossil fuel industry can be seen as climate mitigation policy, albeit a poor one. Indeed one interviewee, a former oil and gas executive claimed, “climate is an energy policy proxy because the climate policy is all about energy” (C25). It thus follows that energy policy can, in turn, be a climate policy proxy. For this analysis, public policies that encourage expansion of the fossil fuel industry are seen as an inverse climate mitigation policy. Consequently, when the climate policy histories of these three countries are discussed, the expansion of the fossil fuel industry will also be highlighted.

To fairly assess within-case policy change over time and to compare climate policies across countries, these policies will be consistently conceptualized and operationalized. This classification is motivated by Lasswell’s (1936) timeless question used to explain politics: who gets what, when, and how? More specifically, building on the conceptualization offered by Simeon (1976) with more recent understanding of the role of time in policymaking advanced by Grzymala-Busse (2011), the dependent variable will consider scope, means, distribution, and temporality (Table 2.1). Since climate policy variation across the cases is the more analytically useful than similarities, the similar aspects of Table 2.1 are not discussed in the comparative analysis in Chapter Six. Instead, the focus is on the timing, durability and scope.

Table 2.1: Operationalization of national climate policy

Concept Description Evidence to look for

Scope The breadth of matters Sectoral coverage of climate subject to governmental policies; overall cost of involvement, includes public policies to government; focus spending, ownership, control on adaptation/mitigation (Simeon 1976)

Means How governments make and Mix of regulatory, market- enforce policy choices based, and voluntary policies; (Simeon 1976) mix of public/private policies

26 Distribution Who gets what, who are the Allocation of benefits and winners and losers of a given costs from policies policy (Simeon 1976) (public/private, consumer/producer, domestic/international)

Temporality Timing - when policies are Date of policy implemented; duration: how implementation; lag time long events take; tempo: how between legislation and quickly they change; implementation; strengthened acceleration: whether they policy instrument settings speed up or slow down over time (Gryzmala-Busse 2011) 2.4 Analytical Framework

The objective of this framework is to explain, using CHA, both the climate policy variation across Norway, Canada and Australia from 1988 to 2018 and why governments were able to make progress and entrench policies in some cases but not others. Through process tracing, I have identified one independent variable (i.e., state strength), two intervening variables (i.e., elite risk perceptions, and policy networks) that can explain the variation in one dependent variable (i.e., climate policy). These four variables or elements are connected via two causal mechanisms (i.e., framing and venue shift) that form a causal chain to explain the climate policy trajectory of these three countries. Together, these elements form the analytical framework used in this dissertation (Figure 2.1). The theoretical pluralism employed in this framework allows a better understanding of the causal complexity of climate policymaking in Australia, Canada and Norway.

It is important to distinguish between actor strategies or tactics and causal mechanisms. Some actors certainly use framing or venue shifting strategies. These strategies are not always successful and, in these instances, do not cause any change. However, when framing is successful, it does have causal force. This can be determined, for example, by understanding the framing of an issue by an actor before a policy decision is made. If there is alignment between the framing in the policy and the framing strategy of an actor, then it can be said that framing had causal force (Huber and Stephens 2001). That is not to say that causality was exclusively determined by framing; rather, it implies that framing had a causal role.

27 In the following diagram, different causal mechanisms are at work between each element. The causal mechanisms were developed abductively, from initial literature reviews and existing theories and from fieldwork relying primarily on elite interviews. The causal mechanisms are processes which can explain, in part, the variation among independent, intervening and dependent variables.13 These mechanisms are necessary, but not sufficient, components that can help explain how climate policy has developed. Of course, there are other causal mechanisms at work influencing additional elements; however, the mechanisms and elements under examination here have important theoretical relevance and solid empirical grounding. The elements are not one-time-only occurrences where, for instance, there is a single discrete moment when policy networks impacted climate policy. Rather, these elements are constantly present and evolving, some more than others. Thus, there is recursivity. State strength for climate policy is largely independent of policy outputs; however, after 30 years of climate policy, there is inevitably some influence that climate policy has on state strength. This complexity need not make an explanation tautological. As Pierson (1993) explained, through feedback policies can transform or expand the capabilities of the state. As explained below, there are many other factors that influence state strength in addition to historic climate policy. Policy networks have obviously changed over time and are different for particular policies. The networks associated with advancing climate policy that directly impacts the fossil fuel industry are often substantially different from those advancing energy efficiency or renewable energy production. These agential elements interact with relatively constant structural constraints—such as reliance on fossil fuel development and a country’s given position within the international political economy—to influence the politics of climate policy development and implementation.

13 George and Bennett (2005: 137) define causal mechanisms as ‘“[…] ultimately unobservable physical, social, or psychological processes through which agents with causal capacities operate, but only in specific contexts or conditions, to transfer energy, information, or matter to other entities. In doing so, the causal agent changes the affected entities’ characteristics, capacities, or propensities in ways that persist until subsequent causal mechanisms act upon them. If we are able to measure changes in the entity being acted upon after the intervention of the causal mechanisms and in temporal or spatial isolations from other mechanisms, then the causal mechanisms may be said to have generated the observed change in the entity.”

28 Independent Variable Intervening Variables Dependent Variable

State Strength Elite Risk Perceptions Policy Networks Climate Policy

Causal Framing Framing Venue Shift Mechanisms Framing

>> Primary Causal Direction >>

<< Some Recursivity or Feedback <<

Figure 2.1: Causal chain of the analytical framework

The relationships between the elements in the framework are interdependent and temporally dynamic. The causal force of state strength is conditioned by the intervening variables of elite risk perceptions and policy networks to shape policy outputs. In an effort to simplify the framework, these variables are depicted in a linear causal chain. State strength can also directly shape the structure of policy networks, bypassing elite risk perceptions.

Despite unidirectional arrows, there is also recursivity or feedback from early actions or phenomena that has shaped subsequent climate policy. For example, early climate policy can reinforce or erode state strength and can impact elite risk perceptions on subsequent policy development. Because of the thirty-year analytical timeframe, there are many opportunities for these feedbacks to occur. Admittedly, this makes establishing causality more difficult. This framework can be applied at a discrete point in time and also be used to examine longer-term trends. The empirical chapters employ the framework to explain both punctiliar moments and decadal patterns.

I will next explain the framework beginning with state strength, followed by elite risk perceptions, policy networks, and finishing on climate policy. Each of these elements will be

29 conceptualized and operationalized. Causal mechanisms that link these elements will also be outlined along the way.

2.4.1 State Strength

State strength represents an important piece of the empirical puzzle—why climate policy has varied across Norway, Canada and Australia despite a shared failure to reduce absolute emissions. It provides a crucial and complex macro-structural element of a more comprehensive explanation, which also includes elite risk perceptions and policy networks. State strength is easier to identify when compared within a case over time or across cases. To be clear, state strength exists on a spectrum; it is not binary. Following Atkinson and Coleman (1989), states are also not uniformly strong or weak across different policy areas. For instance, the same state can be strong in health policy but weak in immigration policy. With regard to energy and climate policy, Norway illustrates a strong state whereas Canada and Australia both are exemplars of a weak state.

The strength of states has been a critical factor shaping democratic consolidation (Linz and Stepan 1996), rule of law (O’Donnell 1993), adequate provision of basic goods (Acemoglu 2005; Rotberg 2004) and economic growth (Coatsworth 1998). However, much analysis of state strength has been guilty of conceptual stretching (Sartori 1970). As Giraudy (2012) notes, there is a dearth of scholarly analysis that explores what constitutes state strength and how these various constituents can be aggregated and compared across cases.

To address these concerns and improve theory building, state strength must be clearly conceptualized and operationalized. For this analysis, state strength is synonymous with sociologist Michael Mann’s (1984: 113) concept of state infrastructural power, namely the “institutional capacity of a central state […] to penetrate its territories and logistically implement decisions.”14 Building on this definition, Soifer (2008) describes three core dimensions of state strength: territorial reach, autonomy from non-state actors, and bureaucratic capacity. This

14 Power is the ability, either directly or indirectly, to get actors to do something they would not do otherwise (Dahl 1957). This includes the ability to prevent conflict from occurring by shaping actor preferences (Bachrach and Baratz 1962; Lukes 1974; Baldwin 2015).

30 dissertation conceptualizes state strength as a function of these three elements, which are explained below in more detail.

Figure 2.2: Conceptualization of state strength. Adapted from Soifer (2008) and Giraudy (2012).

Territorial reach is seen as the constitutional and legislative ability of the national governments to implement climate policy. Many scholarly works have focussed on territorial reach (Kalyvas 2006; Skocpol 1979; Tilly 1990; Ziblatt 2008). Unlike contexts where there are contested political boundaries or civil conflict undermining the authority of the state, in advanced industrial states there is typically far less uncertainty over geographic borders. For this analysis, territorial reach is largely dependent on the degree to which national governments can implement climate policies that are paramount over subnational climate policies. By constitutional design, federal governments generally have less territorial reach than unitary national governments and hence are inherently weaker. Given the focus on national climate policies, federal states such as Australia and Canada clearly have less territorial reach than a unitary state such as Norway, which is largely unencumbered by regions and cities to implement climate policy. While federalism does not preclude subnational governments from having high territorial reach over a particular region of a country, the degree to which subnational governments can implement policy decisions that materially impede the ability for a national government to realize climate policy goals is a critical factor in explaining variation across these three countries. That said, territorial reach is not fixed, even for federations. Federal governments can extend their reach without the need for constitutional reform. For instance, federally-owned enterprises, federal rebates or tax incentives issued directly to citizens or companies, significant engagement in international climate policy fora and co-governance with subnational governments are other

31 ways in which territorial reach of national governments can be increased. Territorial reach is operationalized by examining a) the system of government, b) the pattern of national government intervention in the energy sector, including management of economic rents and the degree of state ownership, and c) the scope of national climate policy interventions, including the degree of co-governance with subnational governments and international climate policy engagement.

Autonomy refers to the “the ability of the state to implement official goals, over the actual or potential opposition of powerful social groups” (Skocpol 1985: 9). State independence from non- state actors is a well-established object of analysis in political science (Bates 1981; Evans 1995; Skocpol 1979; Meckling and Nahm 2018). Since the fossil fuel industry is a particularly powerful industry (Mitchell 2011), and energy is a vital resource for all economies, state autonomy from external constituents that are vested in the status quo is of particular importance for this analysis. Indeed, when independence is lacking, governments or government departments (e.g., energy and environment) are prone to clientelistic relationships with these economic actors, which manifest in the structure of policy networks, particularly when there is a high mobilization of business interest (Atkinson and Coleman 1989). For instance, when government backed down on a mining super profits tax or when the Canadian government put forward energy and environmental policy reforms in 2012. Independence from less powerful, often marginalized social groups, such as environmental and Indigenous organizations, and sometimes trade unions, is notable; however, it is an understanding of state autonomy from powerful interests that is analytically more useful. Government departments of energy or environment rarely have clientelistic relationships with green groups or Indigenous organizations. Autonomy is also critical if a state would like to spur the development of new industries or technologies in advanced industrial economies (Block 2008; Hughes 2016; Mazzucato 2013; Haley 2011). To operationalize autonomy, attention is paid to the alignment of national energy and climate policy with the policy preferences of the fossil fuel industry and other major emitters. A state has more autonomy when it can develop and implement policy that is opposed by powerful non-state actors.

Bureaucratic capacity refers to the professionalization and institutionalization of state bureaucracies to analyze and implement policy, raise revenue, and deliver public goods and services (Huber and McCarty 2004). Many scholars have studied bureaucratic capacity and its

32 relation to state strength (Carpenter 2001; Evans and Rauch 1999; Mazzuca 2010). Attention is given to bureaucratic capacity as it relates specifically to climate and energy policy, since bureaucratic capacity, as with autonomy and territorial reach, can vary depending on the public policy issue. Bureaucratic capacity is operationalized by examining environmental department budgets, staffing levels, and information asymmetries with industrial emitters. If budget and staffing levels do not increase or decrease over time and if significant information asymmetries exist, then bureaucratic capacity can be assessed as low.

State-owned enterprises can increase all three dimensions of state strength, as will be seen in the case of Norway. They can a) increase the territorial reach of governments by having an additional physical presence throughout the country; b) exercise autonomy from non-state actors by considering extra-financial factors or privileging longer-term planning; and c) deepen bureaucratic capacity by providing the government with enhanced human and financial resources and commercial data, avoiding the information asymmetries often found between states and industry.

These three core dimensions of state strength are not completely static over time or across sectors. There will be some inevitable slight shifts over the course of three decades in state strength as result of secular trends, the evolution of state-society relations, and, as explained below, some recursivity from climate policy. To document these shifts, attention will be paid to how these dimensions have changed between 1988 and 2018.

State strength, as an independent variable, is conceptualized as largely independent of climate policy outcomes or the momentary alignment of a political party with major industrial emitters. However, in reality and as reflected in the empirical chapters, there is unavoidably some feedback when climate policies begin to slowly improve or erode state strength. For instance, during the Gillard government in Australia or the Trudeau government in Canada, climate policies ever so gradually began to increase state strength. Some, but not all, of these new policies are intentionally designed to extend the state’s territorial reach or improve bureaucratic capacity, such as giving carbon tax rebates directly to citizens or creating federal centres for climate analytics.

33 Regardless of the primary driver of change, state strength cannot rapidly shift from government to government or each time there is an election. It is a foundational element that is resistant to transformation because of the constitutional division of powers, institutionalized relationships with non-state actors, difficult to reform bureaucracies, and policy legacies.

State strength can be assessed using a variety of concept structures, such as necessary and sufficient and family resemblance. Both of these concepts fail to maximize empirical differentiation as not all states fit neatly into dichotomous categories of weak or strong states. Consequently, for this dissertation I will take up Giraudy’s (2012) call and employ a diminished subtypes concept structure for state strengths. Following Collier and Levitsky (1997), this approach will help to recognize the hybrid or mixed character of some states. Figure 2.3 provides a non-exhaustive illustration of potential subtypes alongside the binary categorization of a strong and weak state. While Giraudy (2012) still used binary constituent parts (i.e., a state is autonomous or not), as stated earlier, I contend that these three constituent parts can also exist on a spectrum. As a result, for constituent parts where there was not a clear binary modality, a third ‘moderate’ label was added.

34 Figure 2.3: Examples of diminished subtypes of state strength. Adapted from Soifer (2008) and Giraudy (2012).15

2.4.2 Elite Risk Perceptions

As Ulrich Beck (1992) claimed, advanced industrial societies have become risk societies, increasingly focussed on debating, preventing and managing the risks they have produced. Large businesses typically evaluate the business risk from climate change based on physical risk, regulatory risk, market risk, and reputational risk (Hoffman 2005). Political parties constantly wager on the political risks associated with prioritizing action on climate change versus a host of other policy issues. Will certain climate policies hurt my party’s political prospects or my company’s bottom line or will they improve them?

Risks are frequently in the eye of the beholder. Risk perception, therefore, is crucial to understanding elite engagement on environmental issues (Sjöberg 2000).16 Risk perceptions are social constructions. How people view the risks associated with climate change is informed not only by objective, technical estimates of real risk but also by subjective heuristics and biases which are shaped by the intersection of cultural worldview (Kahan et al. 2007), political ideology, race and gender (McCright and Dunlap 2011), among other factors. Moreover, different elites can have mutual interests (e.g., economic prosperity and stability) as well as some potentially distinct interests (e.g., re-election, quarterly earnings).17 These interests of elites interact with their perceptions of state strength to shape risk perception of climate policy.18

It is necessary to define both elites and risk as used in this analysis. I focus on the perceived political risks of climate policy by economic and regime elites. Following Wood (2000: 7),

15 Due to space limitations and clarity, only a few combinations of missing attributes are included in this figure. The labels presented here represent a fraction of the total number of possible combinations of missing attributes. 16 Clearly, public risk perceptions are also important. However, this aspect is not substantively included in the analysis. 17 Business and political elites can also have overlapping personal identities (e.g., an elected official with a corporate background). 18 For the purposes of this analytical framework, worldview, political ideology, race, gender, and interests will be treated as exogenous and stable. Therefore state strength becomes the main variable of interest in shaping elite risk perceptions.

35 economic elites are “those individuals that by virtue of their control of the means of production attain significant income and social status.” Given my research topic, I refine the scope of economic elites to be senior executives employed by large industrial emitters or the financial sector. According to Wood (2000: 7), regime elites are “those individuals whose power depends on their occupation of state (and government offices).” For my analysis, I consider regime elites to include senior bureaucrats and elected officials.19 In Norway, leadership from the peak association for labour unions and other major labour unions can be considered regime elites given the country’s traditionally corporatist approach to policy making (Katzenstein 1985). In Australia, labour unions leadership can also be considered regime elites during Labor Party governments. For the purposes of this analysis, leaders of marginal political parties, ENGOs, and indigenous groups are not considered elites. Their power does not depend on controlling the means of production or on occupying the state.

The inclusion of regime elites necessarily complicates causal claims. However, my field research revealed that internal debates within or among government ministries or political parties, beyond private sector debates, were instrumental in shaping climate policy development. These intra- state debates between regime elites occurred in both strong and weak states. Excluding the views of these senior bureaucrats and politicians, who are a part of the state, would overlook the significant internal debate over the riskiness of climate policy. Because of the inevitable linkages between regime and economic elites, in terms of overlapping membership and shared interests, it would oversimplify the analysis to exclude regime elites.

Political risk for economic elites can be defined as political decisions that impact the expected outcome or value of an economic action (Kobrin 1979): for example, those decisions by a government that change the rules of the game. Political risk for regime elites, in addition to economic concerns, also considers the electoral impact on a mainstream political party. This definition of political risk reflects the status quo bias that is seen within large institutions. The

19 Regime elites are, by definition, a part of the state but state strength is determined independently of the risk perceptions of regime elites.

36 environmental risks of climate policy action or inaction are arguably not often considered by economic and regime elites.20

Risk perceptions can be assessed by examining how elites view the ability of states to provide climate policy certainty and stability. A weak state lacks the reach, autonomy, and capacity to convince elites that there will be certainty and stability in climate policy. In this case, elite risk perceptions will be high. Conversely, a strong state has the necessary reach, autonomy and capacity to assure elites that climate policy would be certain and stable. In this case, elite risk perception will be low. For both types of states, protecting economic growth and major industrial emitters are constants and remain a high priority. However, for elites in weak states, there is a greater dissonance between this economic imperative and the prospect of ambitious climate policy. Hence, the perception that climate policy is uncertain and unstable.

This assessment of risk perception via understandings of policy certainty and stability is operationalized from interview data with regime and economic elites, and primary documents including speeches, media statements, and official documents.

Framing

Risk perceptions are socially constructed through the process of framing. States have an important role in socially constructing policy problems, policy solutions and target populations (Schneider and Ingram 1993). This social construction can have a causal force through framing. Chong and Druckman (2007: 104) define framing as “the process by which people develop a particular conceptualization of an issue or reorient their thinking about an issue.” Framing is a master causal mechanism within this causal chain as it is present throughout, linking all the variables together. When political actors engage in climate policy making and implementation they use different frames to influence how people think about and take action on climate change. States, industrial interests, and environmental groups, among others, use framing, some more successfully than others. Indeed, not all actors have the power, legitimacy or authority to sway how others socially construct problems, solutions and target populations.

20 Also, the risk of inaction is more generally diffuse and of more concern to marginalized, non-elite groups (e.g., environmental groups, indigenous groups, social justice organizations).

37 This dissertation argues that state strength shapes elite risk perceptions through the causal mechanism of framing. Strong states can frame climate policy in a way that lowers elite risk perceptions of climate policy. A strong state will use its resources to frame to elites that future climate policy will be stable and certain. For example, a strong state can signal that it has the sufficient resources to provide financial assurances to liable polluters so that these companies will not incur material losses from climate policy. This frame was used during the development of Norway’s carbon tax. Strong states can also frame itself as a competent actor endowed with the technical expertise to be able to discern rent-seeking from actual economic hardship of major industrial emitters. This was witnessed during Norway’s policy debate over electrifying offshore oil platforms.

Inversely, weak states frame climate policy in a way that increases elite fears of climate policy. Therefore, future climate policy is perceived to be a risky venture in weak states. For instance, a weak federal government can lack the territorial reach to ensure national climate policy is harmonized with highly variable subnational efforts. This weak state may frame climate policy as accommodating regional differences. However, the potential policy patchwork does not provide the certainty and stability needed by many elites. This was clearly seen in the first twenty years of Canadian climate policy. In Australia, a weak state, the federal government under Howard used a frame of ecological modernization, where nuclear and carbon capture and storage technologies were advanced as key solutions to reducing domestic emissions. This did not provide comfort to elites who did not see the Australian state as capable of realizing this ambitious agenda.

The link between the degree of state strength and risk perceptions can be operationalized through interview data with economic and regime elites, and primary documents including speeches, media statements, and official documents.

2.4.3 Policy Networks

Risk perceptions shape policy networks.21 To understand this relationship it is necessary to define and operationalize a policy network. Policy networks have been conceptualized as a

21 As noted above, in reality state strength can also influence policy networks, at times bypassing elite risk

38 metaphor, a heuristic device, an analytical tool, or as a theoretical approach (Sacli 2011). They have been defined as interest networks, discourse communities, policy subsystems, and policy advisory systems (Howlett 2002; Craft and Wilder 2017). The policy network literature bridges many subfields of political science and sociology. It does, however, broadly concern the study of state and organized interest relations at the meso or sectoral level (Cashore and Vertinsky 2000), and combines many different accounts of policy change, ranging from structural and personal interaction to rational choice theory and formal network analysis. Within the structural approach, the principal assertion is that “policy making within discrete policy fields is characterized by regularized patterns of interaction between state actors and representatives of societal interests” (Skogstad 2008: 207). Policy network theory, described by Howlett (2002: 235) as a “major approach in the study of public policy and a powerful tool,” helps the analyst to see policy as involving “fluid sets of state and societal actors linked together by specific interest and resource relationships.” Dowding (1995) criticized the proliferation of network concepts and classifications and the penchant for thick description over causal explanation. He challenged analysts to show how structural components of political life have predictable outcomes on policy. The understanding and analytical use of policy networks in this dissertation addresses Dowding’s discomfort with more nebulous usage of networks.

To help conceptualize policy networks, I examine two aspects of policy network structure: network openness and member stability. First, the degree to which networks are closed or open to the broader policy or discourse community is crucial for understanding policy outputs. Hall (1993) suggests that to see paradigmatic policy change requires opening relatively closed policy networks to allow ‘outsiders’ the chance to influence public policy. Given the state of the climate crisis, it is incontrovertible that paradigmatic policy change is required. Relatively closed policy networks, such as clientelist networks, have historically been common in many natural resource sectors where governments primarily saw their role as promoting the economic development of existing industries and protecting jobs (Rayner and Howlett 2009). These long-standing resource policy networks see close engagement between industry and government, and in some countries

perceptions. In an effort to simplify the causal relationship, the analytical framework focuses on the relationship between elite risk perceptions and policy network structure.

39 labour unions, to promote investment and resource development. I posit that elites seeing climate policy as risk-inducing seek to close policy networks and make them less diverse.

Climate policy networks, simply from the relative novelty of climate policy as an area of concern, are much more recent and exhibit much more structural variation than traditional resource policy networks. Climate networks can be cross-sectoral and relatively open (Giest 2013), and they can evolve over time (Bulkeley 2000, 2014). They include diverse government departments (e.g., finance, natural resources, transport, environment, international development) and a broad array of societal interests, not simply industry, labour, and government but also environmental organizations, international development groups and Indigenous organizations. Potential members can extend far beyond regime or economic elites whose risk perceptions influence policy network structure. But this is not always the case. Climate networks can also, at times, mimic the standard closed structure of a resource policy network, as witnessed in Canada and Australia.

Lastly, membership stability matters. Those network members that have been active for longer periods are more likely to shape policy than are its ephemeral members, especially if those members have more resources (Rhodes 1990). The usual suspects in climate policy networks are nearly always major industrial emitters. Their stability is partly a function of the long-term nature of resource development and the importance of attendant economic growth and employment. I argue that economic elites from polluting industries often see grave political risks from climate policy and thus seek to marginalize actors who may threaten business-as-usual.

To operationalize this conception of policy networks, network membership is examined over time, the views of individual members as seen in media releases or press statements are cited, and interviewees are asked questions regarding risk perceptions and policy networks.

Policy networks do not constrict or destabilize on their own. Governments play a key role in broadening or narrowing policy networks depending upon their own climate policy agenda. This underscores the role of state strength in not only shaping the policy agenda but also the policy process. However, policy networks need not include state actors. Non-state actors such as labour unions, business or environmental groups can create their own policy networks and determine the degree of openness of its membership.

40 To summarize, the accessibility of policy networks and the stability of their membership are key factors that can operationalize policy networks. These aspects of policy networks are shaped by elite risk perceptions, and by extension, state strength. Elites that view climate policy to be risky will help realize closed policy networks with an unstable network membership. By contrast, elites who do not view policy as risk will open networks and seek a stable membership.

Framing

How the problem and the solution to climate change are framed can impact who is authoritative or has legitimate knowledge on the subject. I contend that elite framings of climate policy have a direct influence on the structure and membership of climate policy networks. Framing enables elites to argue that particular networks or actors should be engaged on climate policy, and perhaps indirectly, that the site of emissions reduction should be somewhere else. Framing can be seen in the interest of fossil fuel companies in carbon offsets and voluntary actions by consumers to reduce energy use. These frames implicate the involvement of other actors and networks, for instance nature conservation or international development policy networks, as was seen in Norway. Elites can also use the frame of economic security to delegitimize ideas that threaten business-as-usual and the actors who subscribe to those ideas. For instance, those environmental groups that advocate for a reduction in absolute carbon emissions, the decline of fossil fuel production, or divestment from fossil fuel companies are more likely to be excluded from policy networks. Elites can also frame climate policy in a manner to exclude Indigenous groups or trade unions from participating in influential policy networks. An example is framing as mainly a competitiveness problem rather than a job loss problem for workers in emissions- intensive industries or a matter of Indigenous and settler reconciliation. A likely outcome of this framing is that efforts to protect trade-exposed industries will be likely prioritized (e.g., granting carbon pricing exemptions or direct financial assistance) as opposed to worker re-training programs or initiatives in Indigenous communities. This competitiveness frame was used by elites in both Canada and Australia to shape policy network structure and membership. Intentionally or not, this frame restricted the ability for Indigenous communities and, at times, trade unions, to participate in climate policy networks.

41 2.4.4 Climate Policy

The structure of policy networks shapes policy outputs (Howlett 2002). I argue that the openness of policy networks and the stability of their membership impacts the national climate change mitigation policy. Climate policy, as described in the previous section, is the outcome variable for this analysis. Climate policy has already been conceptualized in terms of scope, means, distribution and temporality. Based on the plausibility probe conducted in Norway, these concepts were further refined to focus on the largest source of variation across and within these cases. As a result, scope, means, timing and durability have become the key measures for describing climate policy.22 Scope can be broad or narrow and refers to the breadth of governmental involvement on climate policy, particularly the sectoral coverage of climate policy and the overall cost of climate policy for government. Means can also be diverse or not and refers to the mix of regulatory, market-based and voluntary policies. Timing refers to when policies are implemented and is considered relative to peer countries and to when climate policies were first proposed by political actors; timing can be early or late. Durability can be high or low and refers to the longevity of climate policies. Policies are considered highly durable if they have not faced retrenchment across time, particularly over changes in government.

I argue that, through venue shift and framing, networks that are open with stable membership often see climate policy that is early, broad and durable. By contrast, networks that tend to be closed with unstable membership tend to result in late, narrow and volatile climate policy. Of course, other causal mechanisms are also present linking policy networks to policy outputs. However, this analysis focuses on these two mechanisms because of the strong empirical evidence supporting their causal role.

Policy network characteristics varied significantly across the cases and, at times, within cases. For instance, Norway’s policy networks have been consistently open with relatively high member stability compared to Australia and Canada. This broader and more consistent policy network in Norway reduced the barriers to expeditiously developing and implementing climate policy in Norway. The diverse membership and long-standing relationships among members

22 Distribution of benefits and costs did not vary significantly across the cases and thus was excluded from the analytical framework.

42 facilitated trust and acceptance of more expansive array of policy instruments. Entrepreneurial civil society organizations that had access to and influence within policy networks were key to promoting electric vehicle policies or international forestry management programs. In Canada, the link between policy network structure and climate policy is most starkly contrasted during the Harper and Trudeau governments. These two governments were instrumental in shaping different policy networks, which in turn shaped the resultant climate policy. An open policy network under the Trudeau government, quickly developed a broad range of policies; whereas, during the Harper government, a highly constrained and unstable climate policy network resulted in delayed and narrow climate policy outputs. As policy network structure changed, the types of climate policy that were possible also changed.

Of course, some network members are dominant or more powerful than others. The power of major industrial emitters to shape climate policy is evident in all three cases, and recounted in many interest group accounts of climate policy development. However, it is not just the fossil fuel industry or power generators that can be influential. Environmental groups, trade unions, Indigenous organizations, other private sector interests, and government departments can also, under certain conditions, can also shape climate policy outputs. Along with industry, these actors can come together in policy networks to advance certain ideas of climate policy. These ideas can promote certain policy venues or advance particular frames associated with climate policy and hence shape policy outputs.

Venue Shift

Economic and regime elites, as well as advocacy groups, who are all active to varying degrees within policy networks often seek to move the location of policymaking so as to result in a favourable outcome. Baumgartner and Jones (1993: 32) define policy venues as “the institutional locations where authoritative decisions are made concerning a given issue.” These locations are not always set in stone but open to modification. Policy entrepreneurs can shop or shift policy ideas to different institutional locations to achieve a favourable climate policy. Venue shift is causal mechanism behind the political strategy of forum shopping, a term found in the international relations literature (Busch 2007; Murphy and Kellow 2013). These venue shifts could be to subnational governments or institutions charged with transnational or private governance. For economic and regime elites, these venue shifts are arguably made so that the

43 location of transformative emission reductions does not fall on the fossil fuel industry, but on other sectors, on consumers or outside of the country. This can be seen in networks promoting voluntary consumer-focused policies, carbon offsets, international mechanisms, renewable energy generation or energy efficiency initiatives rather than transformative climate policies directed at the fossil fuel industry. Environmental groups can exploit venue shift as they attempt to move policy development to venues where more emission reductions could be realized (Pralle 2003). For instance, if they are excluded from national climate policy networks, they can attempt to use fossil fuel infrastructure hearings as a venue to obtain emission-reducing development decisions, as was seen in Canada during the Harper government.

Framing

Policy network members also use framing to legitimize or delegitimize climate policy ideas and, by extension, the political actors that advance those ideas. When policy networks are open and stable, framing can enable policy ideas to form into climate policy that is early, broad, diverse and durable. In Norway, there was a broader range of stakeholders engaged in climate policymaking. These stakeholders included environmental groups and unions that used frames such as fairness and moral obligation to advance climate policies that advocated for domestic emission reductions and funding initiatives in the Global South. In Canada, during the Harper or , networks constricted and frames advanced by major industrial emitters framed climate policy as a risky venture. This prompted climate policy that was delayed, narrow and limited.

2.5 Methods

This dissertation uses two methods: within-case process tracing and comparative case study. These methods are employed in Chapters Three to Six to provide analytical leverage to the empirical puzzle of substantial climate policy variation. The synergistic relationship between these two methods helps to shore up shortcomings were only one of these methods used (Bennett and Checkel 2015). For instance, most-similar case studies cannot control for all but one independent variable. However, process tracing can provide an opportunity to rule out other differences between the cases that may explain an outcome. Comparative case studies and process tracing can also help to explain the anomalies that large-n quantitative analyses, which

44 compare climate policy outputs or other institutional and economic characteristics with emissions outcomes, cannot explain (e.g., Lachapelle and Paterson 2013; Friedrichs and Inderwildi 2013; Burck, Marten, and Bals 2016; Bernauer and Böhmelt 2013; Schmidt and Fleig 2018; Garmann 2014; Le Quéré et al. 2019). Indeed, qualitative analysis is in a privileged position to study how agents with power use this power to shape the institutions, material interests and ideas that structure different politics (Pierson 2007).

2.5.1 Process tracing

Bennett and Checkel (2015: 7) define process tracing as “the analysis of evidence on processes, sequences, and conjunctures of events within a case for the purposes of either developing or testing hypotheses about causal mechanisms that might causally explain the case.” I use within- case process tracing to identify the causal relationship between and among my independent, intervening and dependent variables. More specifically, in each of my three cases I trace the development and implementation of climate policy from 1988 to 2018. To do this, I gathered a range of data in the form of causal process observations.23 In doing so, I conducted 119 semi- structured interviews with 124 individuals and off-the-record meetings with an additional 51 informants. Those interviewed included senior politicians from a range of political parties, corporate executives, senior bureaucrats, journalists, trade unionists and environmentalists who had long-standing high-level engagement in climate policymaking. These interviews largely took place on research trips to Oslo, Tromsø and Stavanger in Norway; Ottawa, Edmonton and Calgary in Canada; and Melbourne, , Canberra and Hobart in Australia. The semi- structured interviews lasted around an hour. All were recorded, transcribed, and then coded in NVIVO. Interviews are identified in the chapters by an alphanumeric code and are listed in Appendix A. Interviewees chose the degree of attribution and how they would be identified, and had the opportunity to review both transcripts and any quotes used in this dissertation. My interview strategy deliberately linked back to my analytical framework and began with broad questions to avoid biasing responses towards particular hypotheses. As the interview progressed, I asked more specific questions related to aspects of state strength, risk perceptions, policy

23 Brady and Collier (2010: 1784) define causal process observations as “an insight or piece of data that provides information about context or mechanism and contributes to a different kind of leverage in causal inference.”

45 networks, climate policy and emissions outcomes. I also extensively drew upon primary documents such as policy documents, news releases, previously taped and transcribed interviews, court documents, and confidential documents made accessible through access to information legislation. Where applicable, I also used secondary sources such as academic articles, NGO documents and media coverage. I conducted archival research at Library and Archives Canada in Ottawa and the Glenbow Archives in Calgary, Alberta. I also made use of libraries at the Norsk Oljemuseum in Stavanger and the National Library of Australia in Canberra, and the libraries of the University of Melbourne, University of Oslo, University of Toronto, University of Ottawa and Carleton University.

My goal for within-case process tracing was to understand how a broad range of actors viewed and engaged climate policy development and implementation and to identify and refine the relationships between the variables and causal mechanisms of my analytical framework.

2.5.2 Comparative case study

I use a small-n comparative case study to explicitly work through the analytical framework and stress the variation across common independent and dependent variables in the three cases (Bennett 2004; Eckstein 1975). This enables cross-case insights to be generated or variables observed that were not possible in the individual case studies. This method can help to assess whether the political dynamics behind climate policy and emissions outcomes in one case are idiographic or nomothetic. Comparative case studies are a form of empirical replication that help generate scope conditions for causal mechanisms. They can generate, test and refine propositions to explain political phenomena. Small-n comparative case studies are susceptible to biased between-case inferences but they provide a range of political, institutional and historical contexts where within-case analysis can take place to better understand variation in climate policy. Further, because of the significant variation between Norway’s climate policies and those of Australia and Canada, a comparative analysis can also constitute a natural experiment. Whereas Norway is the ‘treatment’ country that applied early and broad climate policies, the ‘control’ countries of Australia and Canada have late and narrow policies. As with all natural experiments, this comparison is far from a randomized controlled experiment of the natural sciences but it can help to identify causal relationships, rule out alternative explanations and better cope with endogeneity (Dunning 2008b; Rodden 2009).

46 As mentioned earlier and will be discussed further in the final chapter, the future use of shadow cases or additional case studies outside of Australia, Canada and Norway will be critical to test the explanatory power of the analytical framework and the hypotheses.

In the three subsequent chapters, I will trace the thirty-year climate policy history of Australia, Canada and Norway. I will use the analytical framework to highlight the causal mechanisms at work to develop and implement climate policy. Chapter Six will then engage in a comparative analysis and comment on the ability of each of these countries to decarbonize.

47 CHAPTER THREE: Norway Case Study

It is good to be Norwegian. Norway is often found in the upper echelons of popular lists for liveability, equality, democracy, and happiness. If there is a nation that can develop fossil fuels even while simultaneously maximizing the industry’s public good and minimizing its public harm, Norway would be the place. Not surprisingly then, in the late 1980s this Scandinavian welfare state quickly emerged as a climate policy leader. It has maintained front-runner status ever since.

How did Norway’s suite of climate policies come to pass? This chapter examines the proposition that the strong and sustained history of state involvement over industrial development in Norway and the country’s proximity to the EU, a long-time climate policy leader, among other factors,24 reduced elite perceptions of the political risk associated with climate policy leadership. These muted expectations of risk then informed climate policy network actors to realize an early, broad, and durable, and ostensibly ambitious set of climate policies.

3.1 Norwegian Energy Industry Development

Two highly formative developments predate Prime Minister ’s first efforts at climate policymaking in the late 1980s: development of the hydropower and oil and gas industries. These two crucial events act as critical antecedents, setting the stage for how future climate policy has been formed, directed and maintained in Norway from 1988 to 2018. Slater (2010: 889) defines critical antecedents as “factors or conditions preceding a critical juncture that combine with causal forces during a critical juncture to produce long-term divergence in outcomes.” To be clear, attention must be given to avoid infinite regress. Following Pierson (2004: 89), causal chains can commence, among other reasons, “on the basis of the theoretical interests of the analyst.” This earlier history of the energy sector provides a theoretically useful starting point for this analysis. I argue that these historical events strengthened the Norwegian state, by extending its territorial reach, increasing its autonomy and deepening bureaucratic

24 These other factors include the consensus-based stability of Norwegian social democracy. Although, in this dissertation there will not be the occasion to explore these factors in more detail.

48 capacity, and conditioned the risk perceptions of business and political elites towards enacting early, broad and durable climate policy.

3.1.1 Hydropower development

Compared to its wealthy Northern European neighbours, for much of the 19th and 20th centuries, Norway was considered the poor cousin. A late industrializer with a very small business and political elite, the country was heavily reliant on foreign capital to finance its nation-building goal of industrialization (Cumbers 2012). For centuries its primary exports were timber and fish but the country aspired for a more diversified economy with a major manufacturing base. Since the 19th century, the development of hydropower has been central to Norway’s industrialization goal. Foreign capitalists harnessed the energy of falling water from rivers like Oslo’s Akerselva to mechanically power the growing number of factories. As the use of electricity grew for industrial applications in the early 20th century, hydroelectricity projects owned by largely German and French industrialists and wealthy landowners appeared throughout the country (Ryggvik 2010).

Influenced by the American political economist Henry George, the Norwegian Parliament, the Stortinget, passed a series of concessionary laws in the early 20th century that started to return the control of Norway’s natural resources back to the state.25 The 1909 Forest Concession Act and the 1917 Watercourse Regulation Act and Industrial Concession Act made it exceptionally difficult for private and foreign interests to own forests, waterfalls and hydropower stations. These laws gave priority and preference to municipal ownership of hydropower and to the supply of electricity to agriculture, craft and small industry and household consumers. There are provisions in these laws that assured workers’ welfare and use of domestic suppliers. Private

25 This legislation is catalyzed by the ‘Georgists’, an international movement stemming from the thinking of the American political economist Henry George (Ryggvik 2010). Progress and Poverty (1879), George’s first book which sold millions of copies worldwide, builds on the Ricardian concept of economic rent and argues that economic surplus in the form of rent from natural resource extraction should belong to the public. As George’s radical ideas were gaining influence in the Global North so was the market reach of Rockefeller’s Standard Oil. Georgists were staunchly against monopolies like those experienced in the United States. According to economic historian Helge Ryggvik, when concession laws were first debated in the Norwegian legislature, Standard Oil was often used as a cautionary tale (N04). Minister of Justice Johan Castberg, who was also a member of the Norwegian ‘Henry George Society’ (Thue 2008), made a decisive contribution to these new concession laws (Ryggvik 2010).

49 waterfalls and power stations had to be handed back to the state after 60 years, a right of reversion (Thue 2008). When bureaucrats and politicians sought to develop a concessionary system to manage newly discovered oil off the Norwegian Continental Shelf in the 1960s and 1970s, they looked to the blueprint of state control over natural resources provided by these earlier concession laws (Godzimirski 2014).

3.1.2 Oil and Gas Development

Climate politics in Norway cannot be divorced from the fossil fuel industry. To appreciate this critical relationship, a brief survey of Norway’s oil and gas development is necessary. As previously mentioned, the concession laws of the early 20th century accelerated a nationalization of many key industries in Norway.26 State bureaucrats, politicians and the public all saw, and continue to see, the state as a vital entrepreneur and vehicle to shared economic prosperity. With the notable absence of a strong national bourgeoisie, the state became “a kind of quasi-guardian of natural resources,” where the dynamic was “the national state versus international capital,” explained Petter Nore, former Chief Energy Analyst with the Ministry of Foreign Affairs (N21). This dynamic afforded the Norwegian state a degree of autonomy from foreign-controlled industries, unlike what was found in Canada or Australia, where the state often acquiesced to the demands of industry.

Early Days (1960s-1970s)

When Phillips, the mid-sized American oil and gas company, first approached the Norwegian government in 1962 about exploring off the Norwegian Continental Shelf, the government responded with the same question it had of previous industrial development: How to maximize the benefits for Norwegians? But the government also knew that the oil industry was unlike

26 Unlike Canada and Australia, state-owned enterprises remain an important part of the Norway’s economy. In 2016, the Norwegian state had direct ownership in 74 companies, whose share value was NOK 596 billion at the end of that year or 27 per cent of the total market capitalization of the Oslo Stock Exchange (Norwegian Ministry of Trade 2017; author’s calculations). Some of the companies either wholly or partially owned by Norway are involved in airlines (e.g., SAS), aluminum (e.g., Norsk Hydro), aquaculture (e.g. Cermaq), banking (e.g., Kommunalbanken, Den Norske Bank), culture (e.g, Norwegian National Opera and Ballet, Nationaltheatret), oil and gas production (e.g., Statoil), power production and distribution (e.g., Statnett, Statkraft), railways (e.g., Norges Statsbaner), telecommunications (e.g., Telenor, NRK).

50 many industries in the phenomenal wealth that it can generate and how that wealth can leave a host country worse off if certain provisions are not in place (Ryggvik 2010). The few decades after World War II were an era of decolonization for the Global South and rising resource nationalism for many fossil fuel-rich regions of the world, including some advanced industrial economies. These countries were very much aware of the potential to fall into a staples trap or resource curse if natural resources were not developed to benefit the entire nation. Norway, which had for centuries been the poorest of the Scandinavian countries and been de facto ruled by Sweden and Denmark, saw that the propitious development of North Sea oil would require exceptionally well-crafted institutions to ensure that the country benefited from this industry. Fortunately, Norwegian civil servants are known for their Weberian embodiment of the ideal bureaucrat: highly competent, prudent, and incorruptible (Olsen 1992; Karl 1997). This high degree of bureaucratic competence has facilitated an enviable track record of developing sound public policies and implementing them effectively (Lie 2016).

Even before Norway could begin to respond to Phillips’ exploration request, maritime sovereign rights had to be established. An institutional framework to regulate the industry had to be designed from scratch. Norwegian national interest needed to be pursued. Per Rune Henricksen, former of Petroleum and Energy (2010-2013), noted:

we based our policies on what was achieved by the OPEC countries […] before we found our oil and gas. So, in a way, we were standing on the shoulders of many of the countries who had taken up the national push towards oil companies. So the oil companies, when they came to Norway, they didn’t expect to be able to run around like they did in […] the countries that used to be colonies. (N27)

Phillips applied for exclusive rights to all of the Norwegian Continental Shelf, as was common industry practice at the time.27 Norway rejected this request because it wanted more competition

27 To ensure oil industry views were considered, the courting fossil fuel companies set up, what Ryggvik (2010: 16) describes as a “cartel-like joint committee which spoke in a single voice to the authorities,” chaired by Esso’s top man in Norway. Lawyers from the foreign oil companies were behind many of the

51 to ensure lower production costs and higher revenue to the Treasury (Bartsch 1999). The difficulty for Norwegian negotiators was to ensure the country’s interests were served without scaring off the necessary investment and technology from foreign oil companies.

With an evident lack of national expertise, and dearth of financial resources, organization and technology (Andersen and Arnestad 1990), reliance on company know-how was critical for these early days. Despite this dependence, Norway went to great lengths to ensure it incorporated its national interests into the new concession system. For instance, the common law doctrine of escheat or reversion of property to the state informed the provisions on how long companies could hold on to their concessions and echoed the earlier concession laws for the hydropower and forestry industries.28 In 1971, the Standing Committee on Industry in a parliamentary White Paper declared ten principles undergirding Norway’s oil policy (Norwegian Ministry of Petroleum and Energy 2011).29 These “Ten Oil Commandments,” as they subsequently became known in Norway, clarified how oil and gas extraction could benefit the entire nation and satisfy the government’s public interest requirement.30

formulations in the 1965 cabinet decree that laid some of the groundwork for Norway’s concession regime (Ryggvik 2010). While state consultation with peak associations is common practice in many countries, official engagement with informal associations dominated by foreign interests is less common in Norway. 28 However, to secure these investments into exploration, in 1965 Norway opened up what remains the largest amount of sub-sea acreage (42,000 km2) to development and reduced the government take to even lower than what was negotiated with the companies (Ryggvik 2010). The 1965 licensing round awarded 22 production licenses to a clutch of foreign oil companies, including Amoco, Esso, Elf, Phillips, Shell and Total (Bartsch 1999). The only Norwegian company to participate in that round was the partially state-owned industrial conglomerate Norsk Hydro, who had a small equity share in one of the concessions. Drilling took place over the next few years and it was Phillips who was the first to strike oil and gas in 1969 with the discovery of the massive Ekofisk field, whose recoverable reserves were estimated at 140 million tonnes of oil and 130 billion cubic metres of gas (Bartsch 1999). 29 Innst. S. [recommendation to parliament] no. 294 (1970-1971). 30 The 1971 ten commandments included the following points: 1) That national supervision and control of all activity on the Norwegian Continental Shelf must be ensured. 2) That the petroleum discoveries must be exploited in a manner designed to ensure maximum independence for Norway in terms of reliance on others for supply of crude oil. 3) That new business activity must be developed, based on petroleum. 4) That the development of an oil industry must take place with necessary consideration for existing commercial activity, as well as protection of nature and the environment. 5) That flaring of exploitable gas on the Norwegian Continental Shelf must only be allowed in limited test periods. 6) That petroleum from the Norwegian Continental Shelf must, as a main rule, be landed in Norway, with the exception of special cases in which socio-political considerations warrant a different situation. 7) That the State involves itself at all reasonable levels, contributes to coordinating Norwegian interests within the Norwegian petroleum industry, and to developing an integrated Norwegian oil community with both national and international objectives. 8) That a state-owned oil company be established to safeguard the State’s commercial interests, and to pursue expedient cooperation with domestic and foreign stakeholders. 9) That an activity

52 State supervision and control have remained a first principle for Norway. Frode Alfheim, President of the IndustriEnergi union representing the country’s workers in the oil and gas industry, recounted the early partnership that Statoil had with Mobil when developing the Statfjord field. Mobil, as an operating company, brought skilled staff and technology from its operations in the Gulf of Mexico, which enabled Statoil to grow into an oil and gas exploration and development company. Alfheim noted, “So we learned from that [partnership between Mobil and Statoil]. After that, we were able to, more as a nation, develop an industry alongside Statoil, to build, develop new fields with technology and competence from Norwegian companies” (N20).

Over the next few decades, the Norwegian government slowly grew its bureaucratic capacity regarding oil and gas development and built a comprehensive policy regime to assert control over this new industry. Prior to the discovery of oil in the 1960s, Norway’s merchant navy was the third largest in the world, by tonnage (Ryggvik 2010). Shipyards with skilled workers and engineers were a common sight in small coastal towns. The state intentionally leveraged capital and labour from this maritime industry to generate additional domestic economic activity as the new offshore oil and gas industry developed. A suite of government policies encouraged domestic sourcing of goods, services, and workers when economically competitive and technically possible. State-funded research and training institutions helped to support Norwegian companies involved in the oil and gas industry. Further government requirements on the use of Norwegian as the working language used on offshore platforms and in all company contracts and documents related to Norwegian operations incentivized foreign companies to employ Norwegians (Ryggvik 2010).

In 1972, the Stortinget created the Norwegian Petroleum Directorate, and charged it with oil and gas administration, including regulating environmental and health impacts of petroleum development. A few years later, in 1974, the Ministry of Finance presented White Paper No. 25, which provided an even clearer guide than the ten commandments on how oil wealth should lead

plan must be adopted for the area north of the 62nd parallel which satisfies the unique socio-political factors associated with that part of the country. 10) That Norwegian petroleum discoveries could present new tasks to Norway’s foreign policy.

53 to a “qualitatively better society.”31 It reads as a manifesto responding to many of the concerns voiced following the 1973 oil crisis and raised in many corners of Norwegian society that were for and against Norway’s membership in the European Economic Community, namely: social welfare, environment, equality, local politics, and control over the pace of development (Ryggvik 2010). At that time, these policy issues did not rank as high as they do presently for fossil fuel companies. The inclusion of these broader concerns in energy development policy was a testament to the autonomy of the Norwegian state and its ability to balance the narrow demands of the fossil fuel industry with broader societal demands.

Statoil’s Growth and Distancing from The State

One of the most recognized manifestations of Norwegian state control of its petroleum industry is the state-owned limited company, Den Norske Stats Oljeselskap A/S, or Statoil, founded in 1972.32 In 2018, Statoil changed its name to , in a conscious effort to distance itself from oil production.33 In contrast to many OPEC countries with no clear division between state administration of the oil industry and the national oil company, Statoil had independent management with a board approved by the Ministry of Industry and later the Ministry of Petroleum and Energy. With a strong policy regime tilting the playing field towards domestic players, Statoil’s power grew rapidly.34 Statoil quickly moved beyond being a holding company to become a vertically integrated oil company: from exploration, production, and refining, to petrochemicals and retail. Its first CEO Arve Johnsen boldly declared that “we must conquer the strategic heights” (Ryggvik 2010: 41): a feat it handily accomplished in Norway. Statoil served

31 St. meld (white paper) no. 25. (1973-1974), Petroleumsvirksomhetens plass i det norske samfunnet. [The role of petroleum activites in Norwegian society] 32 Norsk Hydro, already a major industrial company in Norway had a host of other loyalities and priorities and was likely to resist becoming an overt political instrument of the state (Ryggvik 2010). 33 “As we position ourselves for long term value creation and to be competitive also in a low carbon future, we have been searching for a name that captures our heritage and values, and at the same time reflects the opportunities we see. I am confident that the name Equinor will support our strategy and vision to shape the future of energy,” said Statoil CEO Eldar Sætre in a press release announcing the name change (Statoil 2018b). Since the research interviews were conducted in 2017 when the Statoil name was still in use, this analysis will use the Statoil name throughout. 34 At the time, Statoil’s exploration costs were covered by other oil and gas companies. If a major petroleum discovery was made, Statoil had the option of increasing its ownership in that license (Lund 2014).

54 to strengthen the Norwegian state by increasing its territorial reach, growing its autonomy from foreign oil companies, and deepening the capacity of its bureaucracy.

From the 1970s through to the mid-1990s, “Statoil was an extended arm of the Ministry [of Petroleum and Energy] in many ways,” according to Gunnar Berge, former Minister of Finance (1986-1989; N35). In his memoir, Kåre Willoch, former Prime Minister of Norway (1981-1986) wrote that Statoil had become so large that it was a state within a state (Ryggvik 2010: 97). During this time, Erik Solheim, former Minister of the Environment (2007-2012) and later Executive Director of the United Nations Environment Programme, recalled: “The linkage between Statoil and the government was so intimate, no one would really believe that it would do anything detrimental to the interest of industry. There could be disagreements on details, but the long term aims were aligned” (N31).35 Petter Nore explained, “[…] they [Statoil] increasingly called the shots as they controlled more and more of the Norwegian continental shelf“ (N21).36 Former Statoil CEO Harald Norvik (1988-1999) admitted, “Statoil became too big, too powerful, so Statoil was split in two, you heard that story, and that was a reaction to giving a company that type of prioritized position. [It] creates arrogance and too much power” (N36).

By the mid 1980s, the Norwegian state stepped in to check Statoil’s power and started the process of distancing itself from the ‘independent’ management of Statoil. The Norwegian Parliament clipped the wings of Statoil in 1985 by placing the company’s major ownership shares of various oil fields into a state-owned holding company called the State’s Direct Financial Interest (SDFI), collecting the oil rent from the Norwegian Continental Shelf. That did not stop Statoil from becoming a dominant operator in Norway. In 2007, Statoil merged with the oil and gas arm of NorskHydro, effectively giving Statoil operational control over 70 per cent of

35 Some go so far as to say that it is Statoil and not Norway that is defining Norwegian policies. Anders Bjartnes, a journalist argued, “Statoil is defining Norwegian policies, not the other way around. If you will look at it you will see that politicians independent of party have been defending everything Statoil has been doing since the privatization back in 2001” (N08). Bjartnes observed that state has more influence over Statoil’s long-term business decisions (N08). 36 By the late 1980s, Norwegian oil companies became the dominant operators on the Norwegian Continental Shelf (Ryggvik and Kristoffersen 2015).

55 Norway’s oil and gas production (Statoil 2018a).37 One of the purposes of a state-controlled oil company was to deter non-competitive behaviour from other oil companies. Yet, ironically, as Statoil grew more powerful its oversized presence began to manifest the same non-competitive activity associated with the international oil companies.

In addition to the wing-clipping, during the late 1980s and 1990s under the leadership of Norvik, Statoil moved to be more arms-length from government. State ownership became “passive management” according to interviewee N24, or a “sleeping partner” according to interviewee N12. During that time, Statoil sought growth outside of Norway and positioned itself to become semi-privatized, which it did in 2001, when state ownership fell to 81.7 per cent.38 Norvik was explicit that more daylight was needed between politics and the company:

I instructed my people in the communication department not to run in Parliament, not to have any strong links to any of the parties. All the communication, all relationships should be built upon Statoil as a company that needs to be supported by everybody, we needed to have all parties, all members proud of the company that could succeed (N36).

Overt state intervention into Statoil’s management effectively ceased after the 2001 semi- privatization. According to two former Statoil senior executives, despite being the majority owner, the state has only given direct guidance to Statoil on one occasion since semi- privatization: in 2009 the State directed Statoil to change its name from StatoilHydro to Statoil (N12, N15). It is difficult to imagine other publicly traded companies that have a silent majority owner that only stirs when a name change is being discussed. In an interview (N16), former State Secretary of the Ministry of Finance (2009-2013), Kjetil Lund stated that the government no longer interferes in the commercial decisions of Statoil.

37 The only other major Norwegian oil and gas company, the fully privately-owned Saga Petroleum, was acquired by NorskHydro in 1999. 38 In 2001, the Norwegian Parliament stated that the minimum state ownership of Statoil would be two- thirds. In 2005, the share of government ownership fell to 71 per cent and in 2008 it fell to 67 per cent.

56 This lack of direct control over the operations of Statoil does not mean that state ownership no longer matters. The Chief Economist at Statoil, Erik Wærness noted that the Norwegian state still wants to maximize value from its ownership of Statoil (N13). “It’s almost an a priori assumption that ownership matters. It really does, for God’s sake,” explained Petter Nore, a former oil and gas executive and then Chief Energy Analyst for the Norwegian Ministry of Foreign Affairs (N21). That ownership impacts policy, explained Tony Tiller, then political advisor for the Conservative Party:

There’s a definitive effect on policy, the fact that the government, or the state, owns the majority of the largest company in the country which happens to be an oil and gas country. I think there’s a substantial influence on policy as well […] they would perhaps not have been as progressive as they are if it wasn’t for who their owners are” (N33). 39

A common refrain among interviewees was how the government ownership of Statoil shifted the accountability of the company to Norwegians. “Statoil also knows that they are Norway,” shared Conservative MP (N33). “Because Statoil is by far the biggest company in Norway and it is 60 per cent state-owned [sic] so everyone feels, including all politicians, that they have ownership and they really want to have a say in how we should develop our company,” explained economic historian Einar Lie (N02). Hege Marie Norheim, former SVP at Statoil and former State Secretary to the PM Stoltenberg puts it this way: “No one can buy Statoil. Because the majority is state-owned, we are not for sale. There is a long-term […] there is an opportunity for management at Statoil to be long-term […] to take a much broader stakeholder perspective on what they do than just a shareholder perspective” (N07). According to Norheim:

Whatever Statoil does anywhere, it will be a big debate in Norway. Every one of the five million Norwegians feels that it’s about them. It is their identity, their pride or their shame. It is personal

39 Tony Tiller also noted: “There’s a principle for all state ownership in Norway, that we want this arms- length distance, but I’ll tell you that, I think, there’s a lot of informal exchange of opinion and information and that state-owned companies are sensitive to political signals” (N33).

57 and you are confronted with it as an employee of Statoil at every dinner you go to, in your house or out with friends. You have to defend what happened in Canada [i.e., Statoil’s investment in the oil sands], or whatever. This doesn't happen to BP, BG or Total employees. At least, that would be my sense. They have much less public eyes on them in their local constituency, where they come from, than Statoil does (N07).

But this need for Statoil to maintain public trust and accountability is more often described as indirect, especially since the early 1990s when state involvement with Statoil became more arms- length. That said, Statoil needs to have the implicit support of the Norwegian electorate because Statoil’s expansion plans on the Norwegian Continental Shelf depend upon political support, explained Statoil’s former Chief Economist Klaus Mohn (N12). Unlike Australia or Canada, development plans in Norway are subjected to democratic scrutiny, requiring a parliamentary vote. Also, the government can pass legislation requiring Statoil to undertake certain actions, as they did in 2014 when a Parliamentary majority pre-emptively pushed for the electrification of offshore platforms in Utsira High.

State Strength Amidst Neoliberal Economic Reforms

Concurrent with these significant changes at Statoil, neoliberal economic policies focussed on liberalizing trade were becoming globally institutionalized. Norway’s ascension to the European Economic Area in 1993 meant its protectionist measures had to be reformed, if not eliminated. World Trade Organization membership the following year cemented this change. The local content requirement policies that helped Norway’s maritime shipping industry become a globally competitive offshore oil and gas service industry were no longer possible. This governance shift did not signal the sunset of the Norwegian state’s control over the oil and gas industry. Rather, it increased the importance of guiding industry through other, less direct means. As a consequence, the importance of other state institutions grew during the 1990s and early 2000s. For example, Petoro was founded in 2001, to manage the state’s direct financial interest in the oil and gas industry, taking over from Statoil when it was semi-privatized. The state is obviously still involved in developing regulations, including Norway-specific standards, which can indirectly assist Norwegian companies without contravening international trade law.

58 The Norwegian state can also still assert its strength over the oil and gas industry via the concession or licensing system. Norway’s oil and gas industry has discretionary licensing, where the state makes a decision based on a set of criteria (i.e., merit, technical competence, financial strength), and oil and gas companies engage in a “beauty contest,” trying to out do one another in order to win over the government regulator and be granted a concession (Lund 2014). There is no auction to determine which company is granted concessions or licenses. The state mandates cooperation by granting licenses to groups of companies, composed by the state, where major decisions are made jointly and where one company, likely Statoil, is the operator. Farouk Al- Kasim (2006: 194), a key architect of Norway’s early oil policy, explained that merit implies “the [Norwegian] government used its privilege to reward and punish companies on their past performance in licence rounds.” Frode Alfheim, President of the IndustriEnergi union, stressed the importance that the government places on research and development projects and low emissions when adjudicating between the concession bids of different oil and gas companies (N20). The state also determines how much of each field it would like to own during the licensing rounds, effectively enabling the state to extract additional revenue from the most profitable fields. Erik Wærness, Chief Economist at Statoil, described this concession system as “a very strong instrument and it’s served its purpose very well, I think, in terms of ensuring [the state] as high a share as efficiently possible […] which has come to benefit the Norwegian government” (N13).40

Gunnar Berge, former Minister of Finance (1986 to 1989) and former head of Norway’s oil and gas regulator, the Norwegian Petroleum Directorate (1997 to 2007), put it this way:

In Norway, all the oil industry is totally dependent on the government because the resources on the Norwegian continental shelf are owned by the state, you see. In order to operate, you all

40 Unlike in Australia and Norway, which has an auction system, the system is different in Norway, explained Erik Wærness: “Here we don’t pay for any, we don’t buy the licenses. I mean, we bid for them, but we don’t pay for them. What you bid with is of course a working program, an exploration program, and so on, and the state decides the ownership share, decides who will become the operator, puts together partnerships that they perceive will work well together. The government’s economic interest is then guided by whether they take a direct ownership share themselves” (N13).

59 the time need concession from the government, and because of that, you have to cooperate all the time (N35).

As explained by Tore Killingland, then with Norsk Olje & Gass, Norway’s oil and gas industry association, “Usually people think that the oil industry is the bad guy. They take [control of] the government and do whatever they like. But here in Norway, it has never been like that. It has been very clear and strict rules. So we had to take it or leave it” (N01). Furthermore, these rules are enforced. Killingland went on: “the Norwegian government has […] how to say in Norwegian […] all the time 'take the guy in the neck.' Or if a kid has been a bit bad, you take the kid in the neck and wrist them a bit [laughs] (N01).”

Throughout the history of Norway’s oil and gas development, the state has clearly demonstrated autonomy from the oil and gas industry, despite its reliance on foreign capital and on the resultant revenue, employment, and export earnings. “[Norway] has always allowed international companies to contribute to exploiting Norwegian resources but the Norwegian state—they are both keen on high taxation to bring back high government take on the rent but also to preserve some sort of control,” explained Einar Lie, an economic historian at the University of Oslo (N02).41 This degree of state autonomy from non-state actors and this higher degree of bureaucratic capacity that comes with a more hands-on regulatory process clearly indicates a strong Norwegian state.

Moderating Industry Growth

During the first few decades of oil and gas development, the Norwegian state asserted control over the industry’s pace and scale. Before the term ‘Dutch disease’ was coined, Norway witnessed how rapid fossil fuel development drove up labour prices and inflation, overvalued domestic currency, and crowded out the manufacturing and service sectors. These challenges were not atypical. Similar macroeconomic ills were seen in many other major oil producing

41 As the industry matured and the amount of fixed assets grew, the bargaining power of the state also grew. Industry threats of capital flight carried less weight as they were increasingly tied to the Norwegian Continental Shelf. This can be formalized through the obsolescing bargaining model (Bayulgen 2010). Although extending this logic, Australia and Canada also had stronger bargaining power as fixed assets grew but have seen the state play an increasingly diminished role in management of the fossil fuel industry.

60 states, from Iran and other recent post-colonial states to nearby and the United Kingdom. Thus the Norwegian state’s desire for control was logically borne out in regulating the pace and scale of oil and gas development. In the early days, annual production was limited to 90 million barrels of oil equivalent and restricted to below the 62nd parallel, leaving two-thirds of the coast closed to drilling activity, due to concerns from an initial group of smaller centre and left parties supported by environmental and fishing communities (Ryggvik and Kristoffersen 2015).42 This state-sanctioned limit on growth endured the first four concession rounds. However, the production limit was removed in 1988 in favour of an investment limit of 25 billion Norwegian krone (NOK) per year.43 A national financial crisis soon followed. The state nationalised several major banks, and in an effort to accelerate economic recovery, removed the limit to investment.

Maximizing State Revenue

By 1993, discussions around moderating growth had faded as annual investments in Norway’s oil and gas industry soared to 57 billion NOK (SSB 1994: 396). The state’s focus shifted from moderating growth to capturing wealth. Beginning in 1986, the state phased in a new tax system for the petroleum sector that aimed for tax neutrality through symmetry, reducing the distortions associated with the previous tax system. In essence, the new tax regime had a very high marginal tax rate of 78 per cent but up to 78 per cent of expenses could be claimed. This regime leveraged the risk-bearing capacity of the state to de-risk the often expensive, risky and long-lasting exploration on the Norwegian Continental Shelf. When combined with the SDFI, the government take rose to between 78 and 91 per cent, depending on the field. Beyond neutrality and symmetry, one of the benefits of this tax regime has been its stability, remaining largely the same since 1992.

In addition to the tax regime as a way for the state to capture the short-term economic rents from fossil fuel development, Norway’s sovereign wealth fund enabled the state to control the long- term management of petroleum-based rents. In 1990, Norway’s Parliament passed a law establishing the fund with the first deposits made in 1996. Officially called the Government

42 Innst. S. 275 (1973–74), 4. (Parliament Resolution) 43 St. meld. [White Paper] no. 1 (1987–88)

61 Pension Fund - Global, the fund’s purpose is to give the state fiscal flexibility when oil prices fall or when traditional mainland industries contract. In addition, it has served as a state pension fund and a key source of government revenue. Withdrawals from the fund are limited to 4 per cent of its size and investments are made exclusively outside of Norway to limit the inflationary pressures from large investments in a small, open economy. The government is not allowed to borrow money if there are assets remaining in the fund, which in 2019 stood at $1 trillion US. This puts the Norwegian Treasury in the enviable position of not taking on any debt since it created the fund in 1996 (N25). However, that is not without downsides. The desire to not draw down the fund amplified the pressure to open more acreage and increase oil and gas production. It also incentivized fund managers to shift value into higher risk, higher return asset classes, as seen in how the fund has shifted away from bonds and towards equities and more recently, real estate. Lerum Boasson and Lahn (2017) observe the coincidence between the evaporation of public concern over the frenzied investment in oil and gas industry and the fund being used as an indirect and less volatile link to government revenue from offshore oil.44

To summarize, the Norwegian state has had a strong hand on energy development in the country.45 In Norway, a highly competent bureaucracy managed its energy resources for a broader public benefit. As we shall see, this antecedent state strength stands in stark contrast to Australia and Canada, whose governments were actively relinquishing control to the private sector when developing energy assets and whose bureaucracies have struggled to keep pace.

The story now shifts focus to Norway’s climate policy. In the background remains a government with a strong industrial policy to ensure that industry’s narrower interests are kept aligned with

44 When oil production peaked in 2000 the industry began more actively seeking to open arctic and nearshore acreage for development. Since 2011 natural gas production has plateaued. The industry has not had a discovery of a major sized field in the past 20 years. While the Barents Sea may hold promise of more gas fields, many in the industry are not holding their breath. Many major international oil and gas companies have been leaving or scaling back their presence in recent years, including Exxon, BP, and Total. In the 24th licensing round in 2017, Royal Dutch Shell was the only super major oil company to submit an application. 45 Part of the reason why the state in Norway has been able to or has needed to be strong is because of a relatively weak business elite, even compared to neighbouring Sweden or Denmark (which can act as shadow cases, see also N02). “Big Norwegian capitalists are very hard to find,” explains Einar Lie (N02). Norway did have a rich landowning class, that gained income from export timber from the mid-1700s to the early 1800s but they were largely bankrupted by the outcome of the Napoleonic Wars (N02)

62 Norwegian society’s broader interests: providing employment, filling government coffers and funding generous welfare policies, among other goals. The state reliance on a thriving oil and gas industry served to allay elite fears that it would adopt climate policies that could jeopardize business-as-usual growth.46

3.2 Norway’s Climate Policy

This section provides a narrative history of Norway’s climate policy from the early years under Prime Minister Brundtland to more recent developments under Prime Minister Solberg. These women, the only two female leaders of this Nordic nation, provide bookends for this account from 1988 to 2018. Using process tracing, the analytical framework with its elements and causal mechanisms is applied throughout this discussion of climate policies. More specifically, this section explores the politics behind the development and implementation of Norway’s emissions targets, carbon tax, gas power plants and carbon capture and storage, emissions trading, REDD+, electric vehicles, and the electrification of offshore platforms. This list is certainly not comprehensive; however, it does present sufficient empirical evidence to understand how these policies came to pass and why reducing absolute emissions has proven so stubborn.47

3.2.1 Brundtland Commission

In 1983, the United Nations (UN) Secretary-General appointed Gro Harlem Brundtland chair of the World Commission on Environment and Development (WCED), popularly known as the Brundtland Commission. By this point, Brundtland had already established herself as a strong environmental advocate.48 The 1987 report of the WCED, Our Common Future, is widely

46 According to a former senior employee at Statoil: “At the time of the IPO [Statoil’s initial public offering], the most common view among international investors was that a state-owned majority shareholding was a negative. However, some investors also took the opposite view: A government holding for example two- thirds of the shares of a company may, all other factors being equal, ensure some sort of framework stability. It could be argued that they may be less inclined to impose changes in regulations or taxes that would directly harm the company/business and the regulatory environment it works in. So, it could be regarded as a sort of comfort for being treated fair. Not necessarily being treated favourable, but more neutral” (N15). 47 Additional climate policies could certainly have been included: renewable energy policies including the green certificate program and increased grid interconnections with Europe, the EU 2030 Climate Framework, the electrification of maritime transport and biofuels. 48 Invoked as a leader sans pareil by interviewees from a range of professional and political backgrounds, Brundtland made the environment a defining issue for her politics and her country. While her climate

63 credited with bringing the term ‘sustainable development’ to a wider audience and popularizing climate change as an important global environmental issue (Ryggvik and Kristoffersen 2015). The report seized upon the increasing scientific concern about a warming atmosphere and provided a much more public platform to a scientific phenomenon that, at the time, had not received the same global exposure as acid rain, the ozone hole, or rainforest conservation (WCED 1987). Norwegian reception of the report was lukewarm, in part because of residual animosity from the country’s environmental community to Brundtland’s forceful handling of the Alta hydropower protests (Anker 2016), but also because very few Norwegians were aware of climate change. Around 1987, the Norwegian environmental group Bellona began working on climate change but found that public knowledge of climate change at that time was “very, very low,” according to the group’s founder, Frederic Hauge (N39).

The legacy of Our Common Future has been profound both for climate policy and Brundtland herself. Subsequent to her work on the WCED, Brundtland became known as the “world’s environment minister” (Ryggvik and Kristoffersen 2015: 258) and the “Mother of Sustainable Development” (Norwegian Ministry of Foreign Affairs 2017). Given the low but rapidly increasing public awareness of climate change and the newfound international celebrity status of Brundtland, the need for decisive and ambitious state-led domestic action on climate change became clear. According to a senior official at the Ministry of Climate and Environment, climate change “came as a tsunami […] into Norwegian politics […] this was something that came from nothing” (N17). Far from something to run from, the strong leadership provided by Brundtland

policy work of the late 1980s and early 1990s is particularly germane to this analysis, it is helpful to consider her prior political leadership. Trained as a medical doctor, Brundtland was first elected in 1974 when, at 35 years of age, became the Minister of Environment for the . Allegedly in an effort to position herself against an industrialist rival within her party, in 1976 she opposed drilling north of the 62nd latitude on the basis of poor emergency plans (Anker 2016). When a major blowout occurred a year later on the Ekofisk offshore oil and gas platform, she gained significant environmental leadership credibility, despite opening up areas of the northern coast in the Barents Sea a few years later in 1980. Brundtland’s exposure with the Ekofisk accident and her exceptional political skills enabled her to become Leader of the Labour Party in 1979, a post she held for 17 years and during which time she was elected Prime Minister three times (1981, 1986-89, 1990-1996). Like most politicians, her environmental track record is not without blemish. Brundtland supported the construction of the highly controversial Alta- Kautokeino hydropower development, a project strongly opposed by local indigenous Sami people and by many of the country’s environmentalists (N39) (Anker 2016).The non-violent protests associated with the Alta dam were eventually ended in 1981 by the largest police operation in Norway’s history (Anker 2016), a move that tainted her engagement with domestic environmental groups for many years.

64 on climate change sent a clear message to Norway’s political and business elites that this was a public policy issue on which the country needed to lead.

3.2.2 1988 Toronto Climate Conference

In 1988, a year after Our Common Future, the World Conference on the Changing Atmosphere was held in Toronto, Canada. Of the 350 scientists and policymakers from 40 countries that attended, the only Heads of State present were Canada’s Prime Minister Brian Mulroney and Norway’s Prime Minister Gro Harlem Brundtland. Mulroney, in a speech at the conference, commended Brundtland on her “vital leadership to the world community in approaching the interrelated issues of environment and development” (WMO 1988: 3). This event is now largely seen as the inaugural event for climate change as an international political concern (Lahn and Wilson Rowe 2015).49 The Toronto conference called for an international treaty on climate change and for binding national emission reduction targets; not surprisingly, attendees used the same policy toolbox used to address other prominent environmental issues of the 1980s (Usher 1989). With both acid rain and the ozone layer, effective environmental governance was possible because of the strong role of key states in providing clear leadership and seeking involvement from a broader constellation of actors. However, some clear differences were beginning to emerge. Climate policy conversations at the time were centred on domestic not global emissions and on consumption not production of hydrocarbons. This orientation strayed from the production-focussed regulation system of the Montréal Protocol on Substances that Deplete the Ozone Layer—a framing that suited both fossil fuel companies and major fossil fuel exporting nations, like Norway (N04).

3.2.3 1989 ‘Green Beauty Contest’ Election and the Emissions Stabilization Target

An unusually intense heatwave gripped Oslo in the summer of 1989 and provided a sweaty accelerant on a parliamentary debate on global warming (Anker 2016).50 Public concern was

49 There had been previous meetings in Villach, and Bellagio, Italy sponsored by the World Meteorological Organisation and the United Nations Environment Programme, although these were largely scientific meetings. 50 Similar to the 1988 heatwave in Washington, D.C. when climate scientist James Hansen testified before a U.S. Senate Energy and Natural Resources Committee.

65 climbing as fast as the mercury in 1989 with 40 per cent of polled voters in Norway indicating that they were ‘very concerned’ about climate change (Austgulen and Stø 2013: 144). This was a substantial increase from only a few years earlier when the issue was so insignificant it did not even warrant public opinion polling. In preparation for the September 1989 election, Brundtland’s Labour minority government issued a White Paper that outlined its green ambition, showing the world how Our Common Future could be implemented nationally, and simultaneously marginalising her environmental critics.51 The escalating abatement ambitions among major political parties seen in the summer leading up to the September 1989 elections in Norway became known as the ‘green beauty contest’ (Skjærseth and Skodvin 2004). Frederic Hauge, of the environmental group Bellona, called the 1989 election a “world championship in screaming” (N39), as political parties sought to out-green their political opponents. According to Leiv Lunde, Director of Strategy at the Ministry of Foreign Affairs, there were parties in the 1989 election campaign that were advocating incredibly ambitious 50 per cent emissions cut by 2000. These promises had the benefit of making the Labour Party’s target of emission stabilisation by 2000 sound relatively reasonable (N29).52

After vigorous debate the Norwegian Parliament reached a broad consensus before the 1989 election to stabilise domestic greenhouse gas emissions by 2000 at 1989 levels (Hovden and Lindseth 2002). In doing so, Norway became the first country in the world to make a legislative commitment to stabilise GHG emissions (Lahn and Wilson Rowe 2015).53 The legal language regarding the stabilisation target was sufficiently vague that it gave the Brundtland government a strategic off-ramp to back out of the target. When asked if there was major pushback on the stabilisation target from other ministries, notably the Ministry of Petroleum and Energy, a former advisor to Brundtland replied:

51 St. meld. [White Paper] no. 46 (1988-1989), Norwegian Ministry of the Environment 52 Unlike other Northern European democracies, the Green Party has had a minimal presence in domestic politics. Only in 2013, did the Green Party elect a single member to the Stortinget, leader . This has meant that mainstream parties more actively courted voters on environmental issues than if Norway had a Green Party with a significant and stable base of electoral support. 53 This goal was substantially strengthened from the original proposal in the Statistics Norway SIMEN report (SSB 1989) and the subsequent Ministry of Environment White Paper 46. The SIMEN report was the only report, at that time, that had analysed the impact of stabilisation target on Norway’s economy.

66 I think you must have lived [then] to understand what kind of authority Prime Minister Brundtland wielded at the time. And so the cabinet members were, in a sense, like kids waiting for Sunday dinner in their basic attitude towards the Prime Minister. She was such a towering figure, and also more knowledgeable about the issues than anyone else (N38).

Despite securing a legislated stabilization target, Brundtland’s minority Labour government ended up losing the 1989 election to a minority non-socialist coalition led by Jan Syse’s Conservative party. Prime Minister Syse was in office for just over 12 months before falling to a minority Labour Party government led once again by Brundtland. Back in power, Brundtland’s government took steps to build scientific institutions that could provide the analysis to inform government decisions on climate change. In 1990, her new government established the Centre for Development and the Environment (SUM) and the Centre for International Climate and Environmental Research, Oslo (CICERO). Norway’s climate policy during these early years was framed more around moral obligations and domestic action than around cost-effectiveness or achievability (Hovden and Lindseth 2002).

3.2.4 Carbon Tax

A logical extension of this early emphasis on domestic action was a carbon tax on the biggest source of emissions in Norway: fossil fuel production. In 1990, the newly re-elected Brundtland Labour government tabled legislation for a carbon tax and by the end of that year the Norwegian Parliament had passed the legislation. The carbon tax, which covered 60 per cent of emissions resulting from mineral oil, petrol, gas, and offshore petroleum production, entered into force the following year (NMF 1990). Norway was the first country in the world to have a carbon tax for its petroleum sector. At that time, offshore oil and gas installations accounted for a third of Norway’s emissions (Ryggvik and Kristoffersen 2015). While other European countries were beginning to implement carbon pricing—Finland and Poland established carbon taxes in 1990 and Sweden in 1991—Norway remained for decades the only major fossil fuel producer to have a relatively high price for carbon, beginning with around $40 US per tonne of CO2 on gasoline,

67 diesel, and oil and gas extraction.54 Indeed, other oil producers looked strangely at Norway. “The Arabs thought we were totally nuts, and still believe that we’re totally nuts to tax the country’s main source of revenue,” recalled Morten Wetland, former advisor to Gro Harlem Brundtland when her government implemented the tax (N38).

In keeping with the observation that climate change had taken the country’s policy making community by surprise, the tax had not been debated within policy networks in Norway before 1990. Gunnar Berge, Minister of Finance (1986-1989), recalled that he “had no idea of a CO2 tax ahead of that [when it was introduced into Parliament in 1990]” (N35). Unlike Canada and Australia, Norway’s fossil fuel industry did not strongly contest the carbon tax, arguably because of the state’s strength. That is not to say there was not some industry opposition over competitiveness concerns and the impact of the tax on economically marginal fields (Gullberg and Skodvin 2011), but the state was able to carry on and swiftly implement the tax. The CEO of Norsk Hydro wrote an op-ed in April 1990 stressing his concern about the carbon tax eroding his company’s competitiveness and advancing the view that natural gas is better for the climate than coal (Aakvaag 1990). Harald Norvik, Statoil’s CEO at the time, did not like the carbon tax either but he did not publicly oppose it. Norvik remarked when asked why Statoil did not rally against the carbon tax: “[…] you have to be aware of your influence, but also your accountability” (N36). Gunnar Berge, former Minister of Finance (1986-1989) and former chair of the NPD (1996-2007), put it more plainly, “it was not very likely that they [Statoil] should raise their voice very heavily against the government, because the government was the owner of the company […] And the people heading Statoil, like Harald Norvik, had backgrounds as politicians and representing the Labour Party” (N35). When the carbon tax was initially introduced, the Minister of Petroleum and Energy “was effectively Chairman of the Board” of Statoil (N38). Despite this relationship becoming more indirect with time, as described earlier, the Norwegian state demonstrated its independence from the views of major industrial emitters. According to Johan Nic Vold, a senior executive in Norway’s oil and gas industry, initially most

54 Poland, a major coal producer, had an early carbon tax of 0.06 euros per tonne of C02. Well below the levels necessary to incentivize emission cuts.

68 executives in the industry were negative towards the carbon tax but that has evolved over time. Now, he noted, “everyone in the Norwegian oil and gas industry is proud of that tax” (N34).

What is surprising is that this initial oil and gas industry opposition was insufficient to block or delay the carbon tax; indeed, policymakers in Australia and Canada experienced vehement resistance from the fossil fuel industry to far lower levels of carbon taxation. There are a few potential reasons for this. As stated above, a strong Norwegian state leveraged its ownership of Statoil to quell broader industry opposition. Beyond this, the carbon tax, despite the high sticker price, did not materially impact the bottom line of the petroleum industry. The lack of financial impact has a partial exogenous explanation: crude oil prices. By 1990 oil prices had rebounded from a low in 1986,55 giving the oil industry enough liquidity to not be sufficiently concerned about the immediate financial impacts of the new tax.56 Examined endogenously, the autonomy of the state over the petroleum industry lowered the risks faced by economic and regime elites. If Norway lacked autonomy from industry, then the tax would likely never have been implemented - a fate of early state-led carbon pricing efforts in Canada and Australia. Instead, the Norwegian government could frame the carbon tax as positioned within an existing tax system that reduced the risks for elites. As mentioned earlier, the tax regime facing the oil and gas industry was being reformed and this carbon tax would be simply layered on that system, meaning 78 per cent of the stated price of the carbon tax could be written off as a business expense. “Very few people understood it [the carbon tax] wouldn’t matter much,” admitted Morten Wetland (N38). According to Gunnar Berge, because industry could deduct over three quarters off the sticker price of the tax, “[…] it [the carbon tax] didn’t bite that much for a company, you see. So that contributed to soften the impact of the tax” (N35). Ola Storeng, Economic Affairs Editor at Aftenposten, Norway’s largest newspaper, shared that the carbon tax “was hardly at any point a threat to the overall profitability of the industry” (N25). Even today, the carbon tax has been “very marginal” compared to all the other financial considerations, according to Jørgen Kaurin, an advisor for the Fellesforbundet labour union (N22M1).

55 The price of Brent crude oil, the regional benchmark in Northern Europe, had increased from $14.40 US in 1986 to $23.80 US in 1990 (nominal dollars) (Statista 2019). 56 Although high commodity prices did not prevent the fossil fuel industry from blocking much more modest carbon taxing in Canada and Australia.

69 Some interviewees suggested that oil and gas industry resistance to the carbon tax was muted because the companies did not want to be penalized in future development concessions (N25). Others, such as Kjetil Almstadheim, political editor at the business newspaper Dagens Næringsliv, and Gunnar Berge argued that part of the reason Statoil did not vocally protest the carbon tax was because it was 100 per cent state-owned at the time (N18; N35). According to Morten Wetland, “The President of Statoil was kindly asked to come see the Minister [of Petroleum and Energy], and then he was told what to do […]” (N38). This was a time when the government was just beginning to increase the distance between Statoil and the state; it would be another decade before Statoil was partially privatized. The state-ownership of Statoil, somewhat counterintuitively, enabled the government to act more autonomously from the fossil fuel industry than in Canada or Australia. By controlling the industry, the Norwegian state could better balance the narrow interests of that industry with the broader goals of the state. Unlike in Canada or Australia, the industry could not threaten to leave Norway.

This low degree of perceived risk by regime and economic elites, broadened the policy network engaged on carbon pricing. Environmental groups and labour unions were only just starting to engage on climate policy at the time and there was limited evidence of their influence on the carbon tax. However, within the bureaucracy, there was evidence of a range of central ministries engaging on the development of the carbon tax. The most powerful ministry in Norway, the Ministry of Finance enthusiastically supported the tax and key client-based ministries did not stymie its development (N17). Gunnar Berge saw the tax as being mostly consensus-based because none of the typical opponents, that is the Ministry of Petroleum and Energy and the Ministry of Industry, were blocking the consensus, and the Ministry of Finance saw the tax as a revenue generation opportunity (N35). The introduction of the carbon tax enabled the Ministry of Finance to reduce taxes on productive work, namely labour, and to shift the tax burden to an unproductive source, greenhouse gas emissions (N17). Ministry of Finance officials were motivated by new thinking of double dividends associated with shifting the tax base away from things you want more of, employment, to things you want less of, pollution (N17). Harald Norvik, then CEO of Statoil, recalled the fiscal argument for a carbon tax advanced by the Ministry of Finance was “as much of an argument as climate change” (N36).

70 While offshore oil and gas could not avoid being subject to Norway’s carbon tax, it was a different story for onshore industries. Despite the relative insignificance of the economic and emissions contribution of these industries compared to the massive petroleum industry, these onshore industries received generous carbon tax exemptions.57 Gullberg and Skodvin (2011) argue that unlike the country’s oil and gas industry, these onshore industries were able to issue relevant and credible threats to leave Norway if burdensome climate policy were imposed. The state knew that as the sole owner of Statoil, which was responsible for most of the production on the Norwegian Continental Shelf, it could exert pressure on the oil and gas industry in a way that it could not for the mainland emitters. Moreover, this highly profitable industry could more easily share a higher proportion of the economic rent with the government than could lower profit onshore industries. With a 78 per cent tax rate, the oil and gas industry became habituated to a high government take. Beyond this, of course, is the fact that oil and gas production relies on stationary, in-situ assets that are not threatened by capital flight.

Norway’s carbon tax came early and was ambitious compared to its peers. Unlike the high drama of carbon tax deliberations and implementation in Canada and Australia, Norway’s carbon tax has remained in place and slowly increases in ambition. The carbon tax was temporarily cut by 40 per cent in 1998 when oil prices plunged (Boasson 2005). More recently, in 2013 the tax was increased by 200 NOK per tonne for oil and gas production to provide additional economic incentives for companies to electrify offshore platforms (Norwegian Petroleum Directorate 2013). As mandated in the Spring 2012 White Paper on climate policy, the carbon tax has broadened its scope to include fugitive methane emissions from the petroleum industry (Norwegian Ministry of Climate and Environment 2012a). In 2017, the tax was around 425 NOK per tonne for the oil and gas production (World Bank 2017).58 The sectoral coverage has increased slowly over time. In 1996, the Green Tax Commission issued a report calling for the elimination of all exemptions from the carbon tax, while also extending compensation to vulnerable industries. Two years later, Parliament did expand the sectoral coverage of the tax to

57 The OECD (2001: 127) suggested it is more appropriate to call Norway’s carbon tax a highly differentiated energy tax because of the large number of exemptions. 58 There is also the additional carbon pricing from the EU ETS on Norway’s offshore oil and gas emissions.

71 include domestic air transport, domestic sea transport of goods, and the North Sea supply fleet (Hovden and Lindseth 2002). However, onshore processing industries, such as aluminium and cement, and fisheries remained completely exempt.

Curiously, interviewees could cite no evidence in the nearly three decades since the government introduced the tax that it has resulted in reduced competitiveness. Ola Storeng, the economic affairs editor at Aftenposten noted, “[…] we have this CO2 tax, right, we never, ever, ever had any consumers and industry, generally speaking, paying the full price, if they wanted to utilize, consume or utilize in industrial production in Norway” (N25). The combined financial cost of Norway’s petroleum carbon tax and EU ETS costs amounts to only a few U.S. dollars on the break-even prices for Barents Sea projects, which are around $50 to 70 US per barrel of oil (N10). While this may make a difference for very marginal projects, most offshore projects in Norway require robust profits to compensate for high capital costs and high taxes once there is production, and to hedge against volatile commodity prices. Given the relatively modest costs associated with carbon pollution, there was little incentive for oil and gas producers to reduce emissions. It was often easier to pay and continue polluting than reduce emissions. There were, however, notable exceptions. As will be explained more below, Statoil was already stripping CO2 from gas at its Sleipner and Snøhvit operations in order to meet basic EU requirements on product quality. Carbon pricing provided the justification for re-injecting the CO2 rather than venting the pollution and paying the tax.

In sum, a strong Norwegian state, in part due to its ownership of Statoil, enabled it to shield industry from the material financial impact of a carbon tax, which in turn lowered the perceived political risk of the tax. While climate policy networks were very nascent in 1990, within the Norwegian bureaucracy, a broad range of influential ministries were supportive of the tax. The tax has proven extremely durable and has slowly expanded over time.

3.2.5 Shifting the Burden of Emission Reductions

Unlike the carbon tax, Norway’s emissions targets have proven far less durable. The Norwegian parliament legislated the emissions stabilisation target in 1989. The following year Brundtland made the difficult decision to reject plans to build onshore gas plants because doing so would run counter to the emissions target. However, Norwegian economic and regime elites were already

72 beginning to realize that stabilizing and eventually decreasing emissions would be increasingly at odds with their shared desire of rapid growth of the petroleum sector. Perceiving a potentially high risk to oil and gas sector profits and the state treasury if early stabilisation targets were to be met, elites quickly moved to shift the venue of policy discussions away from the oil and gas sector and engage other policy networks.

Many interviewees described the importance for elites of keeping Norway’s climate policy separate from its oil and gas policy. According to journalist Anders Bjartnes:

It still is a very important objective seen from both government and the main parties [i.e., Labour and Conservative], LO and NHO [i.e., the peak labour association (Landsorganisasjonen i Norge) and the peak business association (Næringslivets Hovedorganisasjon)], the big power consensus to keep climate policies in one basket and oil and gas in another one. NL: You are saying that that is very intentional? N08: Absolutely. To maintain these two policy areas in two different rooms or baskets: it has been an important object both from government and the oil and gas interests and their friends in the corporate system (N08).

As a backup plan, in case climate and energy policy could not be kept separate, industry framed continued production of gas as helping solve climate change. In a 1989 speech to the Fifth European Gas Conference Statoil CEO Harald Norvik argued that although gas was not the “final solution” to global warming, CO2 emissions can be “reduced substantially through greater use of natural gas” and that gas is a “convincing alternative to coal and oil” (Norvik 1989: 3). At the time this must have been music to the ears of gas producers in the audience and it is an argument that Norway has continued to use for the following three decades (Aakvaag 1990).

In the early 1990s, knowing that the state would not imperil its main source of revenue and employment, political elites adopted industry’s language and reframed climate policy in Norway from a focus on domestic emissions targets and reductions to expanding domestic oil and gas production, flexibility and international cost-effectiveness. This least-bad logic was used by the Minister of Petroleum and Energy, , in 1991: “we cannot be occupied with

73 national bookkeeping to a degree that we do not do our utmost to achieve the best possible international effect. We should export as much gas as possible […] and even our oil is more environmentally friendly than other oil that it could replace on the world market” (quoted in Nilsen 2001: 160).59 According to Leiv Lunde, who was involved in climate policy analysis in the early 1990s, it was around that time the Ministry of Foreign Affairs began to be

[…] very much involved in […] the shaping of all that was in Kyoto, in focusing on cost-effectiveness and flexibility, and then already the notion that Norway could use its cash and funding to reduce emissions in other parts of the world, rather than necessarily doing things that would hurt the oil industry, and other industries because, you know, the Norwegian emissions structure (N29).

Beyond Foreign Affairs and the Prime Minister’s Office, the Ministry of Finance, and the Ministry of Petroleum and Energy strongly pushed this cost effectiveness frame in the early 1990s (N29).60 The early involvement of these powerful central ministries speaks to the importance of aligning climate policy with the existing core goals of these ministries: maintaining the welfare state and expanding the oil and gas industry. In 1991, an Inter-ministerial Climate Group set forth a number of principles which became the central organising elements for Norwegian climate policy in the 1990s: cost-effectiveness across sectors, countries, and greenhouse gases; profitability wherever possible; and equitable burden sharing among similarly developed countries (Hovden and Lindseth 2002).

With a freshly-minted domestic emissions stabilisation target and a carbon tax on the petroleum sector, and under the leadership of Prime Minister Brundtland, Norway was well positioned to influence the climate change negotiations at the 1992 Rio Earth Summit. Norway explicitly stated its desire to be a foregangsland, a front-runner country, in helping to shape this new global climate change agreement, the United Nations Framework Convention on Climate Change

59 Translation by Hovden and Lindseth (2002). 60 More broadly this reframing as cost effective coincided with the rise of neoliberalism and New Labour in the UK and new public management that preferred market-based mechanisms in the public sector (N30).

74 (UNFCCC) to be unveiled at the Summit (Lahn and Wilson Rowe 2015). By most accounts, Norway has been successful. Some of the principles (e.g., around flexibility, cost-effectiveness, and burden sharing) advanced by Norway and, most notably, the United States, were enshrined in the UNFCCC. This agreement on principles was made even though agreement on specific flexible mechanisms, notably emissions trading, had not been reached. Norway went to “considerable lengths” in advance of the Earth Summit to promote its views on climate policy (Hovden and Lindseth 2002: 150). However, in these preparatory meetings European officials expressed concerns over Norway proposing to buy the achievement of others (Anker 2016). Strong state leadership had minimized the perceived political risks for Norway’s elites. The Ministry of Finance and the Ministry of Petroleum and Energy would not sanction climate policy that jeopardized Norway’s economy. With the international environmental network accessed by Brundtland and the Ministry of Foreign Affairs, Norway shifted the obligation of emission reductions away from Norway and fossil fuel-producing nations and towards major fossil fuel consumers—at that point, the wealthy, industrialized countries of the Global North. The principles of flexible mechanisms and cost-effectiveness ultimately bore fruit in the form of the Kyoto Protocol’s Clean Development Mechanism (CDM), Joint Implementation (JI) Programme, and Emissions Trading. All three of these mechanisms enabled Norway to outsource the location of emission reductions away from its domestic economy, largely towards the Global South.

In 1993, the Norwegian Oil Industry Association (OLF) produced a report on the emissions target that essentially argued that stabilising emissions and increasing oil and gas extraction were incompatible and that technological improvements would not yield the necessary magnitude of emission reductions (Hovden and Lindseth 2002). This rather sobering analysis coincided with a number of major domestic political events to result in a pause in domestic climate policy development for several years. The 1993 Norwegian election and the 1994 EU referendum and resultant decision by the Norwegian Parliament to join the European Economic Area (but not the European Union) forced domestic climate policymaking into a holding pattern until relations with the EU had been clarified and an international climate regime had been developed (Hovden and Lindseth 2002; Reitan 1998). That said, work was being done to position the efficiency of Norway’s oil and gas production as the key to addressing the climate challenge.

75 The strong role of the Norwegian state to promote cooperation in the oil and gas industry extends beyond the required cooperation of the licensing system. It also shaped multistakeholder fora such as MILJØSOK, a policy network which brought together the oil industry and government along with the offshore service industry, NGOs and research institutes. Its aim was to reduce the environmental impacts of offshore petroleum activity in Norway. Statoil CEO Harald Norvik first proposed the forum, and it was initiated by the Ministry of Petroleum and Energy in 1995 (Gundersen 2009). The forum’s first report established emissions intensity targets, outlined areas of potential emissions reductions and cooperation, and recommended reducing tax rates and increasing forms of binding cooperation (MILJØSOK 1996). A 2000 report from MILJØSOK clearly revealed how its ambition had significantly deteriorated as the reality set in of rising emissions from increased production levels wiping out any incremental efficiency improvements (MILJØSOK 2000; Skjærseth and Skodvin 2004).61

Economic elites knew that the state would not jeopardize expanding extraction rates. This knowledge reduced the perceived risks associated with cooperation on efficiency improvements, and enabled a relatively broad membership within MILJØSOK. However, the realm of potential policy solutions advanced by the group was tightly framed around incremental efficiency improvements and saved most hope for unforeseen radical innovations such as carbon capture and storage or global carbon pricing. In short, this particular policy network narrowly framed domestic policy interventions and then outsourced the site of responsibility away from domestic actors to foreign innovators and global fora. While the MILJØSOK program has resulted in efficiency improvements such as novel heat integration techniques on offshore platforms (Christiansen 2001), any discussion of absolute emissions reductions from the oil and gas industry was absolutely off the table.

A strong state reduced elite risk perceptions and enabled policy networks that were relatively open and stable. Journalist Anders Bjartnes described the access of environmental groups:

61 Similar networks of industry, government, and trade unions had previously been brought together under NORSOK, and subsequently under KonKraft to pursue cost-effective strategies to improve efficiency in Norway’s oil and gas sector, including reducing the climate impacts.

76 The groups Naturvernforbundet, Zero, Bellona, have always got good contacts with people in government. NL: Regardless of what government is in power? N08: Yup. Ministers, their advisors, parliamentarians, it is always easy to pick up the phone and get in touch with people from the other side (N08).

Representatives interviewed from these green groups agreed with Bjartnes’ analysis. This favourable access of environmental groups to Norwegian climate policymakers stands in contrast to the access of European environmental groups to EU climate policymakers (Gullberg 2011). Regardless of what government was in power in Norway, regime elites were not threatened by climate policy proposals. As a result, they were often open to meet with environmental groups.

Labour unions have long been involved in discussions on climate policy, through such organizations as KonKraft and through joint climate policy publications with the main employer’s association, NHO. Climate policy research from the think tank CICERO has been widely used by all governments since its founding in 1990. As will be discussed in more detail later, the drumbeat of cost-effectiveness and flexibility eventually led Norway to create its own emission trading system (ETS) and to be the major force behind an international forest management scheme. Leiv Lunde described climate policy making in Norway as a process of “[…] stakeholders with clearly defined [and] differentiated interests, all sitting around the same table and discussing. So it’s a, particularly in relation to the very strong role of oil and gas in Norwegian economy, it’s to me, it’s quite a conspicuously harmonious model” (N29).62 During the Brundtland years, the state tied the interests of environmental groups closer to the state as the state began incorporating many environmental goals and activities (Ryggvik and Kristoffersen 2015). This actively inclusive state, as Dryzek et al. (2003) argue, revealed an “analgesic and even anti-democratic face” of the Norwegian state, as evidenced by the absence of an autonomous public sphere to challenge the state, particularly on the increasing dependence on

62 Norms around fossil fuel production limits through the concept of the carbon budget and stranded assets have begun to filter into climate policy discourse in Norway since around 2012. Networks, in turn, have started to open further, including more diverse actors into these discussions like the fund manager for the country’s sovereign wealth fund, Norges Bank. Actors that were previously deemed as too radical for their views on slowing oil and gas production, are now beginning to have more legitimacy. Although it is too early to see changes in domestic oil and gas production informed by these emerging norms.

77 fossil fuel extraction. Grassroots level environmental action declined and the environmental movement shifted its focus to fossil fuel consumption, as opposed to production (Ryggvik and Kristoffersen 2015).

Returning to the 1994 referendum on EU membership, much of the Norwegian public’s concern centred on the potential loss of independence and control over its fisheries. Similar issues had also been raised in the 1972 referendum. The Norwegian public rejected EU membership with 53.5 per cent in 1972 and 52.2 per cent in 1994 (SSB 1999). Curiously, the dynamics at work in Norway’s climate policy are also seen in the issue of European Union membership.63 These voting results underscored the importance of Norwegian state autonomy and territorial reach. Joining the EU would have reduced the Norwegian state’s strength over a host of policies, most notably fisheries policy. This erosion of the state’s traditional role would have increased the perception of risk for most Norwegians and so the country restricted its policy networks by voting down EU membership. This ensured Norway’s economy and public policy maintained some independence from the EU. Similarly to Canada, these major trade debates of the early 1990s inadvertently took public attention away from climate change and relieved the pressure on business and political elites to accept the ambitious emission reduction target of the late 1980s. Meanwhile, Norwegian oil and gas production and attendant greenhouse gas emissions continued to increase.

It did not surprise many climate policy watchers that on 2 June 1995, the Norwegian government formally abandoned the 1989 stabilisation target while upholding the principles from the 1991 Inter-ministerial Climate Group (Norwegian Ministry of Environment 1995). Expansion of the oil industry and lack of progress on an international climate regime were cited as reasons for the abandonment of the target. Leiv Lunde noted, “[…] what we realized in the 1990s, towards Kyoto, and beyond, was that climate policy is not another small environmental issue, it’s a trade issue […] it’s a national interest issues for Norway” (N29). While Norway clearly could not control the outcomes of international climate negotiations, it had a proven track record of firmly

63 Of course, state strength can be impacted by voting. For instance, this can be done through constitutional referenda. Here, Norwegians did not vote for change and thus these EU referenda results affirm a pre-existent strong state. In this way, strong states can also shape voting.

78 guiding domestic oil and gas development. Conscious relaxation by the Norwegian state of previous limits on production and then investment made subsequent efforts to rein in the rapidly rising emissions from the oil and gas industry next to impossible. The scrapping of the stabilisation target is one of the few instances of climate policy retrenchment in Norway. By and large, Norway’s climate policies have remained durable and have withstood many changes in government.

By the 1997 signing of the Kyoto Protocol, Norway’s vision of flexible mechanisms finally became realized (Reitan 1998). The climate agreement contained enough provisions that Norway did not have to realize all of the emission reductions domestically. Countries could reduce emissions via trading emissions quotas or purchasing clean development mechanism (CDM) certificates. For safe measure, Norwegian officials had advocated and secured a binding target of a one per cent increase above the treaty’s baseline year of 1990. Norway joined Australia, which had secured an eight per cent increase, and Iceland, which managed a ten per cent increase, as the only three countries of the developed world committed to increasing domestic emissions above the baseline year. This anemic target and the flexibility mechanisms did not end the political debate in Norway over the ideal location of emission reductions.64 The debate has continued through to the Solberg Government.

To summarize, from the very early days of climate policy in Norway, the government made clear that it would continue to support expansion of the oil and gas industry and that it would be an international leader in climate policy. This strong state, evidenced in the territorial reach, autonomy, and bureaucratic capacity of the Norwegian government, reduced the many uncertainties faced by elites regarding how to simultaneously pursue seemingly contradictory goals. Policy networks were quickly established and expanded beyond the Norwegian oil and gas

64 In June 2001, the Labour government’s White Paper 54 outlined how it would fulfill its international climate obligations under the Kyoto Protocol. Namely, both domestic and flexible Kyoto mechanisms would be used to achieve Norway’s commitments; however, no guidance was given on the domestic to international ratio of emission reductions. The Bondevik II Government advanced a more ambitious climate policy than the previous government, as evidenced by a supplementary White Paper 15 to White Paper 54 (Norwegian Ministry of Environment 2002). This new policy document shifts from the previous stance of saying a ‘reasonable’ amount of emissions reductions should be domestic to a ‘considerable’ amount and that sectors not yet facing a carbon tax should be brought under the forthcoming Norway emission trading scheme. This did not end the flip-flopping.

79 industry to include a broad range of domestic and international actors. Norwegian players in these networks sought policy outputs that were informed by the principles of cost-effectiveness and flexibility mechanisms and which allowed Norway to pursue its twin objectives.

3.2.6 Natural Gas Power Plants and Carbon Capture and Storage

Natural gas has long been promoted by Norway and its oil and gas industry as the best fossil fuel to fight climate change. But for many environmentalists, using a greenhouse gas to reduce overall greenhouse gases, is farcical. This debate became much more complicated in Norway when calls for increased domestic use of natural gas and use of new carbon capture and storage (CCS) technology combined to seemingly meet the needs of both sides of the country’s climate change debate.

In 1994, Statoil, Hydro, Statkraft signed a memorandum of understanding to build gas-fired power plants in Norway (Engen, Langhelle, and Bratvold 2012). It was seen as a less controversial way to increase power production in Norway, than with large-scale hydro power, the other obvious power choice. Yet the unprecedented controversy surrounding the Alta hydro project of the early 1980s was still fresh for many Norwegians. Gas power plants were seen as a way of meeting growing residential and industrial demand for energy, expanding the natural gas industry, securing more value creation at home and displacing the need to import dirtier electricity from the Northern European grid. However, if these power plants were built it would represent a considerable shift away from the country’s near 100 per cent coverage of hydro for onshore power.

Less than a week after formally abandoning the stabilisation target, the Brundtland government released another white paper showcasing the plan to build gas power plants in Norway. The Ministry of Petroleum and Energy’s White Paper of June 1995 promoted the construction of gas power plants as a way of addressing climate change. The new policy posited that increased gas- derived power exports could displace more polluting coal power in other countries (Norwegian Ministry of Petroleum and Energy 1995). Later that year, the Parliament voted to grant tax concessions to onshore gas power stations in Norway (Hovden and Lindseth 2002). In 1990 the Brundtland government rejected building onshore gas plants because of the climate impacts. Now with the stabilisation target removed, progress could be made.

80 However, even without the stabilisation target, building polluting gas plants was controversial for many in Norway. Fortunately, there was a technical solution that could potentially satisfy critics: CCS. Norway had been an early pioneer in using this technology to address climate change.65

In 1996 Statoil’s Sleipner platform became the world’s first offshore CCS plant.66 At Sleipner, the natural CO2 component of the gas field was up to 9 per cent but the allowable commercial maximum is 2.5 per cent (MIT 2016a). To sell the gas, Statoil would have removed the CO2 and re-injected it even without the carbon tax, according to Professor Klaus Mohn at the University of Stavanger Business School and former Chief Economist at Statoil (N12); the carbon tax provided a further incentive to use CCS, saving Statoil approximately 1 million NOK per day in carbon taxes (MIT 2016a). A former senior employee at Statoil confirmed that:

If you go back to the ‘90s when the Sleipner gas field was developed, initially the question about CO2 removal was a question of whether you were able to develop the field or not from a pure financial perspective. Because if you didn’t remove the CO2 from the gas, it could not meet the required specifications necessary to make it marketable. At the time, the removal of CO2 was a decision based on pure commercial reasons, not on environmental or reduction of emission reasons. But, down the road, it has developed to be a good story from an environmental

65 The earliest instance of CCS research in Norway was by Erik Lindeberg and Torleif Holt, two research scientists at SINTEF, a private research institution in Trondheim, who in 1987 saw CCS as a technology that could reduce greenhouse gas emissions (Engen, Langhelle, and Bratvold 2012). In 1992, the Bellona Foundation, a Norwegian environmental group began promoting the use of CCS and in 1995 it published a study on CCS with Lindberg at SINTEF (Taylor 2011). 66 The Sleipner CCS project re-injects carbon dioxide 800 metres below the sea floor into the water- bearing Utsira sandstone formation of the Sleipner West field. This operation removes on average 0.85 Mt of carbon annually and was the first large-scale CCS project in the world with dedicated geological storage. There had only been three previous large-scale CCS projects before Sleipner. All were in the United States and used the CO2 for enhanced oil recovery, that is, the carbon dioxide was used to re- pressurize oil and gas fields to enhance extraction rates.

81 perspective. The project demonstrates how we are able to remove CO2 from the gas and how we re-inject it into the reservoir (N15).

That marketing was apparently effective. Former Labour MP , previously a member of the Stortinget’s Energy and Environment Committee (2009 to 2017), shared in an interview that CCS at Sleipner was a direct result of the carbon tax (N27).

While the use of CCS to reduce emissions from oil and gas production was relatively uncontroversial in Norway, the construction of power plants with CCS was much more complex. In 1997 the NGO Fellesaksjonen mot gasskraftverk (“Common Action Against Gas Power Plants”) was created by former members of the Norwegian Society for the Conservation of Nature and Nature og Ungdom to mobilize the public against onshore gas power plants (gasskraftverk 2002). The membership of the coalition of interest groups and political parties opposing gas power plants was nearly identical to that of the coalition opposing membership in the EU prior to the 1994 referendum (Tjernshaugen 2011). The short-lived Jagland Labour Government’s Ministry of Petroleum and Energy ruled in June 1997 that all power plant developers had to implement CCS.67 A group of ENGOs, led by Bellona, successfully fought for this new stipulation (Engen, Langhelle, and Bratvold 2012).68 This move essentially delayed the construction of gas power plants.

The 1997 election brought significant change to Norway with Labour being defeated and a minority centrist coalition government, led by the Christian Democrat’s Kjell Magne Bondevik along with the Liberal Party and Centre Party, taking office. Confidence and supply support came from the Progress and Conservative Party.69 The ruling coalition members were all against the construction of gas power plants—a view not held by the parliamentary majority. Bellona

67 In 1996, Prime Minister Brundtland retired from politics and Deputy Prime Minister Thorbjørn Jagland took over as Prime Minister. 68 Bellona’s Frederic Hauge is often criticized by other green groups for their support of CCS. “I would love to work on solar and other things. It’s much more fun. It’s shit to work with CCS” (N39). But he argued it is the only way right now to make the carbon targets work: “Assisting the oil industry in the North Sea [with enhanced oil recovery] is a hundred times better than drilling for new oil in the Arctic” (N39). 69 Prior to the 1997 election, Jagland had issued the ultimatum that if the Labour Party failed to capture 36.9 per cent of the popular vote, they would resign. Upon receiving 35.0 per cent in the election, his Labour government resigned.

82 closely advised the Bondevik government on the CCS laws. Bellona founder Frederic Hauge claims that it did “all the legal work for Mr. Bondevik on the [gas-power plant] pollution law and how he should act […]” (N39). The commitment to use CCS at new gas power plants was the linchpin policy that held together Bondevik’s coalition government. When the 1997 de facto requirement for all new gas-fired power plants to be equipped with CCS was overruled by a Parliamentary majority in March 2000 (Stortinget 2000), the Bondevik minority government immediately resigned, effectively becoming the first government in the world to fall over climate policy.

The same day the Bondevik government fell, the majority in the Parliament, now led by Labour’s , adopted a number of important climate and energy policies, including a first-ever energy efficiency goal and objectives to increase renewables-powered heating and electricity (Lerum Boasson and Lahn 2017). The new government created a new state company, Enova, to realize these new commitments. Beyond this, during its short-lived first term, the Stoltenberg government (2000 to 2001) also issued the pollution permits for the proposed non- CCS gas power plants at Kollsnes and Kårstø.70 Fellesaksjonen mot gasskraftverk, the environmental group formed to oppose the gas plants, had clearly lost and folded a few years later. Meanwhile, the political debate in Norway on CCS and gas plants subsided and did not return until 2005, during Stoltenberg’s second term.

To summarize, the fracas in the 1990s over onshore gas plants in Norway was the result of the unacceptability of, and historical reliance on, large-scale hydropower. This put the traditionally strong state in a difficult situation. Elites viewed hydropower as socially divisive and to be avoided at all costs. However, the alternative of gas plants and CCS was also risky. A normally broad coalition of actors was divided along political lines. The weak minority coalition of Bondevik relied on environmental votes and the opposition used Bondevik’s attachment to CCS as a wedge. Stoltenberg was not ideologically opposed to CCS, far from it, but his party used this opportune moment to seize power. The unusually volatile policy on CCS and gas plants is a

70 In 2000, Statistics Norway was commissioned to write a report on the emissions impact from gas plants without CCS. Despite the report stating that building these new gas plants would likely increase emissions, but the newly-elected Labour minority government of Jens Stoltenberg indicated the opposite, emphasizing an unlikely scenario to justify the construction of natural gas power plants (Ellingsen 2000).

83 fascinating illustration of within-case variation that has continued to stymie a strong state for over twenty years. The story on CCS and gas plants will reemerge later in this chapter during the second Stoltenberg government and the Solberg government.

3.2.7 Emission Trading Development

Before the Bondevik government fell, it initiated policy discussions on increasing the remit of the country’s carbon tax. While these efforts failed, they lead to the development of an emissions trading scheme. In the late 1990s, as part of the effort to implement the country’s Kyoto Protocol commitments, the weak minority Bondevik I government proposed expanding the coverage of the carbon tax to include onshore emission intensive industries—a proposal that was ultimately thwarted (Gullberg and Skodvin 2011). However the Labour Party, in an effort to undermine the Bondevik government’s position, switched its preference regarding climate policy instruments to an emissions trading system, wherein emissions permits could be issued free of charge (Norwegian Parliament 1998). This reversal meant that the parliamentary majority at the time disagreed with a broadening of the carbon tax. In 1998 the Norwegian Parliament established a Quota Commission to examine a Norwegian emission trading scheme. A year later the Commission recommended an emissions trading system (ETS) commencing in 2008 and covering 90 per cent of domestic GHG emissions. The fall of the Bondevik I government in 2000 and the subsequent 17-month Stoltenberg I government (2000 to 2001) meant little was done on climate policy until Bondevik returned to the Prime Minister’s Office in October 2001 with a broader coalition that included the Conservatives. By June 2002, the Stortinget endorsed the Bondevik II government’s proposal to develop a Norway-based ETS for 2005 to 2007 that would address sectors not targeted by the CO2 tax, notably onshore emission intensive industries (Stortinget 2002). However, the proposal of a broad-based ETS was abandoned within a few years.

ETS legislation was eventually adopted by the Stortinget in 2004. It retained an initial trading period of 2005 to 2007 but covered a mere 10 per cent of Norway’s emissions—a far cry from the 90 per cent coverage recommended by the Quota Commission. Onshore emission-intensive industries were once again exempted from carbon pricing but indicated a willingness to participate in the subsequent 2008 to 2012 ETS (Gullberg and Skodvin 2011). This interest later became moot in 2008 when Norway joined the EU ETS.

84 The EU had adopted an emission trading scheme in 2003 (Directive 2003/87/EC) and trading began in 2005. Given the more numerous and lower cost emission reductions within the EU, joining the EU ETS would have lowered costs for Norwegian emitters. Journalist Anders Bjartnes noted, “You cannot find any one nation that is so dependent on carbon trading as Norway,” due to the domestic economic and political cost of reducing emissions in Norway (N08). Unlike the made-in-Oslo ETS, the EU scheme covered power generation and emissions- intensive industries. Hence, 45 per cent of Norway’s GHG emissions were covered under the EU ETS. Subsequent to the 2007 to 2009 global financial crisis and the secular declines in manufacturing and heavy industry in the EU, quota prices were extremely low and had little material financial or direct emissions impact on sectors covered by the EU ETS. Another notable difference was that nearly all of the EU emission allowances were given free of charge. Under Norway’s proposed scheme, the country’s petroleum industry would not receive any free allowances.

As the EU ETS entered its third phase (2012 to 2020) and started to increase the sectors and gases included in the scheme, Norway has remained an active participant. Since Norway is a member of the EEA, and not of the EU, its ability to influence policy in Brussels is highly constrained. Norwegian Ministry of Foreign Affairs officials that I interviewed described Norway as a policy taker in Brussels, not a policy maker (N10, N21).

It is instructive to ask why the Bondevik I government’s attempt to expand the carbon tax failed and why the Norwegian ETS was so short lived. Elites viewed the perceived risk of both carbon pricing instruments as high for Norway’s onshore industry, whose profit margins are much thinner than the oil and gas industry and whose ability to relocate outside of Norway is much greater given their asset base is largely technological and not tied to in-situ resources. Moreover, Norway’s onshore industries were the direct result of a sustained industrial policy. Since post- World War II, the state has located industry along the coast in order to provide good-paying jobs in remote areas. No politician from any major political party would want to be held responsible for onshore industries leaving the country.

In this instance, Norway’s onshore industrial policy worked at cross-purposes with its climate policy. While the Norwegian state was strong with respect to climate policy, it was less so with

85 onshore industrial policy, as it lacked the same degree of autonomy that it enjoyed with the oil and gas industry. This relative sign of weakness heightened the sense of political risk that was associated with expanding domestic carbon pricing, especially for onshore industries. The state was unable to find a frame for a domestic ETS that satisfied concerned elites. As a result, regime elites at first delayed implementation and then shifted venues to the much larger and adjacent European Union. Given the much larger sources of pollution and much cheaper abatement options in Europe, political attention and costs were advantageously shifted away from Norway by the European ETS. A common refrain from many interviewees was that Norway’s participation in the EU ETS enabled oil and gas production to expand.

After the 2005 election, a red-green coalition formed government. Led once again by Labour’s Jens Stoltenberg, and supported by the agrarian Centre Party and the Socialist Left, this government caused a significant shift in climate and energy politics in Norway. This shift notably entailed increased state support for CCS, strengthened emission reduction targets, a shift to international emission reduction opportunities through improved forest management, and most importantly an all-party climate consensus.

3.2.8 CCS and Gas Plants under Stoltenberg II

The membership of the new coalition made it politically imperative for the Labour government to support gas plants and CCS. The support of gas plants without CCS had allowed Labour to topple the Bondevik I government, and because Labour was now in coalition with the Centre party, it now supported CCS at gas plants. In fact, CCS became the linchpin in the grand compromise that enabled parties with opposing views on gas to come together in coalition government. It was a policy that increased domestic gas demand, heartening most trade unions, petroleum and power companies (Lerum Boasson and Lahn 2017). Even some environmental groups supported the use of CCS; for some of these ENGOs, it was a Machiavellian way to block gas plants, since the technology had not been commercialized, and for others it avoided emissions associated with gas power production. Unlike many EU-based environmental groups who criticized CCS as prolonging the use of fossil fuels, Norway’s Bellona became an “eager advocate” in Brussels and at home in Norway (Gullberg 2011).

86 A few weeks after Stoltenberg formed his government in 2005, the Ministry of Petroleum and Energy proposed to Parliament an increase in CCS research and development funding by 150 million NOK. A decade after the Sleipner CCS project, in 2006 Statoil started a second CCS project to store CO2 from the Snøhvit LNG processing facility on the northern coast of Norway.71 Similar to Sleipner, the high CO2 content of gas from Snøhvit (five to eight per cent) makes the gas unmarketable without removing the CO2.

In the fall of 2006, Statoil proposed a substantial upgrade of its existing refinery in — the largest single source of emissions in Norway, 2.3 Mt in 2011 (ENGO Network on CCS 2013). This announcement triggered a debate that nearly, once again, brought down the government over gas plants. Statoil’s proposal included a gas-fired co-generation facility to provide heat and power to the refinery with excess power being sold to Norway’s electrical grid. Stoltenberg’s red-green coalition was clear in demanding that all new gas-fuelled power plants would have CCS. Negotiations quickly followed among ruling coalition parties and between Statoil and the government on the timing and stringency of CCS requirements (Engen, Langhelle, and Bratvold 2012). The result of these negotiations was that a) Statoil, the Norwegian state, and a consortium of international energy companies would build by 2010 a test facility for CCS technologies at Mongstad, and b) the Norwegian state would fund a full-scale post-combustion carbon capture and storage facility at Statoil’s proposed Mongstad co- generation plant. Statoil agreed to contribute an amount equivalent to paying Norway’s carbon tax and the EU ETS—what it would have paid without the CCS requirement—and to assume “some” risk in case of cost overruns (Engen, Langhelle, and Bratvold 2012). In 2007, Gassnova was established as a government-owned company to grant financial support for CCS research, manage the government’s interest in Mongstad and provide advice to government on CCS.72

In short, a strong Norwegian state was able to provide the commitment that regime and economic elites needed that CCS would not be a foolhardy venture. The state extended its reach and

71 Approximately 0.7 Mt per year are permanently stored 2.6 km below the floor of the Barents Sea (MIT 2016b). 72 In September 2013, just after the election that swept the red-green coalition out of power and brought in a blue-dark blue coalition of the Conservative Party and the , the government cancelled plans for a full-scale CCS plant. However, the CCS test facility in Mongstad would continue (Patel 2013; Gassanova 2013).

87 increased bureaucratic capacity through a new state-owned enterprise. It also provided ample funding and assumed a far greater share of the financial risk with Mongstad and CCS than the private sector, as will be explained below. Furthermore, the stronger mandate of the Stoltenberg II government compared to the Bondevik I government meant additional assurances could be made to onshore and offshore industries that the CCS policy would not threaten business-as- usual.

With an agreement in hand, Prime Minister Stoltenberg could tout both climate leadership and expansion of domestic oil and gas production. During Stoltenberg’s New Year’s Day speech in 2007, he boldly announced that developing CCS for Norway’s petroleum industry at Mongstad would be the country’s “moon-landing”:

We must take our share of responsibility. Greenhouse gas emission must be reduced. Norway has taken on a pioneering role by deciding that the gas power plant at Mongstad will be required to have full-scale CO2 capture and storage. We are going to make this a reality […] This will be an important breakthrough in the efforts to reduce greenhouse gas emissions in Norway, and once we succeed, I am convinced that the rest of the world will follow our example. This is a major project for our country. It is our moon landing (Stoltenberg 2007a).

Much to the chagrin of the Stoltenberg II government, and despite countries such as Australia and Canada also developing ambitious CCS projects, the moon landing language soon became fodder for jokes on the viability of CCS. Over a decade later, the spacecraft has yet to land.

Beyond a bold CCS policy, during the Stoltenberg II government, emissions reduction targets were significantly strengthened. A road map to a successor agreement to the Kyoto Protocol was being negotiated at the 2007 UNFCCC Conference of the Parties in Bali with the aim of a new global climate agreement two years later in Copenhagen. This presented the Stoltenberg government with a strategic window to demonstrate international leadership on climate change. Instead of negotiating another emissions increase, as it had for the Kyoto Protocol, Norway committed to much more ambitious short, medium and long-term emission reduction targets

88 (Norwegian Ministry of Environment 2007). More specifically, it included a voluntary upgrade of its original Kyoto target by ten per cent to nine per cent below 1990 levels by 2008 to 2012 (met through international emissions trading), and a minimum reduction of emissions by 30 per cent from 1990 levels by 2020. A long-term goal of complete carbon neutrality was set for 2050 or 2030 if an ambitious global climate policy is reached. This made Norway the first country in the world to set a carbon neutrality goal.

In the lead up to the 2007 Bali negotiations, the Stoltenberg government was also attempting to secure an all-party consensus on climate policy. The climate policy instability of the late 1990s and early 2000s jeopardized Norway’s reputation as an environmental leader and caused Norway to pass by opportunities to reduce greenhouse gas emissions.

In January 2008, the Stoltenberg government announced an agreement with six out of seven political parties that was detailed in a new climate white paper (Labour Party et al. 2008).73 To secure parliamentary support, it was agreed that two-thirds of the 2020 emissions reduction target would be achieved domestically. With these ambitious climate goals now endorsed by a super-majority in the Stortinget, Norway could go to the Copenhagen climate talks emboldened to exercise influence.74

3.2.9 REDD+

During the Bali COP 13 of the UNFCCC in December 2007, Norway spearheaded a new climate initiative based on improved forest management. REDD+, or reducing emissions from deforestation and forest degradation (REDD) and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries (+), was a new climate policy instrument. The original premise of REDD+ was to create a system to pay

73 The lone dissenting party was the right-wing Progress Party. When the Progress Party formed government in 2013 with the Conservatives, they agreed to the terms of the 2008 climate consensus. 74 The goal of stable climate policy was not fully realized with the 2008 climate consensus. Five years after Stoltenberg’s first climate white paper, the government released a new White Paper in 2012 that committed to a raft of new measures and strengthening of existing policies (Norwegian Ministry of Climate and Environment 2012b). Some of these policies include a doubling of the petroleum industry carbon tax to 420 NOK per tonne of CO2, a new climate and energy fund, discouraging car transport, public transit incentives, tree planting, a phase-out of oil-based heating in buildings, a new energy research centre and a full scale CCS demonstration facility by 2020.

89 developing countries for the climate services offered by their forests, such as sequestering and storing carbon. Unlike the CCS projects off the Norwegian Continental Shelf, Prime Minister Stoltenberg explained in a speech at the Bali COP, “the technology is well known and has been available for thousands of years. Everybody knows how not to cut down a tree” (Stoltenberg 2007b). The REDD+ credits earned by these nations can then be sold as offsets in a carbon market.75 It was at the Bali COP that many nations agreed to create REDD+ and make it a key component of the Bali Roadmap, which was to be the new action plan for negotiating a new post-Kyoto climate agreement.

Norway’s International Climate and Forest Initiative (NICFI) was launched in Bali by Prime Minister Stoltenberg who pledged three billion NOK per year to help develop a REDD+ market. This was an immense sum of money from a small country for a program that had not yet begun and was far greater than any contribution from other countries. What was behind Norway’s decision to lead on REDD+? Internationally, there was a storm building. The previous year saw the release of both the Stern Report, a highly publicized economic report that tallied the global costs of climate inaction, and An Inconvenient Truth, a documentary by former U.S. Vice President Al Gore on climate change. In 2007, the IPCC released its landmark Fourth Assessment Report, summarizing the world’s scientific knowledge of climate change, and providing policymakers with sound scientific information for their political negotiations. Just two months before Stoltenberg’s Bali announcement, the Norwegian Nobel Committee had announced that Former U.S. Vice President Al Gore and the Intergovernmental Panel on Climate Change had been awarded the Nobel Peace Price “for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay foundations for the measures that are needed to counteract such change” (AB 2018). These events were in the background as Norwegian ENGOs pitched a new policy idea to a few politicians.

The origin of Norway’s involvement in REDD+ began with a letter in the fall of 2007 from the leaders of two NGOs, Friends of the Earth Norway and the Rainforest Foundation Norway, to the Minister of Finance Kristin Halvorsen and the Minister of Environment of International

75 Eventually as the prospects for a global carbon market dimmed, REDD+ shifted to funding result-based payments to countries, not to third-party carbon credit-seekers.

90 Development Erik Solheim, both from the Socialist Left Party (Nilsen 2010). Given the soaring price of oil at the time and the ideological commitments of Halvorsen and Solheim, the pricey proposal was not a difficult sell. The same NGOs approached Conservative MP Børge Brende, Deputy Leader of the Energy and Environment Committee, who also expressed his support for the idea, citing the good value of a cost-efficient climate initiative (Nilsen 2010). Brende worked with the other two opposition parties to form a shared proposal to the Government. Meanwhile, Norway’s political parties were also negotiating for a much broader all-party climate consensus, which was officially signed in January 2008. According to some sources, the Labour Party and Prime Minister Stoltenberg were initially opposed to REDD+ but eventually agreed to the initiative (Nilsen 2010). It was likely the combination of key political support from other major parties for this particular proposal, the utility for larger negotiations over an all-party climate policy consensus, the recent climate-minded decision of the Norway’s Nobel Committee, and the need to make a splash in Bali in front of other world leaders that prompted Stoltenberg to throw his support and that of the brimming Norwegian Treasury behind REDD+ and the NICFI.

The country’s REDD+ efforts paid multiple dividends. Namely, Norway could use funds it had pledged for international development to also realize climate goals, and through increasing supply of REDD+ credits potentially lower the cost to offset Norway’s greenhouse gas emissions. It also helped to increase what is counted as development assistance towards the country’s goal of one per cent of GDP. Furthermore, by outsourcing emission reductions to the Global South, Norway could reduce the political cost of domestic pollution reduction.

Norway sought to rapidly expand the network of actors engaged in REDD+. This would make the program more effective and durable and ensure that it was not seen as just a Norwegian policy. This was a valid concern: as of 2016, Norway has contributed around 73 per cent of pledged funds globally for REDD+ (Henrich Böll Stiftung 2016). As part of NICFI, Norway has worked directly with Brazil, Colombia, Indonesia, Guyana, Ethiopia, Liberia, Peru, Tanzania, Mexico, Vietnam, and the Democratic Republic of Congo, through a variety of multilateral channels, and with civil society directly. In particular, Norway has had an oversized role in Indonesia and Brazil, where it committed to give one billion USD over five years to each

91 country.76 Norway also hosted the 2010 Oslo Climate and Forest Conference and the Oslo REDD+ Exchange in 2011, 2013, 2016, and 2018, whose purpose is to provide an arena for policy learning and network building among donor and REDD+ countries and civil society groups. This open and stable policy network resulted in action being taken quickly, in large part because countries such as Norway leveraged existing institutions within a host country, channelling additional resources to already functional programs. It also resulted in a considerable variety of specific policy initiatives largely because the domestic circumstances among countries involved in REDD+ varied significantly. Some analysts have also found that NGOs cooperating with governments in policy design and implementation were less liable to publicly criticize NICFI, although some used informal channels to voice disagreement (Hermansen et al. 2017).

In sum, the REDD+ program was a quintessential climate policy of a strong Norwegian state. It played to the qualities of the Norwegian state that make it strong. It extended the territorial reach of the country’s climate policymakers, it demonstrated notable autonomy from powerful domestic non-state actors, and it leveraged the strong capacity of the Norwegian bureaucracy to fund, design and implement the policy. Norway’s economic and political regime elites did not see the REDD+ policy as a risky venture. It was consistent with the stated preference for both flexible mechanisms and cost-effectiveness. A diverse range of actors was able to engage in the relatively open REDD+ policy network, including development and environmental NGOs and many international partners, many of whom have remained long-term participants in the program. This design facilitated a broad set of constituencies benefitting from the policy. The international focus of emissions reductions shifted the pressure away from Norway and its oil and gas industry, evidence of venue shifting. The result was an early, broad, and durable climate policy.

In the 2013 election, Jen Stoltenberg’s government fell to a blue-dark blue coalition led by ’s centre-right Conservative Party and the right-wing Progress Party. The Progress Party

76 Perhaps not coincidentally, at the same time as making these investments, Statoil was making even larger investments in Brazil’s offshore oil and gas industry. Statoil paid 1.8 billion USD in 2008 to be 100 per cent owner and operator of the Peregrino field. In 2017, Statoil announced a 2.9 billion USD purchase a 25 per cent stake in the Roncador project from Brazilian state-owned oil and gas company, Petrobras (Reuters 2017). In 2007, the same year as the Bali COP, Statoil also opened an office in Indonesia.

92 was the only major political party not to sign Stoltenberg’s 2008 climate consensus and had been led from 1978 to 2006 by a denier of anthropogenic climate change, Carl Hagen. Many in Norway feared that the country’s most right-wing party would seek to eliminate many key climate policies once in power. This proved not to be the case and the new two-party minority government coalition largely upheld existing climate policies, including Stoltenberg’s NICFI, and introduced and strengthened several others (Norwegian Ministry of Climate and Environment 2015). In particular, the Solberg Government sought to strengthen electric vehicle policies in Norway.

3.2.10 Electric Vehicles

One of the most well-known climate policy success stories in Norway concerns electric vehicles. Electric vehicles (EVs) in Norway long predate the Solberg Government.77 From the 1970s to 1990s, government policies supported research and development of electric vehicle manufacturing in Norway (Figenbaum 2016). While these attempts at domestic EV manufacturing did not achieve commercial success and ultimately went bankrupt, other EV policies aimed at improving affordability and ease-of-use have proven highly durable and successful. Many historical accounts of current electric vehicle policies trace their origin to publicity-minded civil disobedience by the environmental group Bellona. In 1987 Bellona founder Frederic Hauge refused to pay import fees on a Fiat Panda that had been retrofitted as an electric vehicle (Kristensen, Thomassen, and Jakobsen 2017; Digges 2018). A year later, purchase and import fees on electric vehicle imports were waived. In 1995, Bellona’s Hauge and Morten Harket, the frontman for the 1980s Norwegian boy band A-Ha, drove through Oslo’s toll roads in the same Fiat Panda without paying the tolls, chaining himself to his mini-car upon threat of arrest (Digges 2018). Later that year, Oslo had exempted toll fees for electric vehicles. A year later an annual road tax was lowered for EVs followed by toll waivers on all national roads and free ferry transportation. In 1999 electric vehicles received free municipal parking and in 2000 car taxes for companies owning EVs were reduced by half. EV policies continued to

77 In the 1910s and 1920s, Arthur Bjerke manufactured electric vehicles in Norway. He wrote the government in 1915 asking for reduced fees for EVs because they are less polluting than fossil fuel- powered cars (Mom 2004). In the 1970s, after the 1973 oil crisis, Norwegian industrialist Lars Ringdal made several electric vehicle prototypes (Kristensen, Thomassen, and Jakobsen 2017).

93 grow with access to bus and car-pooling lanes in 2005. More recent state investments have focussed on charging infrastructure and on waiving the 25 per cent value-added tax on leasing EVs. In 2017, the Solberg Government set a non-binding goal of zero fossil-fuel powered vehicle sales in Norway by 2025.

Overall, these policies have been early, durable and broad. And they have been nominally successful.78 In 2017, 52 per cent of all car sales were all-electric or hybrid (Knudsen and Doyle 2018). That same year, 210,000 of the 2.5 million cars in Norway were plug-in hybrid or battery electric—the greatest number of electric cars per person in the world (European Alternative Fuels Observatory 2018). How did this ecosystem of climate-friendly electric vehicle policies come to pass?

When it comes to purchasing and operating vehicles, the antecedent, background conditions for Norwegians has been one of considerable state strength. Extremely high vehicle registration taxes, among the highest in the world (DICE 2014), served as another revenue source for Norway’s generous social welfare policies. In addition, high fuel taxes, also among the highest in the world, have been in place for fuel conservation long before carbon taxes and other climate policies. This ability to raise revenue is a core aspect of bureaucratic capacity and contributes to the strength of the Norwegian state.

Historically strong government revenue generation from passenger vehicles reduced the perceived risk for elites of EV policies when the latter were proposed in the early 1990s. The objective was to increase EV usage. Early policy proposals did not increase costs for fossil-fuel powered vehicles or the state treasury; rather, they removed costs for electric car owners. In the 1990s, the cost was so minimal because there were nearly no EVs in Norway and a noteworthy absence of vested interests opposing these measures. Unlike countries with incumbent vehicle manufacturers, such as neighbouring Sweden’s Volvo, incentives to encourage EV adoption did not pose a threat for the domestic economy because Norway did not have a vehicle

78 The development of Li-ion batteries by traditional vehicle manufacturers, which reduced the cost of EVs, was a necessary but not sufficient factor in explaining the increase of EVs in Norway. Other countries where Li-ion battery EVs are sold but without such substantive economic incentives, did not see a similar increase in EV adoption (Figenbaum 2016).

94 manufacturing industry. Policymakers did not have to worry about driving up costs for local manufacturers and suppliers of internal combustion engine vehicles and eroding their competitiveness. Nor were they concerned about increasing the cost to drive your existing car with an internal combustion engine at first.79 Thus for a consensus-minded society, it was easy to say yes to electric vehicle policies.

With minimal risk facing domestic elites, the policy networks engaged in EV policies were broad from the very beginning. Environmental groups were clearly influential in shaping policy and all political parties wanted to support EV policy. For a time, Norway’s business sector showed some interest in domestic manufacturing as did Ford, although in the end that proved unprofitable. But when there was some modest Norway-based EV development, the policy network further broadened and strengthened. As the number of users slowly grew so did the influence of groups such as Norsk elbilforening (the Norwegian Electric Vehicle Association), whose membership has ballooned since its establishment in 1995 to over 50,000 members in 2018 (Norsk elbilforening 2018). All buyers of EVs in Norway receive a one-year membership to Norsk elbilforening, paid for by the automotive dealer. The positive feedback from EV policies created an increasingly influential group of beneficiaries that rallied to maintain policies and advocate for additional incentives (N02).

This open and relatively stable network of actors promoting EV policies and the absence of organised and powerful actors seeking to block EV policies has facilitated a steady blossoming of entrepreneurial EV policies in Norway over the last three decades. Recent survey data revealed that cost is the primary determinant for Norwegians considering purchasing an electric vehicle (Bjerkan, Nørbech, and Nordtømme 2016). Public policies have effectively made the price of electric vehicles the same as conventional vehicles (Aasness and Odeck 2015), putting luxury Tesla vehicles on par with a mid-priced Volvo, according to one interviewee (N30). Through positive feedback these policies have proven durable, resisting the policy retrenchment seen elsewhere.80 Seeing other Norwegians use electric vehicles also provides powerful

79 Over time, the vehicle registration fee has increased for cars that pollute more greenhouse gases. Also, the carbon tax does cover transportation fuels and has increased over time. 80 For example, in Denmark, where the 2015 reinstatement of the 180 per cent vehicle import tax has caused EV sales to plummet, dropping by 60 per cent in one year (Brandt 2017).

95 demonstration effects; keeping up with the Johansens materially translates into purchasing a zero-emission vehicle. The result has been the greatest per capita ownership of electric vehicles in the world.

Despite this ostensible success, Norway’s EV policies have also faced criticism regarding cost- effectiveness. The incentives for EV ownership are high cost given they generate a relatively modest emissions reduction. The same amount of money could be spent on many other abatement options and more emissions reductions would result. As those policies layered on one another, many relying on tax incentives, the cost to the state Treasury increased. In 2018, the government projects EV-related tax incentives will amount to 3 billion NOK (Knudsen and Doyle 2018). When costed, these emissions reductions are more expensive than those that could be achieved through carbon pricing and far greater than through international offsets (Kontny 2017); hence, Norway’s EV policies violate the long held norm of cost-effectiveness. Besides being expensive, the policy has also been criticized for benefitting more wealthy Norwegians who can already afford to own a new car. A former oil and gas senior executive argued that electric vehicle subsidies are an “incredibly stupid policy” because it is regressive. Case in point was his billionaire friend: he has two electric cars heavily subsidised by taxpayers (N34).

For the country often ranked as the most equal in the world, this is not an unimportant concern. Other interviewees noted that it is precisely because Norway is wealthy that the country should offer generous EV subsidies, enabling Norway to become an EV technology lab (N03, N09, N13). Norway helped “create a mass market for solutions that are initially more expensive but eventually will be competitive when they get volume” explained Marius Holm, CEO of ZERO, an environmental organization advocating for clean energy solutions (N28).

Regardless of the imperfections of Norway’s electric vehicle policy, they have flourished not just in Norway but also more broadly. The policy learning created by Norway’s implementation of these policies spurs policy diffusion and mimicry elsewhere in the world. For example, Norway hosts an annual Nordic EV Summit, where participants from around the world, come to learn how Norway has managed to sell so many electric vehicles. Denmark, who also has an extremely high vehicle registration tax, implemented an identical EV incentive by waiving the tax for electric vehicles (Danish Ecological Council n.d.). The Clean Energy Ministerial, via the Electric

96 Vehicles Initiative and EV30@30, have consistently showcased Norway’s EV policies (IEA 2018a; CEM 2017).

In short, the strength of Norway’s state played a key role in the success of its EV policy. Norway had an established history of high taxation on cars and fossil fuel consumption that predated electric vehicles, which served to bolster bureaucratic capacity. It had strong autonomy from non-state actors as there was no large incumbent vehicle manufacturers, unlike neighbouring Sweden. Also, EV policy did not directly threaten the economics of the country’s oil and gas industry. Combined with a state with considerable territorial reach, the government faced little headwind in developing and implementing EV policy. There was minimal risk for economic and regime elites who did not freeze out NGOs. In fact, NGOs have been central and consistently influential members of EV policy networks. The resultant policies have been early, broad and durable. Indeed, the consistent push by the Solberg Government to maintain and enhance electric vehicle policies, despite the mounting costs, underscored the importance of these policies to Norway’s overall climate policy. EV policies provided a strategic release valve on the public pressure to reduce Norway’s domestic emissions, placating concerned political parties and environmental groups, while shifting the focus away from domestic oil and gas production.

3.2.11 Electrifying offshore oil and gas platforms

One contentious debate that the minority Solberg Government has not been able to avoid concerns electrifying offshore oil and gas platforms. Those actors pushing for Norway to focus on domestic emission reductions rather than international reductions have long had platform electrification in their sights. Platform-based natural gas power plants are a major source of carbon pollution for the oil and gas industry. This pollution is technically avoidable if undersea cables were to transmit emission-free power from the mainland.81 Since 1996, the government has required all offshore development plans to consider the potential for using power from the mainland (Stortinget 1996).82 An official from a Norwegian oil and gas company noted,

81 Indeed, there are already half a dozen electrified platforms. These include, in order of in-service date: 2005: Troll A - Phase One (Statoil); 2010: Valhall (BP); 2011: Gjøya (GDF Suez); 2014: Troll A - Phase Two (Statoil); 2015: Goliat (ENI); 2016: Martin Linge (Total) (ABB 2014). 82 Parliament adopted the recommendation in 1996 of the Standing Committee on Energy and the Environment: “Processing of the Troll-gas on Kolsnes is done with the use of hydropower, and are

97 however, that electrification is almost always more expensive than simply paying the carbon tax and the quota price of the EU ETS (N03). A series of government reports released in 1997, 2002, 2008 assessed the viability of platform electrification, and underscored the challenging economics of using onshore power. Reaction from the Minister of Petroleum and Energy regarding these reports noted the preference for gas plants with CCS over electrification (Lorentsen 2015).

To enhance the economic incentives for the petroleum industry to electrify offshore platforms, the Parliament decided in 2012 to increase the carbon tax by 200 NOK per tonne in 2013 (Norwegian Petroleum Directorate 2013). Also in 2012, the Stoltenberg government updated the grand climate consensus negotiated in 2008. All parties of the Stortinget, except for the one Green Party member, agreed to this update, which now required two-thirds of all emission reductions to be made domestically (Stortinget 2012). The update also explicitly mentioned platform electrification, stating that offshore oil and gas production licenses “always should assess power from shore as energy supply for new field and major modifications on existing fields” and that there is a “goal for the southern part of the Utsira High to be supplied with power from shore” (Stortinget 2012: 15, ).83 The policy direction from Parliament was clear.

Following the 2013 election of the Solberg Government, the issue of platform electrification became much more politicized. The Conservative-Progress Party government stressed its intention to honour the agreement that two-thirds of emissions reductions should occur within Norway. The Director of the Norwegian Environmental Agency noted at the time, “if we are to cut 8 million tons […] then there is no escaping extensive electrification offshore” (NTB 2014). However, the Solberg Government was also clear that any electrification decisions would be made on economic grounds and be decided by the company (Lorentsen 2015).

therefore without emissions of CO2. Also the platforms of the Troll-field are electrified. [...] The Majority [of the Committee] ask the government to prepare an overview of the amount of energy and the cost of electrifying oil and gas fields on the Norwegian continental shelf” (Translation by Kristoffer Lorentsen, Stortinget 1996). 83 Utsira High is a collection of four fields: Johan Sverdrup, Gina Krogh, Ivar Aasen and Edvard Grieg. Sverdrup is by far the biggest of all these fields. Its production is expected to peak at 660,000 barrels per day, which will at that point will be the largest in the North Sea and last until 2050.

98 Leaving the decision to companies was not permissible to the Opposition, who wanted to challenge the Government on its commitment to domestic emission reductions. In April 2014, Opposition MPs forced a bill through parliament fast-tracking electrification for the Utsira High (Stortinget 2014). The Opposition believed that because of the large profit margin for the Utsira High, in particular the Johan Sverdrup oil field, it could press the Government and Statoil on electrification (Dagenborg and Stolen 2014). Government MPs referred to the bill as a “coup” (Skårdalsmo and Rønning 2014).

The Norwegian Parliament does not typically pass legislation regarding oil and gas development that is this technically prescriptive, and beyond the standard deliberation over the Plan for Development and Operations (PDO). The PDO for the Sverdrup field was up for parliamentary debate in 2015 and so this 2014 private members’ bill took both Statoil and the ruling coalition by surprise. Labour MP Per Rune Henriksen recounted, “We had to push pretty hard, and go beyond the normal procedures” (N27). Statoil claimed that they could not deliver the onshore power without delaying the whole project by a year and losing $3.4 billion US (Lo 2014). Opposition MPs warned that waiting until the PDO would be too late; electrification would be next to impossible at that point as the investments would already have been made. They had to take extraordinary pre-emptive measures to ensure total electrification of the four fields—the first time this had ever been done. According to Marius Holm of ZERO, “Sverdrup went through with power from shore because politicians were absolutely certain that it [the costs from electrification] couldn’t stop the project. So we can put any requirement we want on them, and they will still make it happen, because it’s so goddamn profitable, and they were right” (N28). Pia Martin Gautier Bjerke of the Norwegian Oil and Gas Association noted at the time, “We are critical towards the Parliament’s uncommon procedure regarding Utsira, and our position is that the politicians need to ensure a predictable framework for the industry in the years to come, as they have done in the 40 years that lie behind us” (Lo 2014).

Offshore electrification also has the additional ability to increase oil extraction rates. By decarbonizing the extraction of fossil fuel, more fossil fuels can be extracted. According to , former Minister of Petroleum and Energy (2013-2016), and whose party opposed the mandated electrification in the Utsira High, “Some of the more hardline socioeconomic-oriented people pointed towards the fact that you could save a little bit of money by using gas. But that’s

99 really not true, because that will only be true in a very short perspective. In a long perspective, you can produce a lot more oil if you have power from shore” (N32). Through reduced operating costs, electrified offshore platforms can produce more oil and gas than platforms with more expensive and less reliable and less efficient gas turbines, according to promotional material of the Swedish-Swiss engineering firm ABB, which installs onshore power systems to Norway’s offshore platforms (ABB 2014). Of course, increasing recovery rates would also increase the total amount of greenhouse gas emissions once the gas is combusted, eclipsing any emissions reductions associated with using onshore power.

To summarize, electrification of offshore platforms is an exception that proves the logic of my framework. In this area, the state had traditionally less reach over power supply choices of offshore platforms. The perceived political risk faced by elites was high. Electrification had high upfront costs and requiring it was a break with Parliamentary norms around oversight of the oil and gas industry. The networks pursuing a more ambitious electrification policy were notably unstable and relatively closed. The result was a relatively late policy that was very narrow, applying only to the Utsira High area. It is still too early to tell if the electrification policy in this region of the Norwegian Continental Shelf will prove durable.

3.2.12 2017-2018 CCS and Gas Plant Developments

Not without irony, in 2017 Statoil announced it would close the contentious Mongstad gas power plant by 2019 due to unprofitability (Statoil 2017b). The high cost of gas power relative to inexpensive, hydro-based Norwegian electricity and lower than anticipated demand for power and steam were cited as reasons for closing the plant (Nilsen 2017). To complete the irony, the two other gas-fired power plants that were at the centre of the Bondevik I government’s fall from power have already closed: the Kårsto power plant which operated intermittently from 2007 until its closure in 2014, and the Tjeldbergodden reserve power plant, which was commissioned in 2006 but never has been in use (Nilsen 2017). These plants have now become stranded assets.

More recently, the Norwegian state’s CCS efforts have been directed to the cement, fertilizer and waste combustion industries. These efforts have also faced delays. Feasibility plans for full-scale CCS for these non-petroleum industries were completed in 2016 but no decision has been made to implement these plans. According to Ellen Viseth, a political advisor at Bellona, “[…] all the

100 plans are made, it’s just the big decisions, which will release the costs, that’s postponed, again and again, so now it’s 2019. But what they have done so far, by testing and detecting areas, that’s good work, but we’re waiting for them to push the button” (N19).84 In October 2017, the government proposed that it would cut its 2018 spending on the cement, fertilizer and waste CCS projects by 95 per cent (Karagiannopoulos 2017), effectively dooming the projects. Future plans for large-scale CCS for the offshore oil and gas industry remain more hopeful. In 2017, the state- owned CCS company Gassnova contracted Statoil, in partnership with Shell and Total, to explore capturing CO2 from onshore industries and storing it underground off the coast of Norway (Rathi 2017).

Looking back at the Stoltenberg government’s quest for a CCS moon landing at Mongstad, two former cabinet ministers reflect on this decision. According to Kristin Halvorsen, former Minister of Finance (2005-2009), Statoil was “not very eager to do the job [CCS at Mongstad], it was heavily subsidized by the government and they still weren’t able to do the job […] the agreement was very favourable to Statoil. The risk was all on the government side” (N11). Former Minister of the Environment (2007-2012), Erik Solheim called the Mongstad CCS facility the government’s “pet project” and a “[…] failure. The way we organised it was wrong with the benefit of hindsight. While Statoil did not sabotage it—I think they worked on it with good intentions—but it was not really their kind of core business. Their core business was oil— this was a side business” (N31). Reflecting further, Solheim contends that the government should have given the project to a company such as “Mitsubishi or Siemens, someone who has carbon capture and storage as their core business” (N31).

To summarize, CCS presented another interesting example of within-case variation. Here, the typically strong state advancing clear and durable climate policy was nowhere to be seen. The government lacked the bureaucratic expertise in CCS technology. It failed to provide sufficient political or financial capital to support an expensive emergent technology. Further, the state provided inconsistent signals to elites on CCS. The result was increased risk among elites and

84 The Norwegian government has since postponed this decision to 2021 or 2022.

101 atypically volatile networks.85 The resultant policy, unlike most other climate policy in Norway, was late and unstable.

3.3 Conclusion

As will be evident from the Canada and Australia case studies, Norway’s overall climate policy is to be envied. The small Nordic nation has accomplished what Canada and Australia has not: early, broad and durable climate policy. Without a doubt, its climate policies are relatively ambitious. Yet, Norway’s climate story is more complicated than most armchair observers expect. By reading Norway’s climate policy history through the lens of this analytical framework, the role of state strength, elite risk perceptions and policy networks are foregrounded.

The Norwegian state is strong by virtue of its level of state ownership and unitary government, and its long tradition of both independence from industrial interests and a highly competent bureaucracy. In Norway, the state remains an energetic participant in the domestic economy, de- risking the investment environment, providing stability and ensuring the maintenance of generous welfare policies. The Norwegian state would not imperil such a major source of income and employment. As a result, elites saw most climate policy as an immaterial political risk and some even viewed climate policy as enhancing the competitiveness of the oil and gas industry and enabling growth in domestic fossil fuel production.

Elites in Norway sought to open and formalize climate policy networks; however, the restrictive framing of climate policy within these networks precluded the ability of environmental groups to focus on fossil fuel supply-side climate policies and remain network members. As a result, emphasis by green groups was placed on reducing oil and gas industry emissions intensity, and on a host of other policies that did not threaten business-as-usual growth for the industry. Civil society organizations have only recently been turning their attention to production side policies,

85 According to Leiv Lunde, Director of Strategy at the Ministry of Foreign Affairs (N29), even within Statoil there was a diversity of perspectives on CCS. Some at Statoil see CCS as critical for making gas a long- term source of energy, “not just a transition source,” according to former Senior Vice President of Corporate Sustainability, Hege Marie Norheim (N07). Others at the company see CCS eroding their market share if it is used on coal-fired power plants to edge Norwegian gas out of the European power market.

102 particularly around the offshore development near the ecologically-significant Lofoten Islands. Labour unions were actively included in climate policy networks through strong, formal connections with the Labour Party, and good access to other political parties. The views of the peak labour association were not that dissimilar from those of the peak business association.86

Norway’s strong state placated elite concerns and formalized and broadened, to a point, policy networks. In short, the strength of the state created the foundation for the country’s apparent climate policy success.

As will be discussed in Chapter Six, the achievement of early, broad and durable climate policies has not yet translated into what ultimately matters: absolute emission reductions. Nevertheless, compared to Canada and Australia, Norway offers the most hope of decarbonizing its domestic economy.

86 Landsorganisasjonen i Norge (LO), the main peak labour association in Norway, has since the early 20th century been central to most public policy development in Norway. Its position on climate policy has been highly aligned with the Labour Party and with the petroleum industry associated unions. LO has also co-published, with the peak business association Næringslivets Hovedorganisasjon (NHO), a number of climate policy position papers (LO and NHO 2015c, 2015a, 2015b). This close association would be an unthinkable event in Canada or Australia.

103 CHAPTER FOUR: Canada Case Study

And all of those so-called commitments in Paris? You watch, you watch. Symbolic commitments will be made, symbolic policy statements will be enacted, but they won’t have effect on the gearing of carbon in most carbon-intensive economies, especially this one. It’s very difficult to grind it out—people like bloody oil.

-Robert Skinner, former oil and gas executive, Senior Executive Fellow, School of Public Policy, University of Calgary (C25).

Once known internationally as an environmental leader, Canada now struggles to reconcile its unwavering ambition for sustained growth of fossil fuel extraction with its desire to restore its standing as a global leader in addressing climate change. When examined over three decades, Canada’s national climate policy has been late, relatively narrow and inconsistent.

How did Canada’s climate policies come to pass? Central to the answer are waning state strength, the evolving perceptions of economic and regime elites on climate policy, the ebb and flow of climate policy networks and the feedback that emerged from faltering, repetitive attempts to generate national climate policy. One hundred and fifty years of federal and provincial struggle over the control of resource development played a major role in the weak strength of the Canadian state. From the 1868 federal purchase of Hudson’s Bay Company lands to the 1930 transfer of natural resource control to the western provinces, the energy crises of the 1970s, the National Energy Program (NEP) and the 1985 Western Accord, federal-provincial conflict set the stage for subsequent climate policy development.87

As climate policy emerged in the late 1980s and early 1990s, we see an increasingly weak state that is progressively more dependent on fossil fuel production. Canada’s federal government has limited territorial reach; it has few constitutional levers over provincially-controlled fossil fuel production. As the economic importance of the oil sands has grown, Ottawa has had decreasing

87 I have written considerably more detail about these antecedent events and the climate policy history of Alberta. However, these sections have been removed to shorten the length of the chapter.

104 autonomy from the particularistic interests of the fossil fuel sector. Combined with limited bureaucratic capacity to develop, implement, and enforce climate policy, Canada has been unwilling, and at times, unable to de-risk climate policy for elites. Canada’s high degree of economic integration with the United States makes the situation even more complex. The climate policy vacillations and fossil fuel dependence of its southern neighbour have, at times, catalyzed and inhibited climate policy development north of the border (Harrison 2010). Instead of using what risk-bearing capacity it has to advance climate policies that would meet or beat its emissions reduction targets, Canada, the weak state, facilitated accelerated oil sands development. Without clear and strong policy signals, elites associated climate action with considerable political risk, especially given the expansion plans for Alberta’s oil sands. As a result, once broad and stable policy networks shrank and became ephemeral. Those excluded from the climate policymaking process sought other venues. Those remaining in the unrepresentative networks crafted policies that successfully delayed policy that would result in the necessary and inevitable absolute emissions reductions required from fossil fuel development. By and large, climate policy was late, narrow in scope, limited in means and not durable. The economic and regime elites advanced policies that did not threaten the status-quo.

The bulk of this chapter traces Canada’s climate policy history from Brian Mulroney’s early efforts in the late 1980s, through Jean Chrétien’s efforts to sign and ratify the Kyoto Protocol, the stilted climate policy of the Paul Martin and Stephen Harper governments, and lastly, to the climate policies of . This narrative is woven together by the analytical framework in order to bring explanatory power to this historical account and generate insights that can be tested in other jurisdictions or marshaled to shape future climate policy reform in Canada. As Canada’s climate policies have been much more volatile than Norway, this chapter is organized by different governments not individual policies.

4.1 The Mulroney Government (1988-1994)

The story begins in the mid-1980s when the federal government was simultaneously ceding control over oil and gas industry rents to the provinces and becoming an international leader in environmental policy. This leadership began with air and water pollution and soon moved to climate change. When Brian Mulroney was first elected in 1984, the environment was not a partisan issue. As with Nixon-era Republicans in the United States, Canada’s Progressive

105 Conservatives demonstrated considerable leadership on environmental policy. It did not take long for Mulroney to lead the negotiations with U.S. President Ronald Reagan on addressing acid rain. Not long after, Mulroney championed work on the ozone layer, culminating in the Montreal Protocol.88 Canada’s federal government, and many individual Canadians, developed a reputation as being on the vanguard of global environmental issues.89 Moreover, the federal government began to stabilize and open environmental policy networks, most notably through the National Round Table on the Environment and the Economy (NRTEE).90

4.1.1 1988 Toronto Climate Conference

As the 1980s progressed, the Canadian state’s strength on energy policy was waning, giving more ground to market forces, the private sector and the provinces. State-owned energy companies were privatized, energy prices were deregulated, and the federal National Energy Program was shelved. However, the state’s relationship with climate policy had yet to be charted. In fact, it was not until 1988 that climate change appeared on the radar screens of many policymakers. Before long global warming transformed into a critical geopolitical issue for many

88 Indeed, Mulroney has been feted by environmentalists as Canada’s greenest Prime Minister (Cheadle 2006). This laurel was bestowed on him in 2006 by a panel of environmentalists for an event hosted by Corporate Knights magazine. 89 As Bernstein (2002) noted, Canadian government scientists or senior bureaucrats have held leadership positions at the World Meteorological Organization, the United Nations Environmental Programme, the World Climate Research Program and the International Union for the Conservation of Nature. The UN WCED, chaired by Norwegian PM Gro Harlem Brundtland, also had a connection to Canada. The WCED’s Secretary General was Canadian Jim MacNeil, who had also been the Director of Environment at the OECD (1978-1984), was also the lead author of the Commission’s final report: Our Common Future. Another Canadian, Maurice Strong, was a Commissioner for the WCED. Strong had been Secretary General of the 1972 UN Conference on the Human Environment in Stockholm, Secretary General of the UN Environment Programme (1976-1978), and Under-Secretary General and Special Advisor to the Secretary General of the UN Later, Strong was instrumental in planning the 1992 Rio Earth Summit where the UN Framework Convention on Climate Change was signed. 90 In 1987, a federal-provincial task force on environment and economy issued its final report, recommending the institutionalization of multi-stakeholder consultative policy development through the creation of advisory Round Tables on Environment and Economy. This effort to expand and stabilize environmental policy networks in Canada was quickly adopted by federal, provincial and municipal governments (MacDonald 2007). These permanent Round Tables had high level involvement from industry, with CEOs and senior executives participating, and from universities, environmental groups, labour unions and social advocacy organizations. The NRTEE, created in 1988, reported directly to the Prime Minister and was an independent policy advisory agency. Until its disbandment in 2013, NRTEE played an active role in advising the federal government on climate policy, keeping the government accountability on its climate change commitments and educating Canadians.

106 countries. As detailed in the previous chapter, in June 1988 Canada hosted the World Conference on the Changing Atmosphere (WCED 1987).

The timing of the conference was highly auspicious. It took place just days after that year’s G8 Summit, also held in Toronto, and many of the international media covering the larger geopolitical gathering also stayed to cover the climate conference. This served to amplify the reporting of the Conference’s audacious recommendation of reducing global greenhouse gases 20 per cent below 1988 levels by 2005, the so-called ‘Toronto Target’.91 The concurrent heat wave in North America provided the media and policymakers with a physical reminder of what climate change could look like, further raising public concern.92 With the aid of these unforeseen weather events, the Mulroney government was able to leverage its role as an international environmental leader and its bureaucratic capacity to raise the profile of climate change among global policymakers. Domestically, Canada’s federal government was also tasked to come up with a plan to reduce greenhouse gas emissions.

4.1.2 Early Environmental Group Climate Advocacy

During the 1980s, environmental groups were only just beginning to engage in climate policy advocacy. Similarly to Norway, public knowledge of climate change during these early years of climate policymaking was very low, even though public concern for other environmental issues at the time was high (Belfry Munroe 2016). Concurrently, environmental groups in Canada also began to professionalise and establish formal coalitions (Demerse and Lemphers 2016). Shortly after the 1988 election, an alliance of 30 environmental groups and the Assembly of First Nations, the peak association for status First Nations in Canada, came together to pen an environmental action plan for Canada, Greenprint for Canada (Greenprint for Canada Committee 1989). The Greenprint was based on a similar strategy used by U.S. environmental groups (C01). The group published the report in June 1989 and presented it to Environment Minister Lucien Bouchard and Prime Minister Brian Mulroney. Gale (1997) contends the

91 The Toronto conference also preceded James Hansen’s testimony to the U.S. Senate on global warming and served to further amplify the media attention on Hansen’s Senate appearance. 92 Thirty years later, one interviewee remembered images from that summer of “barges running aground in the Mississippi, and the Governor of Illinois was calling for them to open the floodgates to Lake Michigan to fill up the rivers. It was quite something” (C06).

107 document provided a helpful political impetus for a comprehensive environmental plan that was already underway at Environment Canada. In the small section regarding climate change, the Greenprint recommended, among other things, a formal commitment to the Toronto Target, tighter efficiency standards for vehicles, appliances and buildings, and a national carbon tax on fossil fuels.93 In November 1989, a coalition of 28 environmental groups and the Alberta Federation of Labour launched a national campaign to spur the federal government to adopt the Toronto Target and lead international efforts to fight global warming (Friends of the Earth Canada 1989; McInnes 1989).94

Meanwhile, business interests, particularly large industrial emitters such as fossil fuel companies and utilities, were beginning to organize a campaign against action on climate change. For these economic elites, transformative climate policies carried grave political risks. Major fossil fuel companies, for example Exxon and Shell, had subsidiaries in Canada and had known about the global warming dangers of fossil fuel combustion since the late 1970s.95 In 1989, Shell and Exxon, along with BP, Chevron, the American Petroleum Institute, and the National Coal Association, among others, formed the Global Climate Coalition. This organization focussed its activities in the United States and on international climate negotiations, but its members were also active in Canada, casting doubt on the ability to reduce emissions and price carbon.96

93 The report recommended carbon tax be instituted in 1991 at 2.5 cents per litre of gasoline, and that it could raise $40 billion over 15 years to fund energy conservation programs, reforestation of 2 million hectares and the completion of the national park system (Greenprint for Canada Committee 1989: 21). 94 This campaign coincided with a Parliamentary Standing Committee on the Environment hearing on global warming. 95 According to a 1988 confidential internal report Shell had been commissioning research on the greenhouse effect since 1981. Shell had even calculated that in 1984 the fossil fuels it produced were responsible for 4 per cent of global GHG emissions (ClimateFiles 2018). Similarly, Exxon had been commissioning internal research on the global warming since at least 1976 and began an active campaign against action on climate change in 1989 which ramped up in the lead up the Kyoto Protocol negotiations (Supran and Oreskes 2017). 96 For example, the Canadian Petroleum Association made a submission to the House fo Commons Standing Committee on the Environment in 1989 regarding global warming and Imperial Oil, an Exxon subsidiary, published a discussion paper on climate policy options in 1991 (Canadian Petroleum Association 1989; Imperial Oil 1991).

108 4.1.3 1990 Green Plan

Following the 1988 Toronto Conference, the Mulroney Government laid the groundwork for the December 1990 Green Plan.97 This document laid out the government’s broad blueprint for implementing sustainable development, of which climate change was but one of many issues.98 Environment Minister Bouchard was inspired by the integration of economy and environment from the Brundtland Commission and sought to integrate the two in this environmental master plan (Hoberg and Harrison 1994). It largely centred on public education and spending and eschewed any regulatory change or legislation that would compel private sector change.99 However, it did echo the environmental leadership the Mulroney government had shown in the past by noting that “initial domestic action on climate change should not await the signature of an international convention” (Government of Canada 1990: 100). Mirroring Brundtland’s creation of sustainable development think tanks in Norway in 1990, the same year Mulroney created the International Institute for Sustainable Development (IISD). The IISD would go on to become an important knowledge creator and networking organization shaping environmental policy in Canada and abroad.100

Nevertheless, the federal cabinet met the draft Green Plan with stiff opposition. The Ministers of Finance, Industry, International Trade and Treasury Board opposed the integration of the economy and environment on the grounds that it was a ‘power grab’ by the Minister of Environment (Gale 1997). More public consultation was needed. A hastily organized cross- country consultation took place that industry and environmental groups criticized (Hoberg and Harrison 1994).

97 In November 1990, the federal government along with provincial ministers of the environment and energy released the National Action Strategy on Global Warming (Canadian Council of Ministers of the Environment 1990). The Strategy had three high-level goals: mitigation of greenhouse gas emissions, adaptation to climate change, and improving climate science. 98 The Green Plan’s section on global warming represents 15 of the plan’s 190 pages. 99 A rare exception would be appliance energy efficiency standards that were pursued under the Department of Energy, Mines and Resources. 100 For example, the IISD’s Global Subsidy Initiative has played an instrumental role in fossil fuel subsidy phase outs in Canada and many other countries (Lemphers, Bernstein, and Hoffmann 2018).

109 When a draft version of the Green Plan containing a carbon tax was leaked by an anonymous source to the Business Council on National Issues (BCNI), the BCNI quickly lobbied the Prime Minister’s Office (Hoberg and Harrison 1994). Industry was seeking less regulation, especially regulation that could negatively impact competitiveness. Alberta, with its oil and gas industry, was particularly concerned over the potential of a carbon tax. The federal Deputy Minister of Environment leading the Green Plan was Dr. Len Good, a key architect of the National Energy Program much-maligned in Alberta (Gale 1997). Ian Shugart, former Chief of Staff to the federal Minister of Energy, Mines and Resources (1989 to 1991) contended that at the time of the Green Plan any “[carbon] pricing or market mechanisms would have been regarded as very, very suspect—like almost an allergic reaction—because of the legacy of the NEP” (C07). When asked what climate policy options would have been possible if Canada did not have the legacy of the NEP, Shugart responded, “[…] my guess is that government would have had much more freedom or scope to use market mechanisms like pricing” (C07).

The final version of the Green Plan did not contain any proposal for a carbon tax but it did say the government would study the idea of a carbon tax in 1991.101 It also avoided any direct mention of reducing fossil fuel production. The Green Plan also backslid on the “Toronto Target” of 20 per cent reductions by 2005 to a more modest goal of stabilizing emissions at 1990 levels by 2000. The backtrack on the carbon tax and the Toronto Target represented Canada’s first regression or negative feedback on climate policy—the result of elite backlash.

The media, opposition and environmental groups largely panned the end result, which for many “represented nothing more than a green veneer over the status quo” (Gale 1997: 108, italics in original). Major emitters and the provinces were much less antagonistic. Indeed, Alberta publicly praised the final product. Hoberg and Harrison (1994) contend the tepid reaction of major emitters and provinces was because the plan’s now weak and vague measures were no longer significant enough to warrant concern.

101 In 1991, Finance Canada and Environment Canada did produce a discussion paper on a federal carbon tax as a potential climate policy (C35).

110 At the time, bureaucratic capacity regarding this new environmental concern was low.102 The policy development capabilities at Environment Canada was not as sophisticated as other federal departments, especially on an emerging issue like global warming. For this reason, the Green Plan was largely written by outsiders to Environment Canada, brought into the department to prepare the document (Gale 1997).

Relative to Environment Canada, Natural Resources Canada (NRCAN), then called Energy, Mines and Resources did have more technical expertise on climate policy at that time.103 However, NRCAN lacked autonomy from major industrial emitters. NRCAN officials leaned on private sector resources, particularly Exxon-controlled Imperial Oil, to better understand the impacts of carbon pricing on the fossil fuel industry. Mike Cleland, who was the Director General of Energy Policy at NRCAN in the early 1990s, recalled:

One of our key interlocutors was Imperial Oil, and we were actively engaged with them over the course of a couple of years examining carbon pricing and looking at different approaches to carbon pricing and the impacts of it, et cetera, et cetera […] for them it was useful to share analytical resources with the federal government through NRCAN. You know, share insights with government officials on what carbon pricing might look like and how it might work […] obviously as an organization they undoubtedly had more bench strength than we were seeing. So, how much of that was actually being brought to bear on this? We were pretty much equal partners. We had our own in-house analytical capability, including modelling capability. Two different

102 David Runnalls, former President of the IISD, recalled during the development of the Green Plan, “I don’t think we ever took climate change that seriously until somebody had to actually sign on a dotted line somewhere, because I don’t know whether anybody ever went and talked to Mulroney about how hard it was going to get to get these reductions. I think they all just thought, yeah, yeah, yeah, we’ve got to do this” (C06). 103 At the time called Energy, Mines and Resources, the Department had long-standing technical knowledge of emissions-intensive industries and already managed an Office of Energy Efficiency that dealt with renewable energy and energy efficiency.

111 kind of modelling capabilities that were kind of able to compare results (C37).

While Cleland admitted Exxon-controlled Imperial Oil’s engagement was “clearly defensive,” it is difficult for me to concede that NRCAN was an equal partner with the world’s largest international oil company. Exxon’s early climate change dis-information campaigns began during this period and Exxon’s involvement also coincided with Mulroney, and soon afterwards Chrétien, closing the door to carbon pricing. David Runnalls, currently Senior Fellow at the Smart Prosperity Institute, observed:

[…] the old joke about Energy, Mines and Resources was that it was the embassy of the energy industry in Ottawa, and if you went into the department and talked to people—even recently, I don’t know what it’s like now—you basically found people who thought that part of their job was to represent the fossil fuel industry in Ottawa (C06).

The Mulroney government had given another clear signal to Alberta and the oil and gas industry that it was passing the reins of fossil fuel development to the provinces, limiting the territorial reach of Ottawa.104 This had the knock-on effect of weakening an already weak state and making early, broad and durable climate policy all the more difficult. Despite calls from civil society in the 1989 Greenprint report and the 1990 move by Norway’s Brundtland government to tax carbon, the Mulroney government capitulated to industry concerns and put an end to any serious consideration of a carbon tax. In the broader context of declining federal state strength, economic and regime elites in Canada sought to limit the ambition of what they perceived to be an economically and politically risky policy. Further, the signals from the United States government and economic analysis from Exxon warned of economic calamity from any serious attempts to reduce emissions. Curiously, these analyses did not calculate the costs of inaction or the economic benefits of reducing emissions. The networks engaged in the development of the

104 Earlier in his mandate, Mulroney signed the Western Accord, relocated Ottawa’s National Energy Board (NEB) to Calgary and privatized the federally owned oil and gas company Petro-Canada.

112 policy were constrained, despite the nominal consultation. Indeed, Department of Finance officials saw the plan as a budgetary exercise that required secrecy. This excluded both industry, who feared higher costs, and environmentalists who wanted more transparency (Gale 1997). NRTEE, whose raison d’être was to provide independent advice on environmental policy, was excluded from the development of the Green Plan (Gale 1997). The result was a relatively narrow policy that only lasted a few years.

4.1.4 1992 Rio Earth Summit

As the Green Plan was rolled out, Canada was at the forefront in the development of the United Nations Conference on Environment and Development, also known as the Earth Summit, to be held in Rio de Janeiro in June 1992. Planning for the Earth Summit began in December 1989 and was organized by Conference Secretary-General and Canadian, Maurice Strong. Political scientist Douglas MacDonald (2007: 134) called the Rio Earth Summit the “apogee of the political power of the environmental movement” in Canada. According to an Environment Canada summary report of the event, Canada’s preparations for the Earth Summit included receiving input from “a large number of interest groups connected to the environment, development, business, industry, labour, the churches, universities, women, natives, and youth, as well as all levels of government” (Meakin 1992). Within the federal government, Environment Canada and External Affairs and International Trade Canada chaired an interdepartmental committee that brought together 20 different federal departments and agencies. This impressive breadth of internal and external stakeholders in part reflects the wide scope of the conference but also the importance of the meeting for the federal government. Canada’s strong leadership position provided a clear signal to the national economic and regime elites that the networks engaged in shaping the country’s position at the Earth Summit could be broad. By this time, the Mulroney government had already punted threatening proposals like a carbon tax for further study.

The Earth Summit was the largest gathering of national leaders at the time with 108 heads of state in attendance. In addition, over 17,000 delegates attended the parallel NGO Forum and the event was reported by nearly 10,000 on-site journalists (United Nations 1997b). Canada’s delegation was broad and diverse, ranging from environmental and social NGOs, business groups, student associations, youth groups and provincial and municipal governments, who had

113 daily and direct access to Canadian negotiating team (Charest 1998). The most important outcome of the Summit was the signing of the UN Framework Convention on Climate Change (UNFCCC).105 The UNFCCC is an international treaty that provided the structure through which the world could negotiate future agreements to address climate change. Its general aim is to “stabilize greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system” (United Nations 1992). The agreement stated the stabilization goal would be at 1990 levels but it lacked timelines and country-specific targets; they were to be worked out at a later point. The absence of timelines and targets in the UNFCCC was widely attributed to the United States.106 The text of the UNFCCC agreement was negotiated in advance from February 1991 to May 1992, with Canadian Elizabeth Dowdeswell co-chairing the preparatory committee. The Mulroney government made sure that it was the first country, in December 1992, to ratify the Framework Convention on Climate Change.

As the federal bureaucracy moved to implement the Green Plan and the declarations at Rio, storm clouds hung over the Progressive Conservatives. In February 1993, Brian Mulroney resigned as leader of the Progressive Conservative Party. Kim Campbell won the party leadership race and in June 1993 became Canada’s first female Prime Minister. Her tenure, however, was brief. Notwithstanding his environmental efforts, Mulroney was deeply unpopular in the early 1990s. The failed Meech Lake constitutional reform efforts, a violent land dispute between a Mohawk community and the government, the implementation of a seven per cent goods and services tax in 1991 and an economic recession did not endear the Progressive Conservatives to Canadians. Campbell was unable to shake the legacy of her predecessor.

105 The other outcomes of the Rio Earth Summit include the following: the UN Convention on Biological Diversity, whose secretariat is based in Montreal; the Principles of Forest Management; the Rio Declaration on Environment and Development, which defines the rights and responsibilities of people to develop their economy and safeguard the environment; Agenda 21, a blueprint for sustainable development for the 21st century 106 Other major fossil fuel producers, such as Saudi Arabia, were also able to weaken language in the Agenda 21 agreement regarding fuel efficiency, alternative energy sources and limits on internal combustion engine vehicles (Meakin 1992).

114 In sum, the Mulroney federal government demonstrated considerable international leadership on early climate policy. Unlike with domestic climate policy, the federal government was less encumbered by federalism when it developed international climate policy. Its territorial reach was less contested, it was more autonomous from domestic industrial interests, and it was able to deploy the federal government’s then-considerable bureaucratic capacity to aid in shaping this international policy.

Domestically, the federal government was more constrained. With less autonomy and reduced territorial reach, domestic federal climate policies were narrow and limited to either voluntary initiatives or program spending that did not present material political risks to elites. The Green Plan signalled to major emitters that it would not tax carbon, at least in the near future. Not threatened by federal climate policy, these elites consequently supported the institutionalization of diverse networks engaged in climate policy: NRTEE, the Canadian Environmental Network, and broad consultations for the Rio Earth Summit. Events unrelated to Ottawa’s climate policies precipitated a change in government and, as will be discussed below, reset climate policies before clear results could be seen.

4.2 The Chrétien Government (1993-2003)

The October 1993 federal election delivered the Conservatives one of the most disastrous defeats in Canadian political history. The party went from having a majority of 169 seats to only two. Prime Minister Kim Campbell lost her seat. The Liberal Party, lead by Trudeau-era cabinet minister Jean Chrétien, assumed power with a majority of 177 seats. Chrétien was Prime Minister for three majority governments, winning elections again in 1997 and 2000.

While promising more action on climate change than their predecessors, the Liberals under Chrétien failed to deliver. The Liberal’s 1993 Red Book election platform contained a few vague commitments on climate policy. The Red Book pledged not simply to stabilise emissions at 1990 levels by 2000, as committed to by the Progressive Conservatives, but to adopt the more ambitious ‘Toronto Target’ of reducing emissions 20 per cent below 1988 levels by 2005 ( 1993). A detailed plan to reduce emissions was to be developed at a later point in consultation with stakeholders. With no segments of society championing the Mulroney-era Green Plan—a lack of positive feedback—the Liberals promptly abandoned it.

115 Had industry, environmental groups or think tanks such as NRTEE or IISD strongly supported the Green Plan, it might have proved more durable.

According to many interviewees, although Chrétien was passionate about nature conservation, climate change was not a serious priority for him. David Runnalls, former President of the IISD, who personally lobbied Chrétien on climate change issues recalled, “It’s clear he [Chrétien] didn’t give a damn about it [climate change]. And the only time he gave a damn about it was when somebody raised the political price on it a bit” (C06). Chrétien also brought about a different approach to environmental governance, relaxing Mulroney’s consistent increase in regulatory pressure on industry (MacDonald 2007). Due to the ascendence of neoliberal ideology, environmental regulations were increasingly framed by elites as inhibiting economic growth and distorting markets, rather than correcting market failures.

In the course of the Chrétien years, environmental groups steadily lost influence with the federal government. Although these groups had been relatively well funded from private donations and government grants during the 1980s, shortly after the Rio Earth Summit, and coinciding with an economic recession and neoliberal public sector reforms, these sources of income disappeared. Many ENGOs did not have contingency funds, resulting in their collapse in the 1990s (Gale 1997).

Canadian unions were not actively advocating for climate policy throughout most of the 1990s. While some advocacy and policy statements had been made by American counterparts of unions in Canada, such as the United Steelworkers 1990 report Our Children’s Future, it took until 1999 before national unions in Canada proactively adopted climate policy positions (USW 2002). In the meantime, especially during the mid-1990s, union climate policy engagement in Canada was reactive. Unions that had skin-in-the-game, notably the United Steelworkers (USW), the Communication, Energy and Paperworkers Union of Canada (CEP), and the Canadian Auto Workers (CAW), understandably saw the potential risk of job loss from emissions regulations (Nugent 2010).107 During its first term, the Chrétien government did not signal how it would address these employment concerns.

107 In 2012, the CEP and the CAW merged to form Unifor.

116 4.2.1 The Road to Kyoto

Despite the dearth of climate advocacy from environmental groups and unions, the federal government was legally compelled to develop climate policy. As a party to the UNFCCC, Canada was obliged to publish a national climate plan in time for the first Conference of the Parties (COP) in Berlin in 1995. This deadline set the stage for the 1995 federal-provincial National Action Plan on Climate Change.

The Liberals formed a multi-stakeholder Climate Change Task Group in early 1994 with the mandate to develop consensus-based recommendations for a National Action Plan on Climate Change. Members of the Task Group included NGOs such as the Sierra Club and industry associations such as the Canadian Association of Petroleum Producers (CAPP). It did not take long for numerous Task Group members to express concerns over a lack of clear direction and few resources, leaving those involved to consider the initiative a failure (LeBlanc 1995). Before some environmentalists left it and began publicly voicing dissent, the Task Group quickly published 88 recommendations in a June 1994 report. The recommendations were overwhelmingly voluntary: opt-in programs such as a voluntary registry and challenge program, public education, and subsidies. The view of industry prevailed. Ironically, despite the limited costs associated with voluntary policies, the majority of the recommendations were never implemented.108

Canada’s private sector did not limit its engagement to government-sanctioned venues. Major emitters were actively organizing against transformative climate policy. In September 1994, a coalition largely composed of companies and industry associations that were major greenhouse gas emitters formed the Alliance for Responsible Environmental Alternatives (AREA).109 AREA

108 In a 2000 review of the progress made on the 1994 Task Group report, the Pembina Institute found that those measures with voluntary, education or research-based approaches had an implementation rate of 33 per cent. Measures involving regulatory or financial incentives had an implementation rate of 15 per cent (Hornung and Bramley 2000). 109 As of 30 April 1998 the membership list was notably dominated by the oil and gas, steel and cement industries. It also included a few municipalities which hosted major emitters (Strathcona County, Wood Buffalo, and Hamilton) and the Alberta Building Trades Council (AREA 1999). It ceased operations in 2000.

117 was co-chaired by Eric Newell, CEO of the oil sands mining company Syncrude. The coalition clearly stated its goals on its website:

Canadian industry must organize itself more effectively to ensure that government policy development will not unduly retard economic growth or put Canadian industry at an economic disadvantage to its major trading partners and the other G7 countries. AREA and business groups in general, believe that any government intrusion beyond encouraging voluntary measures could slow economic growth in Canada and lead to a reduction in our standard of living (AREA 1999).

The Business Council on National Issues provided a broader platform from which to voice concerns, as it had during the NEP and the development of the Green Plan. The peak association for big business released a report in 1994 promoting voluntary business action on climate change (MacDonald 2007).

Another business group that promoted limited, voluntary climate action was the Friday Group. Created by Frank Frantisak from the mining giant Noranda in 1990 in response to the Mulroney government’s poor consultation of industry for the Green Plan, the Friday Group was a forum of industry, politicians and federal bureaucrats to brainstorm ideas and provide early informal feedback. The Friday Group consisted solely of economic and regime elites and hatched the idea for a voluntary greenhouse gas registry that became the Voluntary Challenge and Registry program, described below (Dashwood 2012).

Industry advocacy strategically exploited divisions within the federal cabinet. The Chrétien cabinet quickly split with the Ontario-based Environment Minister Sheila Copps supporting regulation and the Natural Resource Minister, the lone Albertan Liberal MP Anne McLellan, firmly in support of voluntary initiatives (MacDonald and Smith 1999). Despite Copps’ preference for regulation, she conceded in her memoir that “it became clear that the rule of [federal-provincial] ‘consensus’ in the environmental agenda would mean moving to the lowest common denominator. There was no way that Alberta would agree to any reduction in fossil-fuel emissions” (italics in original, Copps 2005: 93). Because of the limited territorial reach of the

118 federal government, there were few options for the federal government to compel Alberta to accept federal climate regulations.

For Canada’s oil and gas industry, a favourable Climate Change Task Group report and the reluctant support of the Liberal caucus were insufficient. This important industry and major emitter wanted more assurances that any future climate policy would not have a material impact on its expansion plans. Three months after the Task Group report, McLellan signed a Memorandum of Understanding on behalf of NRCAN with CAPP. In the Memorandum, the oil and gas industry and the federal government agreed to develop a voluntary carbon registry program. The Chrétien government honoured the agreement. Like with Mulroney’s Green Plan, there was increasing evidence that the Chrétien government also lacked the autonomy from major industrial emitters to implement policies that could meaningfully reduce emissions.

Less than a year later, in February 1995, the Liberal government unveiled a National Action Program on Climate Change with a Voluntary Challenge and Registry (VCR) as its hallmark policy (MacDonald 2007).110 In brief, this policy gave companies the option to develop a plan to reduce emissions and then publicly report progress on this plan. Similar to the Responsible Care program of the chemical industry in North America, the VCR relied on peer pressure to usher in transformative change. While an abject failure in terms of emission reductions, the VCR provided valuable legitimacy for the efforts of the federal government and participating firms.111 Action was being taken. Canada showcased this newly announced program at the first meeting of parties to the UNFCCC in Berlin in April that year.

The Chrétien government did not consider exclusively voluntary climate policies. Despite McLellan’s opposition in Cabinet to regulation, some of her NRCAN officials were working on a policy on carbon pricing. A senior NRCAN bureaucrat at the time recalled,

Let’s just say that our minister [McLellan] at that point was getting a lot of heat from various people in Alberta about the fact that we

110 In Québec, there was a separate policy called ÉcoGESte. 111 An evaluation of the VCR program by the Pembina Institute found that after five years, companies that opted to participate, did not reduce emissions any more than sector-wide emission trends (Hornung and Bramley 2000).

119 were actively involved in developing a […] what came back around was, finally, basically, PMO [Prime Minister’s Office] saying, ‘Stop working on this.’ So, we didn’t stop working on it, we changed the name. We started calling it the Greenhouse Emissions Fiscal Instrument (C37).

Regardless of the proposal’s name, the NRCAN initiative never made it to the Cabinet. Finance Canada was also working on a follow-up of a campaign promise from the 1993 Red Book; in 1994 it launched the Task Force on Economic Instruments and Disincentives to Sound Environmental Practices to recommend action for the 1995 Budget.112 Part of the remit of this group was to examine carbon pricing. However, the recommendation regarding pricing carbon pollution was “not seriously entertained by the government at that time,” according to Professor André Plourde, one of the Task Force members (C36). Once again, an early carbon pricing policy proposal was quashed.

Internationally, Canada’s federal government and business community supported cap and trade and carbon offsets. These flexible mechanisms were market-based and ideally applied to all countries, addressing domestic concerns about competitiveness and carbon leakage. An international cap and trade and offset program would shift the emissions reduction burden away from domestic polluting industries to locations abroad where emissions reductions were assessed to be less expensive, often in developing countries. During international negotiations, Canada aligned itself with a bloc of countries that did not have the high environmental ambition of the European Union. Leading up to and during the 1995 Berlin COP, a subset of the JUSCANZ negotiating bloc, consisting of Japan, the United States, Canada, Australia, and New Zealand, fought against targets and timetables in a future climate change agreement (Bernstein 2002).113 Declassified federal cabinet minutes reveal that in the months leading up to Berlin, Canada did

112 Page 63 of the Liberal Red Book remarked: “Our first task will be to conduct a comprehensive baseline study of federal taxes, grants, and subsidies, in order to identify barriers and disincentives to sound environmental practices. We want to promote, not hinder, the research, development, and implementation of clean and energy-efficient technologies; renewable energy use; the sustainable management of renewable resources; and the protection of biological diversity” (Liberal Party of Canada 1993). 113 This informal and ephemeral group was called the Advanced Countries of the Asia Pacific (ACAP) that unlike JUSCANZ was organized strictly around climate policy (A37).

120 not support extending an emissions stabilization cap beyond 2000, the year the UNFCCC stated that emissions were to be stabilized (Government of Canada 1995). Ironically, targets and timetables would be essential features of a functional international cap and trade market. Perhaps realizing this or due to pressure from EU nations or environmental groups, just before the close of the Berlin negotiations, the JUSCANZ coalition agreed to legally-binding timelines and targets in exchange for a flexible mechanisms provision.114

In 1995, Canada lost its bid to host the UNFCCC secretariat in Toronto to Bonn, . A perceived lack of leadership and national commitment to address climate change can, in part, explain this failure (Bernstein 2002). The international community’s decision marked the end of the era of Canada as a strong international environmental leader. Within a decade Canada would become a pariah during UNFCCC negotiations.

The decline in international status was also accompanied by a decline in bureaucratic capacity. The Liberal Government’s 1994 Program Review led to major budget cuts in the 1995 budget, reducing the ability of the government to develop and implement climate policy. Mike Cleland, Director General of NRCAN’s Energy Program during these budget cuts, described their impact on the capacity of NRCAN to engage on climate policy:

It had an impact. Program review was a serious matter. We took big cuts in program review. And everybody did pretty much across the board in the federal government. So, there was no way of escaping that having an impact on your capacity. For example, at the Office of Energy Efficiency we gave up some of our programs. I think that was pretty much the norm (C37).

Between the 1994-95 and 1997-1998 federal budgets, Environment Canada spending decreased by over 32 per cent and spending at Natural Resources Canada dropped by 45 per cent (Bourgon 2009). The cuts to these departments were among the most severe in the federal government and

114 The pilot “activities implemented jointly” program enabled investors from a developed country to pay for an emissions reduction through a host in a developing country. This eventually formed the basis of the Joint Implementation and the Clean Development Mechanism of the Kyoto Protocol.

121 reduced the ability of federal bureaucrats to develop and implement climate policy, especially when spending programs were a central plank in the federal plan on climate change. These budgets cuts clearly weakened the state and made it more difficult to assure economic and regime elites that ambitious federal climate policy was not a perilous activity.

4.2.2 National Task Force on Oil Sands Strategies

In Alberta, significant political changes were underway that would make the decarbonization of Canada’s economy even more remote. In 1993, the same year Ralph Klein was elected Premier of Alberta, the Alberta Chamber of Resources, the peak association for the natural resource sector in Alberta, established the National Task Force on Oil Sands Strategies. Headed by Syncrude CEO Eric Newell, the intent of this group was to accelerate oil sands development in the province. The oil sands had struggled for decades with profitability and with operational challenges. A reboot was needed. Newell enlisted the Mining Association of Canada to rally support in Ottawa among key politicians and ministries (Turner 2017). Members of this new policy network included oil companies, NRCAN, Finance Canada, Alberta Energy, the National Research Council and the Canadian Imperial Bank of Commerce. The membership was highly constrained to organisations and economic and regime elites that had high ideational compatibility. Broader associations like the Alberta Chamber of Resources and the Mining Association of Canada conveyed an expansive economic development agenda even though the primary objectives were restricted to boosting oil sands output. Despite the inclusion of government in the Task Force, all senior positions were held by industry leaders. In Task Force subgroups, government officials, regulators and members of public research agencies held a minority of positions. No labour unions, environmental groups, indigenous organisations, social or faith-based NGOs were included.115 The Task Force delivered its Final Report, The Oil Sands: A New Energy Vision for Canada, in the spring of 1995 just as the federal government was releasing its National Action Program on Climate Change (Alberta Chamber of Resources 1995).

115 Ironically, the report recommended “aboriginal communities should be invited to fully participate in all oil sands economic opportunities” despite these communities not having any input into the development of the report (Alberta Chamber of Resources 1995: 48).

122 Oil sands proponents realized this ambitious vision and much more. Recommendations in the final report included what at the time was an incredibly ambitious goal of ramping up oil sands production from 400,000 barrels per day to 1 million barrels per day by 2020. They reached this production goal 16 years ahead of schedule in 2004.116 The Task Force report also set a then audacious target of $20 to $25 billion of capital investments over the next quarter century.117 They reached that investment target in three years (Chastko 2004). Between 2000 and 2017, $285 billion was invested in Alberta’s oil sands (Alberta Energy Regulator 2018b).118 Meanwhile, the 62-page final report contained only three sentences on carbon emissions. Not surprisingly, given the highly restricted Task Force membership, the climate impacts of accelerated oil sands development were an afterthought.

Consultation with industry is clearly necessary when enacting industrial policy reform. However, in this case, there was arguably an imbalance with broader societal needs as no voices beyond industry and government were included in the Task Force governance or consultations. Meanwhile, mounting demands on an increasingly poorly resourced bureaucracy led to a widening information asymmetry between industry and government. In short, it became more difficult for the federal government to push back against industry’s narrow interests, such as it had during the Pierre Trudeau government during the energy crises of the 1970s.

4.2.3 Federal Engagement on the Kyoto Protocol

While Alberta was racing ahead with its oil sands expansion plans, the federal government continued to engage in multilateral talks for a global climate change agreement. These negotiations were picking up pace in the lead up to the COP 3 meetings in Kyoto in December 1997. Ottawa’s approach had been shifting since the ratification of the UNFCCC in 1992. Both

116 In 2018, oil sands production reached 2.8 million barrels per day (Alberta Energy Regulator 2018a). 117 All dollars in this chapter are considered nominal Canadian dollars, unless otherwise stated. 118 This investment was in part fuelled by rising global oil prices and also by an investment-friendly tax and royalty regime. Within two months of the report being released, Klein all but eliminated royalties on oil sands projects, reducing them to 1 per cent until the project has paid off all costs, including research and development, and earned a return allowance, after which a modest 25 per cent royalty would be imposed. Beyond provincial incentives, the Chrétien government also delivered. In the 1996 federal budget lavish federal subsidies were handed to the oil sands industry: all capital costs, including operation and research and development costs, would be 100 per cent deductible from federal corporate income tax in the year incurred.

123 the 1995 National Action Program on Climate Change and the Oil Sands Task Force report clearly revealed that the views of major emitters, represented by Alberta-based Natural Resources Minister McLellan, had won out over those in government, the federal cabinet, and environmental groups and broader civil society advocating for more ambition. Domestic regulations or market-based instruments were off the table as was any connection between carbon-intensive oil sands expansion and national climate policy. After the 1995 Berlin COP, Natural Resources Canada began to take a more prominent position, vis-a-vis Environment Canada and the Department of Foreign Affairs and International Trade, on developing positions related to implementation (Bernstein 2002).

A federal election in early June 1997 awarded Chrétien’s Liberals another majority government. Only a few weeks later at the Denver G8 meeting, EU members encouraged Canada to increase the ambition of its position on an international climate accord.119 U.S. President Bill Clinton was also keen to speak to Chrétien in Denver about Canada’s plan for the Kyoto climate meeting. According to one former bureaucrat, “Chrétien arrived more or less flummoxed by the whole thing” and consequently a senior official from Environment Canada “[…] got called down to Denver on almost a moment’s notice to brief the Prime Minister on this file the Prime Minister had never heard of. Pretty wild” (C37). Climate policy, at least for the Prime Minister, had evidently not been a priority up until that point.

Meanwhile, the federal government was ensuring its negotiating position was aligned with the provinces. In November 1997, the federal and provincial Ministers of Energy and Environment agreed that Canada should seek to reduce its emissions to 1990 levels by 2010.120 Then, to the surprise of many elites in Canada, Chrétien signalled Canada would further increase its ambition—a position at odds with many in his own cabinet and with the provinces. Chrétien had become energized on climate change after an October 1997 trip to meet European leaders.

119 Since the 1995 Berlin COP, JUSCANZ members moved to support a strengthened position, increasing the pressure on Canada to follow suit. At the June 1997, Denver G8 meeting, Canadian government officials noted a considerable push by EU heads of state, especially Germany’s Helmut Kohl, for ambitious emission targets (Bernstein 2002). Chrétien recalled in his memoir that at this Denver meeting, “Bill Clinton and I were forced to listen to the Europeans brag about the great strides they had made in greenhouse gas reductions during the previous decade” (Chrétien 2008: 384). 120 Québec, the sole dissenting province, sought an even more ambitious goal.

124 During this trip he apparently called Ottawa and ordered his officials to develop a position to “beat the Americans” (Toner 2002: 101). After the November joint ministers’ announcement, the federal government had unilaterally announced a more ambitious target of three per cent below 1990 levels by 2010 just a month before heading to Kyoto.121 Chrétien soon publicized his new found convictions with a series of impassioned speeches stressing his commitment to emission reductions, defending climate science, and likening climate skeptics to the tobacco industry denying the health risks of smoking (Bernstein 2002).

An emboldened and seemingly more autonomous federal government surprised industrial interests who rallied to defend business as usual. Industry responded with increased lobbying and the Canadian Coal Association ran a public relations campaign warning Canadians of economic suicide should Canada agree to a deal in Japan (Russell and Toner 1999). CAPP used full-page newspaper ads arguing that developing countries such as India and China ought to reduce their emissions and that Canadian gas exports to the United States reduced global coal use. For both points, CAPP advocated outsourcing emissions reductions away from Canada’s petroleum industry and towards other countries.122 The environmental group, the David Suzuki Foundation, countered with opinion polling showing widespread public support for federal climate action and its own full-page ads and research studies (Smith 1998).

During the negotiations in Kyoto, Canada released its target of a three per cent reduction from 1990 levels by 2010. When the U.S. Vice-President Al Gore intervened at the last minute, increasing his nation’s ambition, Canada followed suit. Canada wanted to remain relatively aligned with the United States and pledged a further three per cent reduction, bringing Canada’s Kyoto target to six per cent below 1990 levels by 2010. This was far higher than the stabilization target adopted a month earlier by the federal government. Canada agreed to this more ambitious target with the understanding that it would have access to the Protocol’s market-based flexibility mechanisms, such as international offsets, and that it could gain credit for emission reductions

121 This strengthening of the target was, according to some media sources, the result of a phone call from U.S. President Clinton to Prime Minister Chrétien in October 1997 urging Canada to bridge the divide between the ‘highly’ ambitious EU and the ‘less’ ambitious U.S. (Harrison 2007). 122 Although, a split was occurring within Canada’s oil and gas industry at the time. Suncor, Shell and Petro-Canada were identified as more willing to cooperate with federal climate regulation, whereas Imperial Oil and Talisman Energy were unwilling (Jang 1997).

125 from domestic carbon sinks, namely through improved forest and agricultural management. Canada’s six per cent emissions reduction target stood in stark contrast with Norway’s one percent increase and Australia’s eight per cent increase.

Canada’s engagement on the Kyoto Protocol is a cautionary tale of developing relatively ambitious policy without addressing the governance foundations underpinning the successful implementation of that policy. As Chrétien would soon find out, his government now had to face the wrath of the provinces and the oil industry. Without finding other ways of extending Ottawa’s territorial reach, increasing its autonomy from powerful non-state actors or deepening bureaucratic capacity, domestic implementation of ambitious international commitments would remain an extremely challenging undertaking.

4.2.4 Post-Kyoto Federal Climate Policy Under Chrétien

Canada’s Kyoto commitment to deeper emission cuts than had been domestically negotiated outraged many of the provinces and Canadian industry.123 A backlash ensued. Pierre Alvarez, former President of CAPP, recalled “ […] the visceral reaction out here [Alberta], was because it [the Kyoto target] was viewed as being another betrayal as the NEP was […], and there were still enough people around who remember the NEP” (C29). Alberta Premier Klein threatened a constitutional challenge and similarly described the increased ambition as a “betrayal” (Johnsrude 1997). At a meeting with provincial Premiers and the Prime Minister just after the Kyoto conference, the Prime Minister agreed to three concessions that would ultimately slow Canada’s ratification of the Kyoto Protocol and limit the emissions reductions in high-polluting provinces such as Alberta.124 Klein was pleased that this agreement effectively gave Alberta a provincial veto over implementation. The provincial backlash was a classic case of negative feedback from federal climate policy.

123 Ironically, by 2014, five provinces, containing two thirds of Canada’s population, met or surpassed the country’s seemingly outrageous Kyoto target: Prince Edward Island, Nova Scotia, New Brunswick, Quebec and Ontario. 124 These assurances from the Prime Minister included the following: no region would be asked to “bear an unreasonable burden,” a benefit cost analysis of implementation prior to ratification, and any implementation plan would be made in partnership with provinces and territories (Canadian Intergovernmental Conference Secretariat 1997).

126 After Kyoto, the federal government created the Climate Change Action Fund, capitalized with $150 million from the 1998 budget, to develop a national climate action plan and promote public education and research (Government of Canada 2001). A Climate Change Secretariat was formed to coordinate the plan’s development. As part of the consultation for this plan, the federal and provincial energy and environment ministers jointly launched the National Climate Change Process. Alberta and the federal government co-chaired the consultation initiative. The Secretariat created 16 issue tables or working groups with industry, environmental NGOs, scientists and government officials from all levels of government (Hornung and Bramley 2000). This broadening of the policy network was, in part, an attempt to restore the trust of industry and provinces lost by the federal government’s surprise move at Kyoto. This consultation process expanded the traditionally clientelist policy network between Natural Resources Canada and the natural resource industry to include senior bureaucrats from other key departments (Bernstein 2002).

The result of this extensive consultation was a new climate plan released in October 2000 just prior to COP 6 in The Hague, called Action Plan 2000.125 As with the 1990 Green Plan and the 1995 National Action Program on Climate Change, Action Plan 2000 centred on spending programs, public education, and voluntary initiatives. No regulatory or market-based instruments in this $500 million plan were pursued. All its initiatives were highly aligned with industry preference for voluntary climate policy, despite the lack of emission reductions from the previous five years of voluntary programs (MacDonald 2007).126 If fully implemented, the recommended actions in the Action Plan 2000 would result in Canada achieving merely a third of the necessary reductions committed to under the Kyoto target (Government of Canada 2001).

Following the November 2000 election of Republican George W. Bush as U.S. President climate ambition in Canada ground to a halt, just as it had in Australia. Since Bush strongly rejected the Kyoto Protocol, the Alberta government, many industry groups, and the federal government

125 Also in October 2000, at the Joint Ministers of Energy and Environment Meeting, Canada’s National Implementation Strategy and Canada’s First National Climate Change Business Plan were released. These plans set out the measures that provinces and territories will take to reduce greenhouse gas emissions and contribute to national goals. 126 These new programs were in addition to the Voluntary Challenge Registry, which continued to operate until 2004 as a public-private partnership.

127 agreed Action Plan 2000 could no longer be implemented in its current form (Brownsey 2005). At the time, three quarters of all Canada’s trade was with the United States. Canadian economic and regime elites argued that any action to address climate change must be in lock-step with the U.S. in order to avoid putting Canada at a comparative economic disadvantage. Alberta’s oil patch, in particular its emissions-intensive oil sands and heavy oil producers, felt that it would face a disproportionate burden to reduce emissions. Some estimates calculated the costs to meet the country’s Kyoto targets for the trade-exposed oil industry could increase as much as $6 US per barrel, at a time when oil was trading at $23 US (Brownsey 2005).

Comparisons of the federal government’s plan to implement the Kyoto Protocol with Pierre Trudeau’s National Energy Program were commonplace at the time in Alberta. However, the strength of the state to develop and implement climate and energy policy had diminished since the early 1980s. Between 1988 and 1998, Environment Canada had its budget cut by 30 per cent, from $800 million to $550 million (Boyd 2003). During that time, the federal government’s capacity to model the economic impacts from climate change was limited.127 Meanwhile, the federal government had been devolving environmental and energy policy governance to the provinces while the oil and gas industry had significantly increased its ability to influence federal policy.128

In short, a weak federal government had an ambitious Kyoto commitment but no realistic plan to meet its own targets. In the absence of a strong state, regime and economic elites saw transformative climate action as high risk and restricted access to policy networks. Climate

127 David Runnalls recalled the dearth of strong analytical research on the impact of climate change in Canada throughout the 1990s until the federal government began to develop a Kyoto Protocol implementation plan: “See, I just don’t think anybody did proper research on what Canada’s emissions were, where they came from, how they were going to grow, or anything else. We walked around blind. The major study—I was on an advisory group on international trade and environment—and I remember [a senior departmental official] from NRCAN came and spoke to us before Kyoto, and they had this model and they ran this model. And I said, where did this come from? And they said, well, it’s Charles River Associates—basically, it’s the model the U.S. government had paid for, and they’d sort of bolted on some Canadian stuff onto the end. And anybody could tell it was horseshit, but there wasn’t anything else. So I wouldn’t underestimate the degree of ignorance on the part of the provincial and the federal government on climate change until they actually had to come to grips with what they’d agreed to in Kyoto” (C06). 128 Industry and provincial influence over the National Energy Program was minimal compared to the National Oil Sands Task Force.

128 policy was largely kept separate from energy policy. The result was ineffectual climate policy, a booming oil and gas industry and rising greenhouse gas emissions.

4.2.5 Towards Ratification of the Kyoto Protocol

In the spring of 2001, U.S. President George W. Bush confirmed that the U.S. would not pursue ratification of the Kyoto Protocol, which had been signed by his predecessor Democrat Bill Clinton. Given this confirmation and the earlier decision that Action Plan 2000 needed to be re- evaluated, it came then as a shock to many elites when in July 2001 Prime Minister Jean Chrétien announced that Canada would ratify the Kyoto Protocol in 2002, making the country’s pledged emissions reductions legally-binding (Chase 2002).129

Once again, the response from Canada’s private sector was swift and fierce. A well-organized and well-resourced campaign from Canadian business and industry associations ensued (MacDonald 2003). CAPP convened a task force of CEOs to develop a consensus-industry position on a carbon pricing scheme (C29). Major private sector associations, most notably CAPP, the BCNI, and the Canadian Chamber of Commerce promptly sent letters to the prime minister and relevant ministers. New economic analysis was conducted. Canadian Manufacturers and Exporters (2002), the industry association, warned 450,000 jobs would be imperilled if the climate agreement was ratified. As with the National Energy Program, broad-based business associations were mobilized to support the position of emissions-intensive industries, most notably oil and gas.

The federal government attempted to re-frame the ratification debate. In May 2002, the government published A Discussion Paper on Canada’s Contribution to Addressing Climate Change (Environment Canada 2002a). This paper shaped the policy discussions for the next six months around three policy options: domestic emissions trading, targeted measures via public information and minor regulatory changes, or a combination of both. It was the first time the

129 This apparent about-face resulted, in part, from the decision from UNFCCC signatories to account for the carbon stored in the soil and wood fibre (MacDonald 2007). At the same time, the federal government was also pushing for credit for emissions reductions by shipping gas exports to the United States on the grounds that the Canadian gas displaced dirtier oil or coal (Harrison 2007). An identical argument was raised in Norway regarding its shipments of gas to the EU

129 government was willing to move beyond voluntary policies and seriously consider regulatory or fiscal policy instruments.130 In June 2002, the government solicited feedback on a new climate plan through the National Stakeholder Workshops on Climate Change. At these workshops, industry, ENGO, labour and agriculture representatives shared their views on a new policy with government and other stakeholders. It became clear through these broad solicitations that industry views on Kyoto ratification were not aligned with labour unions, environmental groups, and more importantly, the federal government. Most labour unions and environmental groups enthusiastically supported ratification.131

Concurrent with the national stakeholder workshops, the Business Council on National Issues (2002) released a policy statement that argued against emission trading regulation on the grounds it would decrease the competitiveness of Canadian firms and penalize highly efficient businesses. Instead, the Business Council advanced that the government ought to pursue a ‘made-in-Canada’ approach of subsidies for research and development and the maintenance of existing voluntary programs. The statement went on to note the uncertainty surrounding climate science and quote a well-known climate skeptic.132 For the Business Council, an elite club of big business CEOs, the risks caused by requiring companies to pay for carbon pollution were too great given the government had clearly noted a much safer avenue of subsidies and voluntary programs was also possible. In contrast to Norway’s outwardly-focussed climate policy, a ‘made-in-Canada’ approach limited the international policy networks that could be engaged. Policy learning from outside Canada, or input from foreign NGOs, were implicitly excluded in this nationalist approach.

130 Previous government efforts to investigate carbon pricing in the early 1990s are not considered serious since they did not survive long enough to make it to a discussion paper stage. 131 Union support included the CEP, the CAW, the USW and the Canadian Labour Congress. The CAW was highly critical of the federal government’s use of voluntary climate policies, preferring taxes, spending and regulations to realize a meaningful and just transition (CAW 2002). The CEP attempted to reframe the climate policy action as not simply generating wealth but also as a public service that should meet human needs (Nugent 2010). Although these frames by the unions were not adopted by the Chrétien government, they were later adopted by the Trudeau government. Of note, there were some exceptions to support for ratification among conservative building trades unions. The Alberta Building Trades Council joined the anti-Kyoto, business led AREA coalition and the Building Construction Trades Department of the AFL-CIO joined a different anti-Kyoto business lobby group, the Canadian Coalition for Responsible Environmental Solutions (Nugent 2010) 132 That is, Professor Richard Lindzen of the Massachusetts Institute of Technology.

130 Linking the efforts by firms, industry and business associations was the Industry Steering Committee on Climate Change (ISC3). Formed in the late 1990s, the committee’s purpose was to coordinate the private sector’s response to federal climate policy—similar to AREA in the lead up to the 1997 negotiations of the Kyoto Protocol. With the announcement of the federal government’s intention to ratify the Kyoto Protocol, ISC3 played a critical role (Belfry Munroe 2016). Both AREA and ISC3 served a function similar to the Australian Industry Greenhouse network: to coordinate engagement with the federal government and amplify industry influence. Notes from a June 2002 ISC3 meeting recorded the ways by which members could influence Liberal MPs and expressed member concern over the failure to influence government officials by undermining the credibility of climate change science (ISC3 2002).133

In the face of staunch private-sector opposition, the federal government carried on with its ratification plans. In September 2002, Prime Minister Chrétien announced at the “Rio+10” World Summit on Sustainable Development in Johannesburg that Canada’s House of Commons would have a ratification vote before the end of the year. In Canada, international treaties are ratified by Cabinet rather than through a House vote. However, Chrétien strategically shifted the venue of debate out of a Cabinet that was divided on ratification, to a House where he could possibly find more amenable backbench MPs who did not prioritize the interests of major emitters as much as did the Cabinet (Harrison 2007).134 A positive House vote could then sway Cabinet to support ratification.

This surprise announcement of the House vote caused industry to modify their lobbying strategy and broaden their appeal to the Canadian public. Less than a week after the Johannesburg Summit a full-page ad appeared in The Globe and Mail, Canada’s largest national newspaper,

133 ISC3 members at the June 2002 meeting include representatives from the Canadian Chemical Process’ Association, the Cement Association of Canada, the Canadian Electricity Association, the Conseil patronal de l’environnement du Québec, the Forest Products Association of Canada, the Business Council on National Issues, the Canadian Fertilizer Institute, Ontario Power Generation Inc., the Canadian Environment Industry Association, Stelco Inc., the Canadian Energy Pipeline Association, the Canadian Steel Producers Association, the Mining Association of Canada, the Aluminum Association of Canada, the Canadian Chamber of Commerce, Noranda Inc., NOVA Chemicals, and the Coal Association of Canada (Belfry Munroe 2016). 134 The division in cabinet was in no small part due to the division in ministerial loyalty between Paul Martin, who sought leadership of the Liberal Party, and the incumbent leader Jean Chrétien.

131 sharing industry’s preference for a ‘made-in-Canada’ approach (MacDonald 2003). A few weeks later, yet another new business coalition formed: the Canadian Coalition for Responsible Environmental Solutions (CCRES). The CCRES had thirty-two members and in its first press release also advocated for a ‘made-in-Canada’ approach and sought solutions rooted in subsidies and voluntary agreements (CCRES 2002). For the next two months, CCRES representatives, led by CAPP and the Business Council, testified before Parliamentary committees, wrote letters to senior-officials, created bilingual websites and launched a major television campaign (MacDonald 2003).

The Alberta government, predictably, launched a $1.5 million anti-Kyoto advertising campaign in September 2002. These ads warned Albertans of the menace of ratification: massive job losses and lowered living standards (Brownsey 2005). The Klein government’s public relations efforts were rewarded with polling data that showed a majority of Albertans now opposed the Kyoto Protocol. Public polling from spring 2001, before the provincial and industry advertising blitz, revealed that 72 per cent of Albertans had supported Kyoto; by October 2002 that support had evaporated, falling to a mere 27 per cent (Chase and Mahoney 2002). On 17 October 2002, Alberta released a ‘made-in-Alberta’ climate plan. Called Albertans and Climate Change: Moving Forward, it reframed climate policy as one of emission intensity reductions and not absolute emission reductions as called for in the Kyoto Protocol (Government of Alberta 2002).135 The plan argued it would remove 60 million tonnes of GHG emissions by 2020 from business-as-usual by reducing per-barrel pollution, and shrinking the province’s emissions intensity by 50 per cent from 1990 levels. However, given the aggressive expansion of the oil sands this ‘reduction’ actually equated to a 45 per cent increase in absolute emissions from 2001 levels.

It was not simply Alberta that was concerned. On 28 October, all the provincial environment ministers signed a statement calling on the Prime Minister to convene a first ministers’ meeting, prior to a ratification vote, to discuss climate policy. Chrétien rebuffed the request, effectively excluding the provinces and derailing the National Climate Change Process. At that time, only

135 In addition, the plan called for large facilities to report GHG emissions and over $500 million in research and development funding primarily for biofuels and carbon capture and storage.

132 two of ten provinces (i.e., Québec and Manitoba) supported ratification (Harrison 2007). The Prime Minister’s Office also took over the file from Environment Canada and Natural Resources Canada, historically the two lead departments (MacDonald 2007). The increasing resolve by the Prime Minister on ratifying the Protocol further dimmed the prospects of industry succeeding in blocking ratification.

In November, the federal government released its implementation plan for its Kyoto Protocol commitments: the Climate Change Plan for Canada (Environment Canada 2002b). In the end, the plan decided to pursue both emissions trading and voluntary agreements in the form of covenants with a regulatory backstop. For the first time, the federal government planned to adopt greenhouse gas emissions trading. This plan was notably incongruent with the majority industry preference, as reflected by the CCRES and Business Council, which were more supportive of voluntary covenants (Belfry Munroe 2016).136 Both of these industry groups actively avoided discussing emissions trading or means of ensuring compliance. The implementation plan provided another signal that the mind of the Prime Minister was set. The House of Commons voted in favour of ratification on 10 December and cabinet promptly ratified the Kyoto Protocol on 13 December 2002.137

All was not lost for the oil and gas industry. In addition to the formal, open and relatively transparent stakeholder consultation that the federal government had commenced in June 2002 on its May 2002 discussion paper there were private negotiations with the petroleum industry. Prime Minister Chrétien ordered his Deputy Minister, the Clerk of the Privy Council, with the support of Alberta regional minister Anne McLellan to initiate these parallel talks (Harrison 2010). Only five days after ratification of the Kyoto Protocol, Natural Resources Minister Herb Dhaliwal wrote to CAPP chairman John Dielwart assuring him that the carbon price would not be any higher than $15 per tonne and that the government would set emission intensity targets for the oil and gas industry, similar to the Alberta plan, and not absolute targets. The oil and gas

136 While public preference was often for voluntary measures, internal preference for compliance-based policy varied considerably among major emitters in 2002 (Belfry Munroe 2016). 137 To help ensure Chrétien had the numbers, he made the traditionally non-binding resolution a confidence vote for the majority Liberal Government. All Liberal MPs voted in favour of the resolution (Harrison 2007).

133 sector would need to reduce per-barrel emissions by 15 per cent below a projected business-as- usual for 2010 (Dhaliwal 2002 as cited in Belfry Munroe 2016).

Former CAPP president Pierre Alvarez noted that while Minister Dhaliwal’s letter was not a formal agreement, it did represent a negotiated settlement, which was in time extended to all industrial sectors (Belfry Munroe 2016). Alvarez explained in more detail the process for arriving at industry’s position:

[…] early on there was some companies who were rabidly opposed. You know, Imperial and Talisman were very strong about not proceeding down that road. Suncor and Nexen and a few others were prepared to take it on more broadly. It depended whether you were a gas producer, or an oil sands producer, were you growing, were you not growing, were you an exporter, were you a non- exporter—it was all over the map […] we created a task force of CEOs to sit down and work our way through to the point where the 15 and 15 agreement was signed off by the Association [CAPP] and all of the members (C29).

Despite industry’s public preference for voluntary mechanisms and subsidies, the deal was perceived as a coup for major emitters. At the time, modelling suggested that a carbon price between $100 and $250 per tonne would be needed to achieve compliance with Canada’s Kyoto Protocol targets (Harrison 2007). The Dhaliwal letter indicated that Ottawa would keep the carbon price an order of magnitude less than what was likely needed. The emissions reduction burden would necessarily shift away from the oil and gas industry and towards other sectors and, potentially, abroad.

To summarize, climate policy development during Chrétien’s time as Prime Minister was highly disjointed. A common refrain from a diverse range of interviewees was Prime Minister’s Chrétien’s lack of leadership on climate change. Chrétien presided over three majority governments that slashed funding for many departments, including Environment Canada and Natural Resources Canada, reducing bureaucratic capacity. At the same time, a major tax reform helped accelerate oil sands development, which increased the federal government’s fiscal

134 dependence on the fossil fuel industry and reduced its autonomy from the interests of that industry. The seemingly flippant way in which Chrétien approached climate action irked many who were involved in climate policymaking, be they from industry or environmental groups. The limited state strength worried many economic and regime elites. Many were doubtful that the government had the ability to carry out an emissions reduction plan in line with its international commitments while expanding the oil sands. Policy networks were constrained as closed-door negotiations over a ‘Plan B’ for industry excluded input from non-industry sources. The result was incoherent climate policy that was neither particularly ambitious, nor designed to last. None of Chrétien’s three major climate plans was followed for more than a few years.

4.3 The Martin Government (2003-2005)

Jean Chrétien stepped down as Prime Minister in December 2003 and was replaced by Paul Martin, former Finance Minister in Chrétien’s cabinet. A federal election in June 2004 failed to give Martin the parliamentary majority enjoyed by his predecessor.138 For his first cabinet, Martin appointed Stéphane Dion as Environment Minister. Dion successfully lobbied to move the responsibility for the climate file from Natural Resources Canada to Environment Canada, after he was appointed chair of a cabinet committee on climate change in 2005 (Belfry Munroe 2016). Presumably, the environment department would be able to move climate policy faster and with less compromise with major emitters than had Natural Resources Canada. Environment Canada soon drafted regulations on intensity targets for major emitters, emissions trading and a clean technology fund.

The Martin government took a more conciliatory approach with provinces and developed yet another climate plan. Ottawa worked with willing provinces to create six bilateral federal- provincial agreements on emissions reductions in exchange for federal funding. In April 2005, the federal government released its first phase of a new sustainability plan called Project Green with a new climate plan, Moving Forward on Climate Change: A Plan for Honouring Our Kyoto

138 This was largely thanks to a consolidation of two right wing parties in the final year of the Chrétien government. In 2003, Canadian Alliance Leader Stephen Harper united his party with the Progressive Conservatives to form the Conservative Party of Canada. While a divided right had assured Chrétien majority governments, this formidable new Conservative Party would put Liberal dominance on notice.

135 Commitments (Government of Canada 2005). This latest climate plan had a regulatory cap-and- trade program for large industrial emitters and a considerable amount of public spending: $10 billion over seven years. However, missing were details on how international emission credits could be used to meet Canada’s Kyoto Protocol commitments. An earlier draft had suggested that 40 per cent of Canada’s emissions reductions were to be purchased through international credits (Harrison 2007). While the previous Chrétien government had sought to use flexible mechanisms, with the tentative support of industry and ENGOs, by 2005 these actors no longer viewed these international credits as legitimate (Belfry Munroe 2016).139 Without this policy instrument, Martin’s climate plan faced a 100 Mt gap between the emissions reduction possible from the plan’s climate policies and Canada’s Kyoto target. Despite this shortfall the Martin government moved forward with regulation.140

Industry and the Alberta government predictably opposed the Martin government’s plans. As in the lead up to the Kyoto Protocol and its ratification, industry supported voluntary agreements and subsidies. The Canadian Council of Chief Executives, formerly the Business Council on National Issues, published a reaction to the April 2005 plan stressing once again, a made-in- Canada approach while remaining vague on what that approach would entail beyond developing new technologies (CCCE 2005). The Canadian Chemical Producers’ Association also wrote Minister Dion several times in 2005 to urge against a cap and trade program and against listing carbon dioxide as a toxic substance (Belfry Munroe 2016). Alberta, not wanting Ottawa to regulate its emissions, sought to retain local control. Alberta released its own draft climate regulations for large emitters in June 2005 (Alberta Environment 2005); they were virtually identical to the proposed federal regulations (Bramley et al. 2011).141 By the end of 2005,

139 Environmental groups were critical of the loopholes for industry, the verifiability of the emission reductions, and the outsourcing of emissions reduction responsibilities to other countries. Industry, meanwhile, saw international offsets as shipping money abroad instead of developing domestic technologies and securing public subsidies. 140 In July 2005, the government published its intention to regulate carbon dioxide emissions in the Canada Gazette and in November of that year added carbon dioxide to the list of toxic substances under the Canadian Environmental Protection Act. This addition was needed to provide the legislative authority for the government for a climate change regulatory framework. According to former Liberal aides, at the time Dion planned to have final regulations published in January 2006 (Belfry Munroe 2016). 141 The Specified Gas Emitters Regulation would later become a key component of the 2007 Alberta Climate Plan.

136 Alberta formally opposed the federal government using the Canadian Environmental Protection Act to regulate GHGs.

Besides his push for a national cap and trade program, Dion concurrently moved to strengthen emissions standards for the auto industry. However, he failed to win cabinet support for these proposed standards (Harrison 2010). Natural Resource Canada opposed these actions, preferring voluntary agreements. Ultimately, the auto industry accepted a voluntary emission reduction standard of 25 per cent. Dion’s inability to realize mandatory vehicle emission standards increased doubt over his ability to convince Cabinet to regulate stationary sources of emissions, especially those from the oil and gas industry.

Compared to the majority government enjoyed by Chrétien, the minority government of Paul Martin could not override the concerns of elites. As the commodities supercycle began to create oversized profits for the oil, gas and mining sectors, the federal treasury also increased its dependence on tax revenue related to extractive industries. Industry might have lost the public push to block the ratification of the Kyoto Protocol, but during the Martin Liberal government it did succeed in blocking any legally-binding measures—a prime example of negative feedback. The oil and gas, electricity and manufacturing sectors were able to convince Ottawa that the emissions reductions burden on the private sector should be reduced nearly 30 per cent from 55 Mt to 39 Mt. The effect was to outsource the burden of emissions reductions assigned to them in the 2002 Chrétien-era plan to Canadian households and the public sector (Government of Canada 2005).

In sum, little if any progress was made during the Martin government. The Canadian state remained weak. A government reticent to extend the reach of Ottawa, a growing dependence on revenue from emissions-intensive industries, and an overstretched bureaucracy, in part due to Martin’s earlier budget cuts as Finance Minister, did not create the governance foundations needed to create broad and durable climate policy. By the end of 2005, fifteen years after its first stabilisation commitment, no federal law-based regulatory action had been taken on climate change. All initiatives had been voluntary or based on program spending. Meanwhile, the oil and gas industry was booming.

137 4.4 The Harper Minority Government (2006-2011)

In November 2005, on the first day of COP 11 in Montréal, Martin’s Liberal Party lost a confidence vote. An election was promptly called for January 2006. Harper’s Conservative Party won a slim minority government, ending the thirteen-year rule of the Liberal Party. This election marked the beginning of a seemingly new approach to federal climate policy. Prime Minister Harper was an outspoken critic of ambitious climate policy. In the lead up to Canada’s ratification of the Kyoto Protocol in 2002, Harper had said the international agreement was a “socialist scheme to suck money out of wealth-producing nations” (CBC News 2007). Many of his party’s Western Canada-based MPs, including many Cabinet ministers, were climate skeptics. According to letters obtained through access to information requests, as late as 2011 there was considerable uncertainty in the Conservative caucus over the veracity of climate science and the impact of humans on climate change (de Souza 2012b).142

Not long after the election, in April 2006, the new Environment Minister Rona Ambrose declared it was impossible for Canada to meet its Kyoto commitments (CBC News 2006). Her statement ignored the potential role of international offsets. The Harper government soon cancelled all of the previous government’s Project Green programs, decided against developing a domestic offset program and ruled out the use of international credits. It also cancelled work underway at Environment Canada on regulating greenhouse gas emissions from large industrial facilities.

The new Conservative government quickly set out to create an alternative climate policy. It did not take long before the level of ambition became apparent. According to leaked government documents, Canada’s climate negotiators were instructed not to support a continuation of the Kyoto Protocol beyond 2012 and to oppose stringent targets for a second commitment period at a UN climate conference in Bonn in May 2006 (Curry 2006).143

142 That doubt, especially regarding anthropogenic climate change, continued to be voiced by Stephen Harper, and some key ministers including Joe Oliver, Stockwell Day, and Maxime Bernier (de Souza 2013b). 143 Although Minister Ambrose denied giving these instructions (Laghi and Mittelstaedt 2006).

138 Business groups conveyed similar messages to the Conservative government as they had to the previous Liberal government. In a summer 2006 memo to Environment Minister Ambrose, the Canadian Council of Chief Executives strongly threw its support behind a climate policy that was “made-in-Canada” and did not resemble the “flawed” policies of the Liberal government, namely, “paying lip-service to a flawed international agreement and funnelling taxpayers’ dollars into dead-end scheme […]” (CCCE 2006).

Since the Harper minority government could not completely ignore climate policy, as it was increasingly important to all other federal parties, the Conservatives unveiled their own “made- in-Canada” climate legislation in October 2006.144 Borrowing identical language used by industry associations during the 2002 and 2005 climate policy debates, the plan announced additional consultations for regulations for automobiles and industry and public spending programs on biofuels, public transit and climate research. The timeline for emissions reduction was also pushed back: the goal was now to end emissions growth by 2025. This climate change bill progressed slowly through Parliament and was eventually killed when Harper prorogued Parliament in September 2007.

After the October plan, the government hastily strengthened its target by pledging to end emissions growth as early as 2010 and reduce emissions by 150 Mt by 2020, committing Canada’s emissions to be 20 per cent higher than the 2010 Kyoto Protocol target. Around this time, provinces that had been waiting for federal climate policy leadership and funding started assuming more of a leadership role. Ontario began developing a climate and energy policy that would result in its comprehensive and ambitious 2009 Green Energy and Green Economy Act. Alberta was once again developing a made-in-Alberta climate plan and British Columbia would soon institute a carbon tax.

As public concern for climate change increased and the ambition of the federal government showed reluctant signs of increasing, nominal industry support for carbon pricing gained traction. Between 2006 and 2008 many industry associations made the switch from only

144 Bill C-30: Canada’s Clean Air and Climate Change Act. The first reading version of the bill was substantially weaker than later versions after substantial strengthening by opposition parties.

139 supporting voluntary measures and subsidies to also supporting a carbon pricing instrument, although variation remained in the exact instrument choice (Belfry Munroe 2016).145 This about- face can in part be explained by the growing public concern but also knowledge that the Harper government would most certainly not implement any climate policy that would imperil business- as-usual for major emitters.

4.4.1 Harper’s Turning the Corner Climate Plan

In April 2007 the federal government announced a new regulatory plan for climate change: Turning the Corner: An Action Plan to Reduce Greenhouse Gases and Air Pollution. The plan called for an economy-wide peak in greenhouse gas emission between 2010 and 2012 and a 20 per cent reduction in absolute emissions from 2006 levels by 2020; however, it did not provide a clear pathway to achieve this goal, even when subsequent details were released a year later in March 2008 (Government of Canada 2008a). Turning the Corner indicated the government would pursue a domestic cap and trade program and an end to new coal power in Canada. The architecture of this program looked similar to the Martin government’s regulatory attempt.146

As a counter to Turning the Corner, the Liberals, now under the leadership of Martin-era Environment Minister Stéphane Dion, released the Green Shift plan in June 2008 (Liberal Party of Canada 2008b). The Green Shift called for a revenue-neutral carbon tax of $10 per tonne, rising by $10 per year for four years. Income tax reductions would offset the revenue generated by the carbon tax. When the price at the pump increased dramatically in 2008, the Liberal’s plan became unpopular for many Canadians, despite the fact that Dion’s proposed tax would not cover gasoline (Belfry Munroe 2016). However, Dion’s plan would raise more money in emissions-intensive provinces than in other regions. When asked by The Globe and Mail editorial board about how he anticipated Western Canadians would react, Dion bluntly stated it would be “good for them” (Janigan 2012: IX).

145 The CCCE, who had for over a decade voiced opposition to climate regulation, announced in 2006 that it was no longer opposed to regulatory instruments (Dillon 2006). In 2007, CAPP shifted away from resistance to regulatory carbon pricing mechanisms to support a hybrid carbon tax. Other industry associations that shifted to support carbon pricing include: Railway Association of Canada, the Canadian Petroleum Products Institute, the Forest Products Association of Canada, among others. 146 Namely, it included intensity targets for large final emitters, a domestic cap and trade program and a compliance technology fund at $15 per tonne. The fund was intended to be phased out by 2018.

140 The Liberals were polling very poorly and a global economic crisis was unfolding when the October 2008 election was announced. During the election campaign, a federal carbon tax, first explored by the Mulroney government in the late 1980s, became politically toxic. The Conservative Party prominently used Dion’s proposed carbon tax as a wedge issue. A senior federal official recalled, “[…] the Conservatives just ate him alive. They played on this carbon tax idea and they just destroyed him.” Harper’s Conservatives won the election but once again formed only a minority government.

Cap and trade, meanwhile, rose in prominence. Québec, Ontario and Manitoba planned to join the Western Climate Initiative’s cap and trade program with several western U.S. states, including California, and the province of British Columbia.

With the deepening global economic crisis, the November 2008 election of Barack Obama as US President, and the renewed, albeit minority, mandate of the Conservatives, the federal government delayed all of the planned regulations from Turning the Corner and restricted international policy networks. The Conservatives abandoned their 2008 campaign promise to implement a cap and trade system. In December 2009, at the international climate summit in Copenhagen, Stephen Harper signed the voluntary climate accord but also weakened Canada’s target under Turning the Corner to align with the targets set by the United States. Michael Martin, former Deputy Minister of Environment Canada (2014-2017) and former Chief Negotiator and Climate Change Ambassador for Canada leading up to the Copenhagen climate conference recalled that during the Harper years, “We weren’t being successful […] You should have no illusions of that. Canada had no influence on the international negotiation process through that [Harper government] period. Certainly in my time, it was purely defensive” (C02).

While pulling back internationally, reducing its territorial reach, the federal government restated that it was waiting to collaborate with the new U.S. administration to begin a North American cap-and-trade program on carbon emissions (McCarthy and Galloway 2010). The American Clean Energy and Security Act of 2009, otherwise known as the Waxman-Markey Bill, proposed a federal cap and trade program in the United States. The House of Representatives passed the bill but the legislation died in the U.S. Senate in July 2010. When the Democrats lost control of the House of Representatives later that year, the door for a continental climate policy effectively

141 closed.147 The rationale for Canada avoiding any significant federal action on climate change evaporated. Rather than implement a domestic cap-and-trade program as set out in Turning the Corner, in February 2011 the Harper government scrapped that plan in favour of sector-by-sector regulations for industrial pollution. The ostensible goal was to introduce these regulations by the year’s end. This deadline would eventually be extended for another four years. In the end, the full suite of sectoral regulations was never realized. Michael Martin recalled:

I think ministers were more preoccupied with the public dimension of the issue [climate change] and the challenge of managing it when they didn’t have a coherent policy story to tell. And hence the challenge of trying to work through various domestic policy initiatives like Turning the Corner or its various successors, what we used to call in the Department of the Environment, The Latest Failed Climate Plan (C02).

Beyond not having a coherent policy story, the Harper government did not address any of the systemic barriers to climate policy implementation in Canada. The federal government’s territorial reach shrank even further. Autonomy from major industrial emitters was the lowest it had been since climate change became a major policy issue. And an enfeebled, and under Harper, embattled bureaucracy lacked the resources to develop and implement broad and durable climate policy.

4.4.2 Civil Society Policy Networks During the Harper Government

Increasingly under the Harper government, economic and regime elites sought to constrain climate and energy policy network membership by excluding labour unions, indigenous communities and environmental groups. Not sitting idle, these outsider groups formed international links that served them well in future efforts. Early environmental advocacy on the oil sands helped Canadian ENGOs to form links with American green groups and philanthropic

147 Facing Congressional deadlock and prioritizing healthcare legislation, the Obama administration moved to strengthen vehicle fuel economy standards and in April 2010 the Harper government announced it would harmonize Canada’s vehicle efficiency standards with the new rules proposed in the United States (CBC News 2010).

142 foundations. In 2005, the Pembina Institute released a report in 2005 on the environmental impacts from unconstrained oil sands development (Woynillowicz, Severson-Baker, and Raynolds 2005). This led to a coalition of a dozen Canadian environmental groups signing a declaration for a moratorium on oil sands growth later that year (Pembina Institute 2005).148 These Canadian groups then formed links with several U.S.-based environmental groups and philanthropic foundations that had been funding a campaign to protect Canada’s forests and to stop more extreme forms of oil extraction in the United States.149 As the Harper government and industry intensified efforts to increase production in the oil sands and as prospects for climate leadership diminished in the U.S., with the failure of the Waxman-Markey Bill, the link between American and Canadian environmental groups and philanthropic foundations grew. Soon these networks started to expand to European environmental groups and foundations. Environmental groups, during times of diminished influence with the federal government, also shifted scarce resources to provincial and municipal climate action. Indeed, shortly after the Harper government was elected, many environmental groups shifted personnel away from Ottawa to work on other sub-national priorities.

Around the same time, indigenous communities began organizing to voice their concern over oil sands development and the impact on the larger watershed. Keepers of the Waters (2018), an indigenous-led organization, began holding meetings with indigenous communities and linking with environmental scientists and environmental advocacy organizations. At a 2008 event, Norwegian activists concerned about oil sands investments by the Norwegian company, Statoil, met with Dene elders to learned about the environmental impacts of oil sands development (Turner 2017). Soon, celebrities followed: actors Leonardo DiCaprio, Jane Fonda and Daryl Hannah, musician Neil Young, television personality Bill Nye the Science Guy, South African Anglican Archbishop Desmond Tutu, movie director James Cameron, climate scientist James Hansen. Environmental groups and indigenous communities hosted these international stars in an

148 Signatories included: Canadian Parks and Wilderness Society, David Suzuki Foundation, Dogwood Initiative, Greenpeace Canada, Pembina Institute, Prairie Acid Rain Coalition, Sage Centre, Sierra Club of Canada - National, Sierra Club of Canada - Prairie Chapter, West Coast Environmental Law, World Wildlife Fund Canada (Pembina Institute 2005). 149 This is best exemplified in a July 2008 funding pitch hosted by the Rockefeller’s Brothers Fund, the Pembina Institute, Corporate Ethics International and the Natural Resources Defense Council. Although efforts to coordinate activities pre-dated this meeting.

143 effort to raise awareness from outside of Canada about the environmental impact of the oil sands. This was a classic case of boomerang effect, where local groups with little influence or access to domestic decision makers seek transnational allies to encourage international scrutiny (Keck and Sikkink 1998). Indigenous and environmental groups, frustrated by lack of influence over oil sands development in Alberta, also shifted the venue of contention to the courts, initiating many provincial and federal lawsuits against the government to compel the state to improve environmental management of the oil sands and improve consultation with Indigenous communities. Many of these cases succeeded (e.g., against Northern Gateway pipeline), some caused considerable project delays (e.g., Shell Jackpine Mine Expansion, Transmountain pipeline, Line 9, Line 3), while others still remain before the courts (e.g., Beaver Lake Cree First Nation v. Alberta and Canada). According to a senior federal government official, when this broader campaign against the oil sands hit the industry, “they didn’t know what to do” (C13).

Taking a step back from the oil sands, at the broader level of climate policy and preparing for a low-carbon transition, Canadian labour unions were also actively building internal capacity and coalitions in the late 2000s. In 2008, the Canadian Labour Congress passed its first climate policy paper at its constitutional convention (CLC 2008).150 That same year the Labour Congress, inspired by the Blue Green Alliance in the United States, hosted a dialogue between Canadian environmental organizations and labour unions.151 This dialogue evolved into the Green Economy Network, which hosted the first “Good Green Jobs for All” conference in 2009.152 Blue Green Canada was another strategic alliance formed in 2008 out of a smaller group of unions whose members are directly impacted by a low-carbon transition, and environmental

150 The policy paper was non-binding and laid out concerns about the need for a just transition and the need to slow down the expansion of the oil sands. 151 In the United States, the American branch of the USW brought together labour, environmental groups, business and think tanks into the Apollo Alliance in 2001. In 2006, the American branch of the USW entered into an agreement with the U.S. Sierra Club and eventually seven other parent unions and the Natural Resources Defense Council to form a U.S.-based Blue Green Alliance. 152 The environmental groups engaged in the Canadian Green Economy Network included the following: Environmental Defence, Greenpeace Canada, the Sierra Club of Canada, the Pembina Institute. Social justice organizations were also involved, including: the Indigenous Environmental Network, Kairos, and the Council of Canadians. Labour unions involved included: Canadian Auto Workers, United Steelworkers, the Communication, Energy and Paperworkers Union, the Canadian Union of Public Employees, the Public Service Alliance of Canada, and the National Union of Public and General Employees.

144 groups. It advocated for a just transition and for the positive economic and employment impacts of a low carbon future.153

In sum, while these efforts by indigenous communities, environmental groups and labour unions were integral to shaping the public debate around climate policy in Canada during the Harper government, their access to established policy networks at the time was restricted and the resultant influence on climate policy was marginal at the time. Instead, they sought to create new policy networks in order to sway public opinion and shape policy decisions. However, the impact of these relatively poorly resourced groups pales in comparison to the persistent access and deep influence of major industrial emitters.

4.4.3 Industry Policy Networks under the Harper Government

Unions, indigenous communities and environmental groups were not the only political actors building coalitions during the Harper years. Major industrial emitters were also busy at work and benefited from their access and influence with the Conservative government. New networks were created through two institutions that received significant funding from the Harper government: the Canada School of Energy and the Environment and the Energy Policy Institute of Canada.

The Canada School of Energy and Environment (Canada School) was founded in 2008 with a $15 million grant from the Harper government and led by former senior advisor to Harper, Bruce Carson. This “school” was intended to create an online network for academics who work on energy and environmental technology issues at the Universities of Calgary, Lethbridge and Alberta. That mandate quickly shifted as the Canada School morphed into a university-based, government-funded policy think tank for the oil and gas industry. David Keith, a former University of Calgary professor and the Canada School’s first scientist, gave the initial pitch to Carson in 2006 when Carson was working in the Prime Minister’s Office. Reflecting on the mission drift of the new organization, Keith wrote the following in a Toronto Star op-ed:

153 Members of this coalition include: the United Steelworkers, Unifor (formerly Canadian Auto Workers and the Communications, Energy and Paperworkers Union), Environmental Defence Canada, the Pembina Institute, The Columbia Institute, and the Broadbent Institute. The initial alliance was between USW and Environmental Defence.

145 I assumed Carson would take his new mandate seriously and we could maintain an independent, university-based centre that could serve as a neutral convening ground for a wide variety of perspectives from the oil patch to environmental advocates. I was wrong […] It soon became clear that Carson was simply using his academic post to further the interests of the Conservative government and a narrow segment of the energy industry […] Carson worked closely with industry leaders to produce meetings and reports that had the patina of stakeholder representation while in fact aiming to avoid meaningful public debate. Leaders of Alberta’s universities did nothing substantive to manage the problem until Carson’s scandal forced their hands. Even then, they failed to act decisively to ensure that public money was used for research that supported broad public interests (Keith 2015).

The scandal Keith referred to was Carson’s conviction of influence peddling and illegal lobbying.154 Through Carson’s trial a significant volume of documents became publicly available, shedding light on the privileged relationship the oil and gas industry had with the federal government. By June 2009, Carson was chairing an “Oil and Gas Working Group” of the federal government, deputy ministers of environment from the federal, Alberta and Saskatchewan governments and the Canadian Association of Petroleum Producers (Eisler 2009). Interestingly, a 5 June 2009 email regarding the work plan for the Oil and Gas Working Group noted the first concern of industry when it came to climate policy development was to ensure business-as-usual growth. This growth should be “accommodated as it occurs (i.e., no overall cap) through free allocation to facilities.”155 Additional meetings were being made with the highest levels of government and the oil sands industry. For example, the Deputy Minister of Natural Resource Canada, Cassie Doyle, in preparation for a 12 June 2009 meeting on a new oil sands public relations campaign between the Clerk of the Privy Council and senior executives

154 A detailed account of Bruce Carson’s trial can be found in Kevin Taft’s book, Oil’s Deep State (2017). 155 “Scenario Brief, Meeting between Minister Prentice and Key Oil and Gas Industry Representatives, June 5, 2009,” document released under the Access to Information Act to Greenpeace Canada, p. 7

146 from the oil sands industry, was firming up the invitation list of oil sands executives. A 10 June 2009 email from Doyle to the head of CAPP, Dave Collyer, stated, “Dave as we discussed earlier today, please feel free to invite others to ensure full representation of CAPP’s oil sands committee. This will ensure that we’re fully aligned and issues raised by Murray [i.e., Murray Edwards, Chairman of oil sands company Canadian Natural Resources Ltd.] are resolved” (italics added, Doyle 2009). Of course, meetings between senior bureaucrats and industry executives are not uncommon or unwarranted and access does not always connote influence. However, the eagerness of the Deputy Minister of Natural Resources Canada to ‘fully align’ with the oil sands industry on its communication efforts is at odds with the broader governance mandate of the department and the federal government. The Harper government certainly did not undertake comparable coordination with environmental groups, unions or indigenous organizations on energy or climate policy.

At the same time that the Canada School was getting off the ground, the Energy Policy Institute of Canada (EPIC) was founded. EPIC, formed in the fall of 2009, was a network of predominately fossil fuel companies or fossil fuel-dependent companies that sought to create a national energy strategy for Canada. Ever since the ill-fated National Energy Program of Pierre Elliot Trudeau, the federal government, the Alberta government and the energy industry have been highly reticent to develop a pan-Canadian energy policy. EPIC stepped in, as an industry- funded think tank, to fill this leadership void by leading the development of a policy that in many countries is state-led. However, the majority of the membership of EPIC was dependent on status quo fossil fuel development in Canada.156 Bruce Carson was also the head of EPIC. Evidence presented during Bruce Carson’s court trial also shone a light on this highly influential network of companies.157 Thomas D’Aquino, the first chair of EPIC, was also president of the Canadian Council of Chief Executives from 1981 to 2009. Under his leadership, the Canadian Council of

156 Of the 27 full members listed on the EPIC website on 6 July 2014, 23 were fossil fuel companies, fossil fuel industry associations, large fossil fuel users or companies with large clientele in the fossil fuel industry. An additional seven groups were associate members with five of these groups being either fossil fuel companies, fossil fuel industry associations, large fossil fuel users or companies with large clientele in the fossil fuel industry (EPIC 2014). 157 Like with the Canada School, additional details of EPIC governance and its links to the Alberta and federal government can be found in a book by Kevin Taft (2017).

147 Chief Executives were adamant critics of Canada signing and ratifying the Kyoto Protocol and any attempts to have industry pay for carbon pollution.

From 2009 to early 2011 while Carson led EPIC and the Canada School, both organizations shared staff and board members. Both groups also had strong links to the Alberta Progressive Conservatives, the federal Conservative Party and Canada’s oil and gas industry. EPIC and the Canada School also worked in close association with key senior federal and provincial officials. Cassie Doyle also gave advice to EPIC on how it should lobby the federal government: “the kiss of death on this [EPIC’s national energy strategy framework document] will be that it’s seen as being promoted by NRCAN” (Kehoe 2016: 18). EPIC played a central role in developing rules, legislated in the 2012 federal budget, to restrict public input into federal environmental assessments and National Energy Board hearings. EPIC released its final framework report for a national energy strategy in August 2012 and soon disbanded. Climate considerations were clearly not a priority for EPIC’s national energy strategy. It took a last minute intervention by Federal Deputy Minister of Environment Paul Boothe to include language on Canada’s Copenhagen emission reduction target (Kehoe 2016: 29).158 In the sentencing report for EPIC Director Bruce Carson, Justice Catherine Kehoe described EPIC’s role in shaping climate and energy policy in Canada:

It is especially egregious in the case of EPIC where Mr. Carson was representing a non-profit corporation set up to represent numerous major private Oil and Gas Energy Companies whose sole purpose was to develop energy policy for Canada for the commercial benefit of the companies while the public including other interested companies, environmentalists, etc. had no

158 Section 86 of Justice Kehoe’s ruling notes (Kehoe 2016: 29): “At Tab 56, Exhibit 2, Mr. Carson sends the EPIC Executive members an email, dated January 20, 2011, Subject: Env Can, stating, “met this evening for an hour with Paul Booth (sic) fed DM Env—he has read the version of the report I sent to him late last week and also discussed it with Peter Kent. They are ready to support our report provided we add a sentence to the Env section-probably just before we get into the recommendations saying something like—EPIC recognizes that pursuant to the Copenhagen Accord that Canada has committed to reducing GHGs by 17 percent off 2005 or 6—can’t remember-levels by 2020 and the recommendations in this Report will help Canada attain that goal—Given the CEOs discussion and their concerns about the env community and their potential comments I believe this is a worthwhile and necessary change—bc”

148 knowledge of what was transpiring behind the scene with Ministers, Deputy Ministers and other very senior officials in government, both federal and provincial (Kehoe 2016: 11).

The oil and gas industry, via the Canada School and EPIC, attempted to legitimize and ideally implement this industry-written vision through intergovernmental venues such as the Council of the Federation meetings and Energy and Mines Ministers meetings from 2010 to 2012. Industry was highly successful in ensuring its perspective was represented in any resultant report or communiqué from these meetings and ultimately in the federal legislative changes in 2012, detailed below. Given that many of the policy recommendations from these industry-driven dialogues became government policy, it is notable that broader civil society was not engaged or consulted.

The conversation was broadened somewhat in a series of high-profile events across the country between 2009 and 2011. In October 2009, Canadian think tanks met in Winnipeg to establish a “consensus” on Canada’s energy future.159 At the Banff Dialogue in April 2010, the Canada Council of Chief Executives and the Canadian Chamber of Commerce joined the think tank conversation.160 Ed Whittingham, former head of the Pembina Institute, when asked if he considered these dialogues consultation, replied,

159 Those businesses represented at the Winnipeg Consensus include: the Canada School of Energy and Environment, Canada West Foundation, NRTEE, Public Policy Forum, Pembina Institute, Atlantic Provinces Economic Council, Institute for Research on Public Policy, Conference Board of Canada, Business Council of Manitoba, and the IISD (Winnipeg Consensus 2009). The group was convened by Roger Gibbins of the Canada West Foundation, Daniel Gagnier of the IISD, and Jim Carr of the Business Council of Manitoba. 160 According to the final report of the Banff Dialogue, “Three overarching themes and conclusions emerged from the discussions: 1) It was the unanimous view that there was a definite need for a “Canadian Clean Energy Strategy” and it is needed now; 2) It is essential that this strategy concentrate not only on energy supply but also on the demand side of the energy equation, emphasizing conservation and reduced demand by Canadians; 3) Only when we put a price on carbon will we recognize the fundamental relationship between energy and environment and through such a price, conservation will be encouraged as well as environmental protection” (Banff Dialogue 2010). Of note, the report framed significantly expanding oil sands development as consistent with a clean energy strategy. The document also shifted attention away from fossil fuel production to fossil fuel use. It also constrained the mitigation opportunities to a price on carbon, provided it is designed in a way to not materially impact the growth of the fossil fuel industry.

149 Good god, no. None of it was run by government, it was all just putting together multi-stakeholder tables—and by multi- stakeholder it could’ve been a bunch of [oil and gas] companies and Pembina, so not very multi-stakeholder (C31).

In short, while the Chrétien and Martin governments certainly promoted oil and gas development, the Harper government made the expansion of Canada’s fossil fuel industry the top priority for Ottawa. The unparalleled access and influence of the oil and gas industry further reduced Ottawa’s autonomy from a powerful non-state actor and its narrow interest of expanding production and shareholder value. Harper helped to shape and confirm the perception among Canada’s elites that ambitious climate policies were a major political risk and would jeopardize the wealth created from extracting and selling oil and gas. Consequently, these elites sought to constrain the membership in the policy networks engaged in forming national climate and energy policy. The blatant lack of diversity in the leadership of the Canada School and EPIC speak to these closed networks, as do efforts by civil society actors to develop and engage other ad hoc networks.

The impetus for a national energy strategy was arguably the threat posed by a patchwork of climate policies which could imperil the oil and gas industry’s expansion plans. Industry and the federal government via policy networks such as the Canada School and EPIC, successfully sought to narrow the conversation, delegitimize voices that were not aligned with industry’s vision, and implement climate policy that would permit, or in some cases facilitate, increased rates of oil and gas extraction. From 2006 to 2011, during the Conservative Party’s minority government, it could not appear too strongly against climate policy for fear of losing the crucial support of the Liberals or New Democrats. The support of one of these parties—which both nominally supported more climate action than the Conservatives—was necessary to avoid the government falling.

4.5 The Harper Majority Government (2011-2015)

After the May 2011 general election, Stephen Harper’s Conservative Party at last won a majority government. Harper was now on solid political ground for a major overhaul of Canada’s energy

150 and climate policy. Coincidentally, the oil and gas industry had been effectively framing the conversation and building the necessary networks during the years of minority government.

In the fall of 2011, Environment Minister Peter Kent noted the spring election delayed progress on climate regulations for the oil and gas sector and that a new working group was to be created consisting of representatives from the Alberta government, CAPP, and three major oil sands producers, Canadian Natural Resources Limited, Cenovus, and Suncor. The group would meet roughly every four weeks (de Souza 2014). No non-industry groups were included in this highly- restricted working group.

In December 2011, the federal government withdrew from the Kyoto Protocol. This effectively made Canada the only country in the world to ratify and then withdraw from the international climate change agreement.161

Beyond delaying climate regulations for the oil and gas sector and withdrawing from an international climate agreement, federal officials were empowered to work behind-the-scenes to implement far-reaching policy changes that would reduce federal oversight on fossil fuel energy projects and speed up regulatory approval. These initiatives, sketched out at a high-level in EPIC’s energy strategy framework, had many details that needed to be sorted out. In the meantime, one of the methods chosen to prime the pump of political acceptability of regulatory reform for the oil and gas industry, besides large advertising campaigns, was to delegitimize environmental opposition to oil and gas development.

4.5.1 Joe Oliver Letter

On 9 January 2012, in a highly unusual move, the federal Natural Resources Minister Joe Oliver published an open letter on his Ministry’s website. The letter coincided with the start of the National Energy Board hearings for Enbridge’s controversial Northern Gateway pipeline, which

161 I attended a climate policy event hosted by the Calgary Chamber of Commerce in December of 2011. At the event, Environment Minister Peter Kent was reporting back to Calgary business executives on progress made the week prior at the COP in Durban, South Africa. Kent boldly declared, “Christmas has come a little early this year, Canada has pulled out of Kyoto Protocol.” This announcement was met by a standing ovation.

151 would carry bitumen from Edmonton to Kitimat on the Northern British Columbia coast.162 Minister Oliver’s carefully-crafted letter reframed the federal government’s relationship with environmental groups. He cast green groups as having a “radical ideological agenda” that used “funding from foreign special interest groups” to sabotage the Canadian economy. Minister Oliver explained in the letter (Oliver 2012):

Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade. Their goal is to stop any major project no matter what the cost to Canadian families in lost jobs and economic growth. No forestry. No mining. No oil. No gas. No more hydroelectric dams.

The ensuing media coverage amplified the government’s message with industry providing a complementary framing of green groups when sought for comment. This letter embodied the most acrimonious moment between the federal government and environmental groups. ENGOs arguably had a high degree of influence over Mulroney’s Green Plan, but their influence waned during the Chrétien government, and was regained slightly under Paul Martin before nearly disappearing during the Harper government, especially during his majority mandate from 2011 to 2015. Canada’s environmental movement believed the letter was a declaration of war. The federal budget two months later confirmed their suspicions.

4.5.2 Federal Budget 2012

In April 2012, the Harper government tabled its annual budget legislation, Bill C-38. The budget sought, among other things, to shrink the degree of public participation in major energy project hearings in Canada and increase the speed of approvals, through new legislation for both environmental assessments and the National Energy Board, effectively reducing the territorial reach of the federal government. The omnibus bill also allowed cabinet to overrule decisions made by the independent quasi-judicial National Energy Board. Further, Budget 2012 rewrote

162 To put the letter in additional context, environmental groups had encouraged Canadians to submit comments on the proposed pipeline in the fall of 2011. This resulted in thousands of public submissions, swamping the limited capacity of the Canadian Environmental Assessment Agency and the National Energy Board to process and consider these unanticipated concerns, resulting in project delays.

152 numerous environmental laws, such as the Canadian Environmental Assessment Act, the Canadian Environmental Protection Act the Fisheries Act, the Navigable Waters Protection Act, and the Species at Risk Act. While these pre-existing laws were far from flawless, many of them had been created in consultation with a wide range of stakeholders. It appears that the oil and gas industry was the only stakeholder consulted for the energy and environmental reforms in Budget 2012. Ed Whittingham, head of the Pembina Institute, at the time recalled, “we were just more on the receiving end of it [Bill C-38]. Like oh, crap. Here it comes” (C31).163

The 2012 budget reduced bureaucratic capacity, hollowing out the federal government’s already weakened ability to conduct environmental research and policy analysis.164 The National Roundtable on Environment and Economy, founded during the Mulroney government in response to the Brundtland Report, was disbanded. The Roundtable had provided independent advice to the Prime Minister on environmental issues, commissioned its own research and was crucial to enhancing the bureaucratic capacity of the federal government. A year earlier, federal funding for the Canadian Environmental Network had been cancelled. This funding had been in place since the 1980s to ensure resources for environmental organizations to come together and coherently engage the federal government. As a result, it became more difficult for environmental groups to engage the federal government on national climate policy reform.165

The 2012 budget also earmarked $13.4 million for Canada Revenue Agency audits of environmental and social NGOs that were engaging in “illegal” political activity. If found guilty, these groups would lose their charitable status and the ability for donors to receive tax credits. It was feared this would effectively force many important civil society organizations to close. Seven major environmental NGOs in Canada were subject to these audits (Tsao et al. 2015).166

163 The Mikisew Cree First Nation whose traditional territory is in the oil sands region, sued the federal government, albeit unsuccessfully, for failure to consult them on the Budget 2012 environmental reforms—reforms that would impact their constitutionally-enshrined Indigenous and treaty rights. 164 The Canadian Foundation for Climate and Atmosphere Research closed in March 2012 after the federal government failed to renew its funding. Environment Canada’s Adaptation to Climate Change Research Group was also terminated. Department of Fisheries libraries were closed. The Experimental Lakes Area in Northern Ontario was defunded. This research site was where the science that led to industrial phosphate bans and international acid rain treaties had taken place. 165 These cuts were highly reminiscent of the Alberta government’s elimination of numerous environmental consultative bodies in the early 1990s when Ralph Klein became Premier. 166 These ENGOs included: the David Suzuki Foundation, Tides Canada, the Pembina Institute, Équiterre,

153 While these organizations did not close, the government’s intention to produce an advocacy chill in Canada was successful (Kirkby 2014).167 Moreover, Canada’s national spy agency, the Canadian Security Intelligence Service, and the Royal Canadian Mounted Police, Canada’s federal police service, began to monitor environmental and Indigenous groups opposed to oil sands pipelines, putting additional pressure on civil society not to oppose fossil fuel expansion plans.168 These actions recast groups that traditionally engaged in non-violent civil disobedience as domestic terrorists.

The energy and environmental reforms in Budget 2012 were, in general, aligned with the energy strategy work carried out by the oil and gas industry during the Harper minority government. Once a Conservative majority government was secured the fossil fuel industry could realize the reforms with a government that actively excluded environmental groups, unions and indigenous communities. A group of major industry associations led a coordinated lobbying effort in late 2011 for many of the environmental policy changes seen in Budget 2012.169 Beyond this collaborative undertaking, each of these associations and their individual member companies lobbied the government in writing and in person.170

West Coast Environmental Law, Environmental Defence, and the Ecology Action Centre. All of these organizations had been critical of the climate policy reforms of the Harper government. 167 Despite this chill, the CRA audits and other reforms of Budget 2012 did embolden Canada’s non profit sector to form a Black Out, Speak Out campaign to protest against the muzzling of NGOs. The campaign culminated in a day where the websites of 100 charities in Canada were voluntarily taken offline. 168 This surveillance was the subject of a formal complaint by the B.C. Civil Liberties Association (BCCLA 2014). 169 This additional effort is evidenced in a 12 December 2011 joint letter, obtained through access to information laws (Scoffield 2013). This letter is signed by the Canadian Association of Petroleum Producers, the Canadian Petroleum Products Institute, the Canadian Energy Pipeline Association, and the Canadian Gas Association under an umbrella group called the Energy Framework Initiative to Federal Environment Minister Kent and Federal National Resources Minister Oliver. 170 For instance, according to a 2011 Canadian Energy Pipeline Association presentation obtained through the Access to Information Act, the 2012 legislative reforms were very similar with the pipeline association’s demands. In fact, six out of seven demands made by the industry association were fulfilled in Budget 2012 changes (Scoffield 2013). The demands included: a) “Regulatory reform so that each project goes through just one environmental review”, b) “Bolster the Major Projects Management Office” (which steers resource projects through the federal approval process), c) “Speed up permitting for small projects”, d) “Make government expectations known early in the permitting process”, e) “Support a 8-1-1 phone line to encourage construction companies to ‘call before you dig’”, f) “Modify the National Energy Board Act so it can impose administrative penalties, in order to prevent damage”, g) “New regulations under the Navigable Waters Protection Act”. Only e), the 8-1-1 phone line, was not implemented in the 2012 legislative reforms.

154 A month after the budget, Canada’s chief climate negotiator admitted that the federal government would delay the draft oil and gas regulations until 2013 (de Souza 2012a). It appeared that creating a single greenhouse gas regulation for the oil and gas industry proved much more difficult for the federal government than enacting the largest environmental law reform in a generation.

For the past thirty years—not just during the Harper government—economic and regime elites in Canada have framed climate policy as a threat that will erode competitiveness and result in capital flight. Companies and capital will move out of the country. Corporate profits and tax revenue will be reduced. Some of these concerns are certainly real, but there is also strategic rent-seeking.171 In some cases and in order to mobilize the large segment of society that faces economic insecurity, climate policy has been framed as a threat to the financial stability of households. The ever-repeated mantra of the Harper government was that a carbon tax would “hurt hard-working families.” Given this logic, it follows that those who promote carbon taxes that hurt families should therefore be excluded from the networks deliberating on climate policy. This high-risk framing, despite the populist appeal, causes policy networks to exclude concerned public interest organizations. Membership is limited to those actors who hold non-threatening views about climate policy, such as the view that expansion of the oil and gas industry is compatible with Paris-aligned emission reductions. Seemingly radical views, such as the call to phase out oil and gas production, are delegitimized.

171 The chair of Alberta Premier Notley’s Climate Advisory Panel, Andrew Leach noted: “So different industrial make up leads to different concerns about competitiveness, and, you know, are they overblown? Probably. It’s like professional sports teams: they all threaten to leave when they don’t get a new stadium. Are all of them going to leave? Well no, absolutely not, but they’re also not in a charity business, so they’re not going to invest in a place just because. They’re going to look for the highest rate of return on their dollar and that average cost of carbon becomes part of the picture” (C17). Professor Heather Eckert, a University of Alberta economist described how business elite framing of competitiveness concerns can mask underlying motives: “It is rent seeking. It’s those companies wanting to exert political pressure to influence regulatory decision making in a way that increases their profits […] it [competitiveness] is a salient concern of both government but also of citizens. You know, that is a touchstone in Alberta—if energy firms all of a sudden start arguing, well, you know, this is going to mean is mass layoffs, closures, we’re going to leave, then all of a sudden there’s lobbying or pressure on the government, not only from the industry but from the citizens […]” (C18).

155 4.5.3 Oil Sands Export Pipelines

Budget 2012 and the development of a Canadian Energy Strategy coincided with a rapid expansion of oil sands production. All of this new production needed additional pipelines to move the oil to downstream markets. Many pipelines were proposed, including Enbridge’s Northern Gateway, Line 3, Line 9 reversal, Kinder Morgan’s Trans Mountain Expansion, and TransCanada’s Energy East and Keystone XL. Historically, pipelines in Canada have received little public scrutiny. Regulators and industry were unaccustomed to public engagement beyond those living directly on the pipeline right-of-way. However, with increasing domestic and international attention during the late 2000s and early 2010s on the oil sands’ environmental impact—in particular its climate impact—and with fewer venues to express this growing concern, pipelines became a strategic pinch point for civil society to intervene.172 Environmental groups and Indigenous communities knew stopping or slowing the approval and construction of oil sands pipelines would slow not only the local environmental damage from the pipelines and the oil sands, but also more broadly, the release of carbon pollution into the Earth’s atmosphere. Indigenous communities and environmental groups formed coalitions and shifted the venue of debate away from the Alberta Legislature, Ottawa’s House of Commons and the U.S. Congress. They attempted to raise these concerns in authoritative venues where they believed more progress could be made, progress that in some cases meant project delays: the quasi-judicial National Energy Board hearings in Canada and the Obama Administration. Gaetan Caron, former Chair and CEO of the National Energy Board (2007 to 2014) recalled during the Harper government:

[…] you have the NEB become more the focal point of where people could choose to go to express their views on not only energy systems and the risks of carrying hydrocarbons in energy systems like pipelines, but also the bigger question—well, the

172 Alberta had been consistently shrinking the amount of public participation in energy infrastructure decisions through limiting input to those who are ‘directly and adversely impacted’ (Bowness and Hudson 2013). As interpreted by Alberta’s energy regulator this effectively excluded environmental groups and indigenous communities whose traditional territory would be impacted. Not coincidentally, Budget 2012, brought in Alberta’s narrow definition of standing into federal energy and environmental legislation.

156 other big question—of climate change and what is the government doing about it. And with the Harper government the perception that nothing was being done and certainly the valid perception that I would say that there was no place for the political and the policy debate—as to what Canada should do—to be seen (C30).

The changes to restrict public participation in fossil fuel infrastructure projects in Budget 2012 were a direct response by industry and the federal government to this new strategy of civil society. Moreover, the government sought to educate Canadians and influencers in Washington, D.C. Natural Resources Canada’s communications budget increased seventyfold between 2010 and 2013 (Turner 2017). Between 2013 and early 2014, the federal government spent $24 million for a Washington, D.C.-based ad campaign, aimed at convincing U.S. policymakers that they should approve the Keystone XL pipeline (Harris 2014).173 Full-page ads were taken out, including a $200,000 ad in the New Yorker, and new government websites were created targeting U.S. policymaking communities. At a time when Ottawa’s strength to manage climate policy was decreasing, these unprecedented public relations campaigns were ineffective at wooing decision makers or the public in Washington during the Obama administration (Canadian Press 2015).

In short, this strategic venue shift to pipeline hearings was successful for ENGOs and opposing Indigenous communities. Most pipelines that were in the sights of these groups experienced regulatory delays. Ultimately, during the Trudeau government, the approval for the Northern Gateway pipeline was revoked and the proposed Energy East pipeline was abandoned and, at the time of writing, the portion of the Keystone XL pipeline in the United States remained unbuilt.

4.5.4 Sector-by-Sector Climate Regulations

Progress on the 2011 decision by the Harper government to officially scrap its unimplemented 2007 Turning the Corner climate plan in favour of sector-by-sector climate regulations began with regulations on coal-fired power generation. In September 2012, Environment Canada

173 A survey commissioned by the federal government to assess the impact of these advertisements on DC residents, revealed that the ads missed their marks with only 11 per cent of those surveyed understanding the ads are about the Keystone XL pipeline (Harris 2014).

157 published finalized greenhouse gas regulations for coal-fired power plants (Environment Canada 2012). This regulation came into force in 2015 and allowed existing coal plants to continue operating until the end of the plant’s economic life, typically around 50 years.174 Mike Beale, former ADM of the Environmental Stewardship Branch at Environment and Climate Change Canada, who has helped guide many federal climate policy initiatives for the last 20 years, argued that one of the reasons why coal power generation was the first to be regulated was because, “It’s less trade exposed, and its domestic consumers, in large part, both residential, commercial, and industrial who bear the cost of initiatives” (C35).175 Unlike trade exposed industries such as mining, electricity generators can pass along costs to ratepayers, effectively shielding the sector from any additional regulatory costs.

Another important factor is that the coal power generation lobby is relatively weak and fragmented compared to other industrial sectors. Energy generation and transmission in Canada is poorly integrated across provincial boundaries, making a strong national electricity generators association less influential than other national industry associations. Furthermore, with the privatization of power generation in coal-heavy Alberta and Ontario’s announced phase out of coal, the interests of the sector were even more diffuse (C35).176 When asked why coal power generators did not consistently push back against the federal regulations, Beale responded: “Companies are sophisticated, they make their assessment of how serious the government initiative is. I think in this case they were persuaded that this was a serious initiative that had—it had the backing of federal cabinet and a very powerful minister. And so much of the focus was on the how” (C35). A coal power climate policy was clearly a priority for the Harper government and Jim Prentice, an influential Calgary-based cabinet minister was charged with making the policy happen. For coal power regulations the state strongly asserted itself, demonstrated independence and managed the expectations and risk perceptions of the private sector. The state was able to act, in large part, because of the increased autonomy from coal power interests

174 This was not a coal power phase out. New coal plants could still be built but they had to meet an emissions standard equivalent to having carbon capture and storage on the power plant. 175 Beale also noted that “a concern from the industry would certainly be that the regulation might be stranding the value of some companies” (C35). 176 Also the influence of a coal-fired power generators are waning in general. Historically, one of the key benefits of coal is its cheap price. But as the price of renewables continues to drop and in some instances is cheaper than coal, the economic and political power of coal is further eroded.

158 compared to the oil and gas industry. This does not undermine the claim that with respect to climate policy Canada is a weak state, rather it is an exception that follows the logic of the analytic framework. When a state is more autonomous, and hence less weak, elite concerns are reduced and a state is more able to implement policy.

Spurred by efforts of the Obama Administration to tighten pollutions standards for passenger vehicles and light and heavy-duty trucks, the Harper government sought to harmonize these standards due to the integrated nature of automotive manufacturing in North America. In October 2010, the Harper government had strengthened vehicle efficiency standards for the light duty vehicles with a base year of 2011 to 2016.177 In February 2013, the government finalized regulations for heavy-duty vehicles.178 Given that the transportation sector was the second highest source of emissions in Canada, these regulations represented a major step forward on reducing emissions in Canada. Albeit, this strengthening was largely driven by efforts originating in the United States.

The oil and gas sector has long been Canada’s fastest growing source of emissions and since 2012 it has been the country’s largest source of emissions. Regulating this sector would be critical. The Harper government certainly knew this and first declared its intention to regulate emissions from the oil and gas sector in 2007 using Turning the Corner’s cap and trade program. The following year, Prime Minister Harper noted in a speech to the Canada-U.K. Chamber of Commerce that “new oil sands operations will only be permitted if they can massively reduce their emissions” and that “our plan will effectively establish a price on carbon of $65 per tonne, growing to that rate over the next decade” (Harper 2008).179 The commitments to regulate the oil and gas industry were reiterated in 2011 and in early 2013. During this period, the federal government convened an informal body called the Process Working Group that had representatives from the Government of Alberta, oil and gas companies (CNRL, Cenovus, and Suncor), industry associations (CAPP and the Canadian Petroleum Products Institute), and the federal government (Stewart 2013). This group of major emitters worked to develop greenhouse

177 In 2014, these standards were strengthened for light-duty vehicles with a base year of 2017 to 2021. 178 In 2018, these standards were amended for heavy-duty vehicles with a base year of 2020 to 2029. 179 $65 per tonne is $15 per tonne higher than what the Trudeau government has scheduled for 2022, fifteen years after Harper’s speech.

159 gas regulations for the oil and gas industry. Once again, no environmental groups, labour groups or indigenous organizations were included in these closed-door meetings. During the course of this Process Working Group, CAPP voiced concern over the increased stringency of the provincial and federal proposals and instead advanced a weaker carbon pricing scheme. An email from CAPP to the Government of Alberta dated 9 April 2013 obtained through an access to information request disclosed CAPP’s feedback on provincial and federal proposals. CAPP asked:

Will higher stringency requirements ‘secure’ social license and forestall negative policy action elsewhere? Unlikely. The objection to the oilsands is ideological; not a concern that Alberta’s current framework is not stringent enough. Put another way, if the 40/40 guidelines were enacted, oil sands opponents would claim that they were too insufficient (emphasis in original) (Daly 2013).

The concerns raised by CAPP were primarily around ensuring high profit margins and growth opportunities, not around lowering absolute GHG emissions. The same CAPP email also stated, “We do like targets that are based on intensity. This always needs to be the case as otherwise would be a disincentive to add volumes.” Yet it is precisely these additional volumes that are causing Canada’s greenhouse gas emissions to increase. The next course of action, recommended CAPP, was more analysis and to delay implementation. In November 2013, Environment Minister Leona Aglukkaq admitted that greenhouse gas regulations for the oil and gas industry have been further delayed (de Souza 2013a). Another two years elapsed until the end of the Harper government; in the end, no climate regulations were imposed on the oil and gas industry.

In short, during the Harper majority government state strength on climate and energy policy waned even further. The federal government became less autonomous of the fossil fuel industry and the bureaucratic competence on energy and climate policy decreased. Outsourcing technical and policy advice to external consultants became standard practice across the federal civil service during the Harper years, limiting the ability of the bureaucracy to improve its in-house

160 capabilities.180 The environmental law reforms of 2012 constrained the federal government’s territorial reach even further. With decreasing state strength over climate and energy policy in Canada and the repeated warnings of a ‘job-killing carbon tax’ from the Harper government, the fossil fuel industry and its investors perceived federal climate policy as an even greater political risk. Climate policy could potentially curtail the industry’s expansion plans and strand billions of dollars of assets. Policy networks constricted and network actors sought to delegitimize those with views divergent from business-as-usual fossil fuel expansion. The result: federal climate policy that was delayed, narrow in scope and unstable.

Despite the status quo on climate policy in Ottawa under Harper, change was afoot in his home province. In May 2015, for the first time in forty-four years, Alberta’s Progressive Conservatives lost an election. Faced with a split of the right-wing vote between the incumbent Conservatives and the further right-wing Wild Rose Party, as well as urban voter apathy for both parties, the New Democratic Party (NDP), led by Rachel Notley, sailed to victory.181 The Notley government moved swiftly to increase the apparent autonomy of the province from the oil and gas industry, increase bureaucratic competence on climate policy, open and institutionalize policy networks, and within 6 months, unveiled the most ambitious climate policy in the fossil fuel-intensive province’s history.182 Since Alberta has always been the rate-limiting province for federal climate policy development, change now became possible in Ottawa.

4.6 The Trudeau Government (2015-2018)

In October 2015, Stephen Harper’s Conservative Party resoundingly lost the election to Justin Trudeau’s Liberal Party. After ten years of Conservative rule, the Liberals demonstrated a markedly different approach to climate policy. The son of Pierre Elliot Trudeau, whose father is forever linked to the ill-fated National Energy Program, Justin Trudeau swiftly reframed the federal government’s role on climate change policy from laggard to leader, creating new federal

180 From 2006, when the Conservatives took power from the Liberals, to 2013 annual federal spending on external consultants increased 28 per cent to more than $10 billion (Boutilier 2013). 181 The Alberta NDP went from having only 4 seats to having 54 and a majority of the provincial legislature. 182 This includes a complete phase out of coal power by 2030, a 100 Mt absolute emissions cap for the oil sands, an economy-wide price on carbon, methane regulations, significant incentives for renewable energy and energy efficiency.

161 policies, coordinating action across provinces, and constructively re-engaging international fora. The Liberals strategically prioritized climate action and attempted to strengthen the state’s role in climate policy by augmenting funding for policy development, ostensibly increasing the government’s autonomy from the oil and gas industry, and seeking policy equivalence across the federation. This new assertion of the federal government combined with a Notley government in Alberta reduced the risk perceptions of elites regarding climate policy. Policy networks opened to previously excluded groups, such as environmental NGOs, Indigenous organizations and labour unions. For example, instead of vilifying environmental groups and isolating them from access to policy networks, key political staff positions went to prominent environmentalists.183 The resultant climate policy was broader in scope and developed faster than the many previous attempts.

A month after forming government the Liberals sent a large and diverse delegation to COP 21 in Paris. Prime Minister Justin Trudeau announced on the opening day of the Paris summit to a room of more than 150 world leaders that when it comes to the global fight against climate change, “Canada is back” and “we’re here to help” (Toronto Star 2015).184 Harper’s general contempt of climate multilateralism was widely known. During his period as Canadian Prime Minister, Canada was considered a pariah at the international climate talks, even before it became the only country in the world to quit the Kyoto Protocol. A federal official contrasted the reception of Trudeau at COP 21 to the treatment of the previous government at prior international climate negotiations:

183 These positions include: Gerald Butts, Principal Secretary to the Prime Minister and former President and CEO of WWF-Canada; Zoë Caron, Climate Policy Advisor in the Prime Minister’s Office and later Chief of Staff to the Minister of Natural Resource and former WWF and Clean Energy Canada staff member; Marlo Raynolds, Chief of Staff to the Minister of Environment and Climate Change and former Executive Director of the Pembina Institute; Clare Demerse, Director of Policy for the Minister of Environment and Climate Change and former staff member of Clean Energy Canada and the Pembina Institute; Julia Kilpatrick, Director of Communications for the Minister of Environment and Climate Change and former staff member at Clean Energy Canada and the Pembina Institute; Erin Flanagan, Director of Research for the Minister of Natural Resources and former staff member of the Pembina Institute. 184 An iconic picture, taken in the negotiating hall, included Trudeau, the Premiers of Canada’s largest provinces, the NDP and Green Party Leaders, and the National Chief of the Assembly of First Nations. Under Harper, environmentalists and opposition parties were regularly denied credentials to attend the international climate talks as part of the Canadian delegation.

162 Then we watched the prime minister give his national statement— and I was watching in the hallway, so not even in the plenary room—and there was a whole crowd of people around the television and at the end of it everyone in the hallway was clapping and I couldn’t believe it. I’d never gotten an ovation for anything that the Canadians had said in my whole five years of negotiations [during the Harper government] […] they’d only been in office for three weeks, they hadn’t actually done anything except say that climate change was important and they were going to do something about it (C10).

This enthusiasm was reminiscent of the excitement when a newly-elected spoke at the 2007 Bali COP after eleven years of Australia being considered a pariah at UN climate talks during the Howard government. Once back in Canada, the federal government coordinated the provinces and territories to develop plans to implement the Paris Agreement. The Trudeau government learned from the mistakes of the Chrétien government and did not unilaterally raise Canada’s emissions reduction target; it kept the Harper era commitment of reducing economy- wide emissions to 30 per cent below 2005 levels by 2030. The First Ministers released the Vancouver Declaration in March 2016. The Premiers and Prime Minister agreed, at a very general level, to increase the level of ambition, promote clean economic growth, deliver actual emissions reductions, increase work on adaptation and climate resilience, and enhance cooperation (Canadian Intergovernmental Conference Secretariat 2016). Most importantly, they agreed that a Pan-Canadian Framework on Clean Growth and Climate Change would be finalized by the end of the year.185

185 Prime Minister Harper had eschewed any attempts through the Council of the Federation to coordinate climate policy across the provinces and territories and the federal government. He consistently did not attend Council of the Federation meetings during his tenure as Prime Minister. During Trudeau’s first year there were three First Minister’s meetings on climate policy and the Prime Minister was present at all of them.

163 4.6.1 Pan-Canadian Framework on Clean Growth and Climate Change

On schedule, in December 2016 Canada’s First Ministers released the Pan-Canadian Framework on Clean Growth and Climate Change (Environment and Climate Change Canada 2016). This near-consensus document provided a more coherent path forward than the historically isolated climate initiatives across the federation. Moreover, the Framework was arguably the most ambitious federal climate plan to date. The plan set out a minimum price on carbon and identified more than 50 specific actions governments would take to meet Canada’s emissions reduction commitment in sectors such as transportation, buildings, electricity and oil and gas.186

The intent of policymakers was to thread the needle of concerted climate action in a highly decentralized federation at a time when there was a unique alignment of key Premiers also wanting to act. They included, most importantly, Premier Notley. A senior federal official recalled “having Alberta onside made a material difference to accomplishing what we did in the Pan-Canadian Framework” (C13).187 Despite the path-breaking nature of the Framework, progress has been similar to previous federal efforts: slow. An assessment of the Framework in December 2017 by the Pembina Institute found that implementation timelines were at risk and additional measures were needed to meet the 2030 target (Flanagan et al. 2017).188 This analysis

186 Due to space constraints, not all federal climate policies under the Trudeau government can be detailed here. That said, two additional policies are worth mentioning: the coal phase out and the Powering Past Coal Alliance. After the 2030 coal phase-out was announced by Notley government in Alberta, the federal government quickly strengthened the pre-existing Harper-era coal power regulations to match Alberta’s timeline. In 2018, Ottawa created a Task Force on Just Transition for Canadian Coal Power Workers and Communities—the first of its kind—which included representatives from unions, communities, and environmental groups (Government of Canada 2018e). This represents a formal broadening of policy networks, albeit temporary in nature. A Final Report was submitted to government at the end of 2018, which has not yet been publicly released. Canada was instrumental in forming the Powering Past Coal Alliance in 2017. As of October 2018, this coalition was composed of 28 countries, 19 sub-national governments, and 28 private sector organizations (Government of Canada 2018d). The goal of the alliance is to support clean power generation and for governmental members to phase out existing unabated coal power generation and for private sector members to not power their operations from coal-based power. While these coalitions are important to normalize and build capacity for a transition away from coal, the vast majority of government members do not have a major reliance on coal power (Jewell, Brutschnin, and Cherp 2018). 187 Moreover, the Liberals faced a weakened opposition in Parliament. Immediately the October 2015 election, Stephen Harper resigned as leader of the Conservatives and it was not until May 2017 until the party elected as the new Leader. The NDP took until October 2017 to elected as the new leader. Singh did not win a seat in Parliament until February 2019. 188 These measures included the following: extending the carbon price up to $130 per tonne by 2030,

164 proved correct. It did not take long for major emitters to begin seeking delays and additional rents.

4.6.2 Clean Fuel Standard

The Clean Fuel Standard, which would require emissions-intensity reductions in fossil fuels through efficiency measures or blending with biofuels, was intended to be the Framework’s largest source of emissions reductions: 30 Mt by 2030. A discussion paper was released in February 2017 but after consultations with the oil and gas industry and the provinces, principally Alberta, development of the standard stalled (Rabson 2017b).189 Originally, the regulation was to be finalized by mid-2018. By July 2018 the federal government announced a new timeline. Final regulations for the liquid fuel stream of the Clean Fuel Standard would be published in 2020 and for the gaseous and solid fuels stream by 2021 (Environment and Climate Change Canada 2018b). Both deadlines are well beyond the October 2019 federal election. This delay was not enough to satisfy Alberta. By August 2018, Alberta’s Energy Minister was publicly criticizing the federal government’s promised clean fuel standard, decrying the additional costs it would impose on the oil and gas industry (Heidenreich 2018). Unlike the costs associated with a carbon tax, it is harder for the fossil fuel industry to pass on Clean Fuel Standard costs to consumers. Predictably, the Canadian Association of Petroleum Producers wants the oil and gas industry to be exempt from the Clean Fuel Standard (Bakx 2018).

4.6.3 Methane Regulations

In March 2016, Canada committed to develop methane regulations for the oil and gas industry by 2017 with a three-year phase-in period from 2018 to 2020.190 Reducing methane is critical as the gas has a much higher ability to trap heat than carbon dioxide over the short term.191 Since sharp

implementing national zero emission vehicle legislation, banning the sale of internal combustion engines, and establishing long-term energy efficiency targets. 189 The CEO of ExxonMobil-controlled Imperial Oil was lobbying the Deputy Finance Minister in May 2018 on the fuel standard, according to a briefing note obtained through an access to information request (Bakx 2018). 190 Canada’s commitment came a little over a year after U.S. President Obama pledged to reduce methane emissions from its oil and gas industry by 40 to 45 per cent from 2012 levels by 2025. 191 For instance, over a 20-year period, methane is 84 times more potent than carbon dioxide (IPCC 2014).

165 emissions reductions must happen over the next few decades, reducing methane leakage is an important step. However, in April 2017 the Trudeau government announced a three-year delay (Rabson 2017a). Environment Canada would not begin developing draft regulations until 2020 and it would take until 2023 for the new rules to be fully in place. Ostensibly this change of plans was because the new U.S. President, Donald Trump, shelved his government’s plan to regulate methane emissions.192

Similar to previous occasions when the federal government intimated it would implement climate policy, Alberta pre-emptively released draft methane regulations to, among other things, frame the development of federal methane regulations. Alberta’s draft regulations have the same stated goal of 45 per cent reduction from 2012 levels by 2025, but with major industry concessions, including fewer requirements for on-site measurements.193 Measuring emissions on- site is critical as it is often able to catch previously undetected methane releases.194 Regardless of the emissions reduction imperative or measurement errors, delaying and weakening methane regulations for the oil and gas industry would slightly reduce costs and improve short-term profitability. An environmental stakeholder observed:

Never underestimate the ability or desire of the industry to fight for every incremental dollar, right. I think you’re seeing it in the methane space as well—the cheapest easiest reductions possible and industry is still fighting against regulation […] there’s a routine that industry follow in terms of lobbying against regulation: from there is no problem to it’s too expensive to fix to

192 However, despite the D.C.-based regression, many important oil- and gas-producing states already have similar methane regulations in place, including California, Colorado, Ohio, Pennsylvania, Wyoming and Utah. The presence of these U.S. state-based regulations runs counter to claims from Alberta and its oil and gas industry that Canada-based methane regulations would erode competitiveness with American oil and gas producers. 193 Other concessions include: $2.3 billion in financial support to the oil and gas industry, $2 billion of which is relief from the province’s carbon tax (McCarthy 2018). 194 A 2018 study of oil and gas sites in Red Deer, Alberta conducted ground-based measurements of methane found that in some cases methane emissions were 15 times higher than reported to the provincial energy regulator (Zavala-Araiza et al. 2018).

166 there are no solutions to there are solutions but we have to be careful about competitiveness (C14).

As with the fuel standard, federal methane regulations have also been subject to policy drift. Attempts to change existing policies (i.e., no fuel standard or methane regulations) are blocked despite clear scientific evidence and democratic pressure. Like the Harper government’s proposed climate regulations for the oil and gas industry, once announced, implementation is delayed.

4.6.4 Carbon pricing

The 2016 Pan-Canadian framework also called for the implementation of national carbon pricing by 2018. A two-track compliance model was developed whereby provinces are expected to meet a minimum price floor. To meet the minimum standard provinces can implement their own specific instruments, be it cap-and-trade, a carbon tax or sectoral regulations. If provinces are unable to meet this minimum standard or opt-out, a federal carbon tax will act as a backstop, ensuring that some action is taken. The carbon price would begin at $10 per tonne in 2018 and rise by $10 per year until reaching $50 per tonne in 2022. All related revenue would be kept in the jurisdiction of origin and largely refunded to households.

For large industrial emitters, an output-based pricing system was developed for provinces that fail to implement equivalent carbon pricing. Each regulated facility would have to pay for the proportion of emissions that exceed a production-weighted national average of emissions intensity. Like Alberta’s 2007 climate regulations, facilities have three options for payment: pay the carbon price set by the federal government, submit surplus credits issued by the government, or submit eligible offset credits. Under the Notley government, Alberta implemented its own carbon pricing equivalent for major emitters.

After extensive consultation with a diverse range of stakeholders, far broader than under the Harper government, the carbon pricing scheme received Royal Assent in June 2018. A federal carbon tax would come into effect in January 2019, unless provinces had a carbon pricing equivalent. One month after the carbon price was legislated, the federal government announced it

167 would shift the benchmarks facing major emitters.195 The result: fewer industrial facilities would face a federal carbon tax. Despite this adjustment, the carbon tax would still apply to households through their fuel and electricity usage. The anticipated emission reduction from carbon pricing in Canada is 50 to 60 Mt by 2020, which includes emission reductions from pre-existing provincial carbon pricing efforts (Government of Canada 2018c).

The new federal carbon pricing scheme was endorsed or supported by an unprecedented wide range of stakeholders, including peak associations for environmental groups, trade unions, and Indigenous organizations (Abreu 2018; CLC 2016; Brake 2018). Of note, it was also supported by The Business Council of Canada and the Canadian Chamber of Commerce, neither of whom had supported previous federal attempts to price carbon (Business Council of Canada 2018a; Taylor 2018).

The window of acceptability for a carbon tax in Canada has since been closing as more provincial Premiers challenge the Trudeau government’s right to tax carbon. The Ontario Liberals, who had been climate policy leaders, were resoundingly defeated in June 2018 and replaced by Doug Ford’s Progressive Conservatives. On his first day of office, Premier Ford started the process to repeal all of Ontario’s major climate policies including the cap and trade program with Quebec, incentives for electric vehicles, renewable energy and energy efficiency, and many sustainable transportation projects across the province. Ontario soon launched a legal challenge to the federal government’s right to impose a carbon tax, joining the conservative governments of Saskatchewan and Manitoba in their opposition to Ottawa (Loriggo 2018). While the federal backstop may ensure a carbon pricing scheme in Canada, this assurance is contingent upon future federal governments not weakening or repealing the policy. Regardless, the first-ever federal climate policy for the oil and gas industry was implemented in 2019: 12 years after Alberta’s first policy and 29 years after Norway implemented a carbon tax on its oil and gas industry. By ensuring there is a federal backstop and by recycling revenues directly to

195 For most industries, including oil and gas, the benchmark average shifted from 70 to 80 per cent and for cement, iron and steel and lime and nitrogen fertilizers, the benchmark was moved to 90 per cent of the industrial average (Quinn 2018).

168 households, the Trudeau government increased its territorial reach while attempting to thread the needle of Canadian federalism.

4.6.5 Reducing carbon emissions through hydrocarbon extraction

Despite saying yes to more action on climate change through the landmark Pan-Canadian Framework, the Trudeau government has also said yes to accelerating oil and gas development in the country. The federal government views natural gas and the export of liquified natural gas (LNG) as a crucial method of reducing global emissions, as well as a means for diversifying trade towards Asian markets, creating jobs and increasing tax revenue.196 In 2015, the Liberal government followed through on the preceding Conservative government’s plans to implement an accelerated capital cost allowance for LNG facilities. This fossil fuel subsidy enables companies to more quickly write off the costs associated with LNG facilities, improving the economic feasibility of these projects. Since then, Woodfibre LNG, a small LNG facility with an export capacity of 2.1 Mt per year has received financing approval, along with LNG Canada, a major $40 billion LNG export facility with a final capacity of 26 Mt per year. LNG Canada’s facility will be exempt from paying provincial sales tax on its construction costs and from carbon price increases, and will receive highly-subsidized electricity (Shaw 2018).

In November 2016, a month before the release of the Pan-Canadian Framework, the federal government rejected the controversial Northern Gateway pipeline and approved the Trans Mountain and Line 3 oil sands pipelines. Unlike the previous Conservative government, the Trudeau government attempted to demonstrate that not all oil and gas projects are in the public interest. This position signalled increased autonomy from the oil and gas industry, while still saying yes to expansion of the oil sands. Despite this announcement, elite perceptions of the political risk surrounding the pipeline remained high in part due to sustained environmental and Indigenous campaigns against oil sands pipelines. Sustained low oil prices only heightened the risk. Even with the approval in hand, KinderMorgan, the Houston-based company that proposed

196 This assumes that the lifecycle emissions associated with LNG are in fact less than comparative alternatives. Recent scholarship has found that hydraulic fracturing of gas can emit significant amounts of methane, which can erode the cleanliness argument of gas (Howarth, Santoro, and Ingraffea 2011). Much of the LNG that would be exported from Canada would be extracted using hydraulic fracturing.

169 tripling the capacity of the existing Trans Mountain pipeline from Edmonton to near Vancouver, was unable to find financial backers for the pipeline. Controversially, the Trudeau government stepped in and nationalized the 65-year-old pipeline.197 Ottawa’s stated intent was to temporarily own the pipeline and then sell it to private investors once the expansion is constructed and the uncertainty from opposing environmental groups and Indigenous communities has subsided.198 Using state strength to further entrench reliance on high-carbon fossil fuel extraction is clearly not facilitating a low-carbon transition. In fact, these actions, along with the commitment to a large-scale LNG build-out on Canada’s west coast deepens Canada’s carbon lock-in. As with Notley’s climate policy, Trudeau’s climate policies became a quid pro quo for overcoming concerns over oil sands expansion. Senator Grant Mitchell contended that “the reason that we will get a west to east pipeline, I think, and certainly a Kinder Morgan parallel pipeline, is because we have a carbon tax. That’s the reason” (C12). Robert Skinner, a former oil industry executive, advanced that the Pan-Canadian Framework was

helpful because it gets rid of the criticism. We can now say, look, we have a climate policy; we’re moving on it. And it allowed Trudeau to make the decision on Trans Mountain pipeline and Line 3—there’s a lack of logic in it in the whole piece he did on Northern Gateway, but that’s besides the point. It’s political expediency, you need to do something. So yeah, it’s allowed the industry to move ahead with the prospect that they’re going to have the ability to get their product to market—to diverse markets (C25).

197 The pipeline, built in 1953, was assessed at $550 million in 2007 and was sold to the federal government for $4.5 billion (Trans Mountain 2012). The expansion project will cost at least an additional $7.4 billion. 198 These risks proved real when the Federal Court of Appeal quashed the approval for the pipeline expansion as it was under construction in August 2018 (Federal Court of Appeal 2018). The reasons for the judicial decision: the federal government had inadequately consulted impacted First Nations and that the environmental assessment failed to account for potential marine impacts. The federal government intends to undertake the appropriate consultations and new impact assessments and carry on with the project.

170 Not all insiders agree with this interpretation. When asked if Trudeau’s pipeline approvals were an exchange for Notley’s support for Trudeau’s climate plan, Richard DiCerni, Alberta’s most senior bureaucrat at the time of the ‘deal’ critiqued that perspective as:

[…] cynical, but also simplistic. Public policy is not made in this day and age on the basis of those types of explicit trade offs of, ok, if you give me two baseball cards of superstars and I’ll give you three of […] There was an alignment I would say at the strategic level between the Government of Canada and the Government of Alberta, in regards to policy goals regarding policies on climate change and resource development. Time will tell how it unfolds (C04).

To summarize, from the very beginning of its first mandate, the Trudeau Liberals asserted a stronger role for the federal government concerning climate policy. Within a year, the Liberal government had announced a comprehensive climate plan and secured crucial support from the provinces, industry, environmental groups, labour unions, and Indigenous organizations. Federal carbon pricing, a clean fuel standard and methane regulations, among other climate policies, were all on the docket. At first, many of Canada’s economic and regime elites saw this momentous effort as catalyst for greener economic growth. The government’s framing was working.

Policy networks were significantly broadened by Prime Minister Trudeau compared to those during the Harper government; however, it is premature to judge if these broader networks are durable or if the full-suite of intended climate policies will be implemented and be sufficiently exacting to result in transformative emissions reductions.

What is already being observed are across-the-board delays on the climate policies that would deliver the greatest emissions reductions alongside increasing government subsidies to the oil and gas industry. The same backlash politics that have dogged previous federal governments continue to nip at the heels of the Trudeau government. This suggests that state strength is highly resistant to change. Even with a supportive Prime Minister, an unprecedented alignment of provinces on climate change, a reinvigorated bureaucracy, and broadened policy networks, the

171 autonomy of the government from major emitters remains limited. When asked what has changed under the Trudeau government, Clare Demerse, former federal policy advisor to Clean Energy Canada put it this way:

The politicians and their motivation can sort of turn the ship a little bit, but the ship is still the ship, and climate policy is always hard and industry is always fearful about competitiveness and what if we move too fast and oh my god, we’re a resource economy, and this is risk for us—none of that has changed whatsoever (C09).

4.7 Conclusion

Canada’s track record on climate policy is mixed. When policymakers became alerted to the problem of climate change in the 1980s, Canada was at the forefront of these discussions and a global pacesetter for ambition. This precocious zeal did not, however, translate into an enduring and ambitious domestic national climate policy. The policy that did emerge was narrow, unstable and late. Paired with policy decisions to rapidly accelerate high-carbon, high-cost bitumen extraction and the overwhelming economic dependence on the United States, Canada’s ability to decarbonize was further constrained. Stalwart federal support for expansion of the oil and gas industry deepened Canada’s carbon entanglement and worsened its emission profile.

When it comes to climate policy, the Canadian state is relatively weak. Its federated status necessarily dilutes state infrastructural power across two levels of government. The Alberta- Ottawa conflict during the 1970s energy crises and the National Energy Program in the early 1980s was a brief time when both Alberta and the federal government sought to increase their relative state strength. However, from the nascent climate policy efforts of the 1990s to the present day, the federal government has invariably been reticent to implement regulatory or market-based climate policy. In part, this reticence is from the long-standing and strong influence of U.S.-based oil and gas companies on Canadian energy policy development (Laxer 1970). Be it major U.S. fossil fuel companies operating within Canada or homegrown fossil fuel companies, this lack of state autonomy from powerful industrial emitters continued during the earliest days of climate policy development until the present day, regardless of what party is controlling Parliament. The Canadian state has been further enfeebled by the limited federal

172 bureaucratic capacity to develop climate policy. Budget cuts to the federal civil service and the increasing reliance on private sector consultants to conduct technical policy analysis has hindered the ability for Ottawa to keep pace with the private sector.199

State strength in concert with broader political economy factors shaped elite risk perceptions through path dependent relations. A weak state is further weakened by increasing reliance on fossil fuel revenues and employment. While this dependence is not as high as Norway and Alberta, nor as geographically widespread as in Australia, it still has made absolute emission reduction a difficult prospect in Ottawa. Add to this Canada’s extreme dependence on the United States market and any climate policy that may affect business-as-usual is seen by Canada’s economic and regime elites as highly risky.

Canada’s policy networks have been central to shaping national climate policy. The stability in industry’s representation and the failure to include other affected stakeholders meant that policy networks eschewed transformative all-of-government, energiewende-like policies. Dominant policy networks framed climate policy narrowly in an attempt to delegitimize calls for transformative climate policy. Groups excluded from certain networks have sometimes formed coalitions with other excluded groups that have attempted to shift policy venues and re-frame the climate policy debate. Network members, regardless of policy position, have leveraged Canada’s federalism to best advance their interests, shifting the site of climate action when it is most advantageous.

As a result of the policy network structure and the policy ideas framed within these networks, governments were slow to implement policy that was limited, narrow and not durable. In

199 Professor David Keith reflects on Canada’s dearth of bureaucratic capacity and autonomy in light of Bruce Carson scandal: “Over decades, Canadian governments have emasculated or killed institutions that gave independent advice on science and technology so that they are now among the weakest in the G7. Federal and provincial governments increasingly demand that research funding be tied to matching money from industry, so work that threatens industry’s interests does not get funded. It’s a good idea to tie some applied work in engineering to industrial interests, but this requirement must not apply to policy analysis” (Keith 2015). The federal government’s energy and climate policy modelling capacity remains limited. “While some modelling expertise in systems change is found at universities and consulting companies across Canada, the national capacity is not very high, and there is little if any interaction among the various research teams. When companies or government departments hire policy analysts, few, if any, have training in the modelling of systems change” (Layzell and Beaumier 2018).

173 Canada, the federal government often created industry-favoured voluntary initiatives or sector- specific spending programs compared to economy-wide regulatory policy.

The climate policy changes advanced by the Trudeau government are a notable departure from previous climate policy. Ottawa is slowly increasing its strength through building bureaucratic competence, extending territorial reach and attempting to create more autonomy from the oil and gas industry. Many elites no longer see climate action as a risky venture. Networks have broadened and climate policies are much more comprehensive in scope, means and ambition than ever before. However, it is too early to tell if these efforts will survive a change of government and more critically, facilitate net-zero emissions by mid-century. The ability for Canada to transition to a low carbon economy is discussed further in the second half of Chapter Six.

174 CHAPTER FIVE: Australia Case Study

I love a sunburnt country

A land of sweeping plains,

Of ragged mountain ranges,

Of droughts and flooding rains.

Excerpt from My Country, poem by Dorothea Mackellar (1908)

Far from ironic, this romantic and patriotic verse about Australia is imprinted on the minds of schoolchildren across this sunburnt country. Thanks to other environmental stressors, such as droughts, fires, a hole in the ozone layer, introduced species, and now climate change, Australia is left particularly vulnerable. Despite or in spite of this vulnerability, the country forges on with business-as-usual development.

Australia epitomizes carbon entanglement. Fossil fuel resources both onshore and offshore are exhumed, combusted and exported in all corners of this vast federation. Consequently, the constituencies that support the maintenance and expansion of the industry can be found across the country, not just in one particular region.

Down Under, coal is king. A major source of export earnings and a provider of jobs in key swing ridings, the coal industry plays an oversized role in, among other areas, the climate, energy and industrial policy of the country. Australia’s electricity system has long been dominated by cheap and dirty coal-power. Electricity-intensive industries, attracted to Australia in part because of low-cost power, are consistently strong advocates for not paying for pollution. Here, energy- intensive industries, such as aluminum smelting, alumina refining, hard rock mining, petrochemicals, steel production, combine with coal companies and increasingly oil and gas

175 producers to form a broader ‘fossil fuel lobby’ than simply the three fossil fuels.200 As a result, the climate policy debate in Australia has, until recently, centered primarily on power generation. , Environment Minister (2001-2004) during the Howard government, put it this way: “The production of electricity is the focal point for the climate change policies. And it’s the index that politicians and the public are increasingly using to assess whether the policy is sound or not” (A10).

Yet despite this broad and steadfast high carbon orientation, climate policy in Australia has been highly variable. Over the past three decades, Australia has enjoyed both world-leading and world-lagging climate policies. How did these climate policies come to pass?

Very few of my interviewees linked Australia’s climate policies to a deeper history of the country. That is, of course, not to say that history does not matter for this nation; rather, it serves to constrain climate politics more indirectly. A “quarry vision” operates in Australia (Pearse 2009). Not unlike the staples trap of Canada (Innis 1930, 1940; Watkins 1963; Haley 2011), this powerful quarry vision narrative is that the country’s comparative advantage has rested and will continue to rest on the metals and minerals exhumed from the earth. While not uncontested, this extractivist myopia has some grounding in empirics.201

This chapter argues that weak state strength in Australia, due to federalism, lack of autonomy from major industrial emitters, and low bureaucratic capacity, created great uncertainty for economic and regime elites who moved to constrain policy network membership and stability.

200 Until recently oil and gas revenues have never been large enough to shape public policy (Crommelin 2012). 201 Beyond coal, gold mining has been part of the history of this country since the second half of the 19th century. Today, Australia extracts a wealth of other metals and minerals. It has the world’s largest economically demonstrated reserves of brown coal, lead, mineral sands, nickel, silver, uranium and zinc and the second larges reserves of bauxite, copper, gold and iron ore (Commonwealth of Australia 2010). Exploitation of oil and gas has been relatively recent in Australia. Onshore oil and gas production has been commercially viable since the 1960s but only in small amounts and in relatively isolated locations. Offshore oil and gas has proven far more bountiful. Production in the Bass Strait off the coast of state of Victoria began in the 1960s. In the 2000s, large gas fields in Western Australia have been developed along with liquefaction facilities to export liquified natural gas (LNG) to Asian markets, along with additional gas production in Queensland and South Australia, making Australian the second largest exporter of LNG in the world.

176 The result is a climate policy that was late relative to peer nations, narrow in scope, limited in means, and hampered by instability.

Many critical junctures exist in the story of Australia’s climate policy. They are, notably: the early days after the Rio Earth Summit (1992), the Howard government’s Kyoto Protocol target (1997) and subsequent ETS proposal (2006), Tony Abbott rising to Leader of the Opposition (2009), Gillard’s Clean Energy Future Package (2011), and the Abbott government’s rollback of Gillard-era climate policies (2014). These moments will be key focal areas of process tracing and can shed light on the institutions, interests and ideas shaping climate policy and greenhouse gas pollution.

5.1 The Hawke and Keating Governments (1988-1996)

When climate change first appeared on the radar screens of Australian policymakers, Australia was already a global leader in climate science. Public awareness was surprisingly high, perhaps because of the recently discovered ozone hole over Australia. Both major parties made early and ambitious political commitments. Meanwhile, industry and unions quickly sought to temper the state’s growing enthusiasm for action on climate change.

5.1.1 Early Leaders in Climate Change Science

As with Canada, in the late 1980s and early 1990s, Australia was considered to be at the forefront of international research and public awareness on climate change (Brown n.d.; Henderson-Sellers and Blong 1989).202 In 1987, Australia’s national research council, the Commonwealth Scientific and Industrial Relations Organisation (CSIRO) and the federal Commission for the Future organized Australia’s first conference on climate change research in Melbourne. Greenhouse 87 brought together over 100 natural scientists, sociologists and

202 To get to this point, Australian climate scientists had been working for over 10 years on climate change science. For example, in March 1976, the Australian Academy of Science issues its first report on climate change, warning Australians that human activities are likely to worsen the greenhouse effect (Australian Academy of Science 1976). However, scientific evidence did not at that point support that the world is on the precipice of major climatic change. A 1980 conference organized by the Australian Academy of Science in Canberra brought together scientists to discuss the latest research (Pearman 1980). As the science began to mature, the certainty of major biogeochemical impacts increased.

177 planners to share current knowledge and develop a more strategic research agenda.203 This gathering and a similar event in 1988 drew significant media attention (Henderson-Sellers 1990). In contrast with the last twenty years of press coverage in Australia, the links between human- caused emissions and climate change were a given during these early years (Taylor 2014).

Also in 1988, a landmark international climate conference called The Changing Atmosphere was held in Toronto and received significant media attention in Australia (Taylor 2014). Graeme Pearman, then a senior climate scientist at CSIRO, attended the Toronto gathering and called it a “clarion call to politicians to take action” (Lowe 1989: 4). The conference put forward the so- called ‘Toronto target’ of reducing carbon emissions to 20 per cent below 1988 levels by 2005. This target was not based on any modelling of estimated the emissions cuts needed to achieve an acceptable level. Rather, as Pearman knew, achieving this target was aspirational: “It was never going to happen, it was too ambitious” (A02).

This focus is seen in the stark warning given by Neville Wran, the Chairman of CSIRO in an October 1988 article in The Age (1988): “As sure as night meets day, unless we accept that the greenhouse effect is one of the world’s greatest environmental problems, the lifestyle of the world will, in the course of the next generation, undergo dramatic and drastic changes.” He goes on to note: “Ten years ago, most of us had never heard of the greenhouse effect. Now most Australians have not only heard of it, but understand that it threatens their lifestyle.” In particular, Wran singled out that fighting the greenhouse effect would hurt the country’s coal exports (The Age 1988). The warning was not lost on the coal industry or the Department of Primary Industry and Energy.204

5.1.2 Bipartisan Support for Climate Action

At the time, political support for climate action was not just a Labor Party issue. Genuine bipartisan political support existed. In November 1988, the Coalition Environment critic, Chris

203 In Australia, particularly between the 1980s and the 2000s, the term ‘greenhouse’ was frequently used to mean climate change or global warming. 204 A 1988 draft national energy policy written by the Department had an entire chapter devoted to global warming; it was removed from the final version (Pearse 2007: 169). The bureaucrat who voiced these concerns noted the omission was not from industry lobbying but from senior civil servants (i.e., regime elites) effectively censoring the climate change chapter from the final document (Pearse 2007).

178 Puplick, wrote a discussion paper on the greenhouse effect (Puplick 1988). The conservative Coalition was an alliance of the urban-based Liberal Party and more rural National Party. Beginning with a doomsday quote from the conference proceedings from the Toronto conference earlier that year,205 Puplick carefully described the state of climate science and the potential impact to Australia, including the country’s main agricultural region, the Murray-Darling Basin. He closed with a call to action that would likely shock Liberal and National party members in just ten years:

It is highly probable that over the next several decades climatic changes of an unprecedented magnitude in human history will take place. These will have numerous consequences in Australia and elsewhere. We can either wait to see what happens or we can try to anticipate the effects and plan the best strategy to maximise the gains and minimise the losses (Puplick 1988: 23)

The Coalition’s ambition remained through the 1990 federal election, under the leadership of Andrew Peacock, when it committed to reducing greenhouse gas emissions by 20 per cent below 2000, a more aggressive target than the Labor Party and the Toronto Conference (Liberal Party of Australia 1989). After the Toronto Conference, in 1989, Labor Senator submitted a Cabinet proposal for the adoption of the Toronto emissions reduction target (Burgmann and Baer 2012). However, then-Treasurer Paul Keating convinced cabinet to defeat Richardson’s proposal. Keating successfully argued that Australia should focus domestically on industrial energy efficiency and promote emission reductions abroad (Dunn 1989).206 Having been personally briefed by the Prime Minister’s Science Council that year on climate change, Hawke knew the challenging path to decarbonization that lay ahead for the country and that the government would have to play a key role in the necessary economic restructuring, as it had with trade liberalization earlier in the 1980s.207

205 “Humanity is conducting an uncontrolled, globally pervasive experiment whose ultimate consequences could be second only to a global nuclear war” (WMO 1988). 206 While Richardson faced opposition in Cabinet, other states were beginning to take precocious first steps to address climate change: Western Australia, Victoria and adopted the Toronto target “as an interim objective for planning purposes” (Wilkenfeld, Hamilton, and Saddler 1995: 8). 207 The briefing report for the 1989 meeting notes the need for “deep-reaching and pervasive energy

179 5.1.3 Early Industry Response to Climate Change

As the Commonwealth government struggled to respond to the outcome of the Toronto Conference, emissions-intensive industries already knew the existential threat posed by climate change. In April 1989 the Australian Institute of Petroleum (AIP), the country’s peak association for the petroleum products industry, issued a position paper on the greenhouse effect, one of the first industry groups to do so (AIP 1989). In its report, the AIP stressed the unproven science and unknown impacts of global warming and the need to avoid costly unilateral action. Instead, as a small emitter, Australia ought to pursue coordinated global action. Meanwhile, the country should promote the use of gas over coal power, investigate substituting compressed natural gas for gasoline and diesel as transportation fuels, improve energy efficiency and educate Australians. Not surprisingly, none of these proposed policies would threaten the Australian petroleum industry and some would actually facilitate growth. Clearly, the association did not want a state-driven solution to the problem or to increase bureaucratic capacity: “Whatever policy options are selected, AIP cautions against the establishment of large and costly bureaucracies to oversee their implementation” (AIP 1989: 8). Soon the petroleum industry’s concerns were echoed by other industries, increasing the coalition of major emitters engaged on climate policy. A 1989 report from CRA, now the mining giant , on the feasibility of attaining the Toronto target, echoed similar themes of economic peril and Australia’s minuscule contribution to global emissions. Ironically, this report argued that those fighting global warming fear change and erroneously stated that agriculture stands to benefit from a warmer climate (Dixon, Marks, and McLennan 1989).

5.1.4 Nascent Federal Climate Policy

Unlike early industry efforts to amplify the scientific uncertainty of climate change, the Commonwealth government had much more awareness of the problem and the need to act. In April 1989, at the behest of the Prime Minister’s Office, a National Climate Change Program was established. It included a National Greenhouse Advisory Committee, whose mandate broadened and formalized the stakeholders engaged in climate policy development (Taylor

restructuring at considerable cost and substantial government intervention” (Kolm and Walker 1989: 147).

180 2014). That same year, a Senate inquiry investigated the potential for Australian science and technology to help in the fight against global warming. Its December 1989 final report concluded that there was “irrefutable scientific evidence” that humans have caused these atmospheric changes and that, “early action is essential to stop or slow some of the more extreme effect” (Senate Standing Committee on Industry 1989).

In October 1990, the government moved forward to develop a comprehensive National Greenhouse Response Strategy and adopted the ‘Toronto target’ as an interim planning target with a clause indicating that emissions reduction would not come at the expense of the economy.208 The federal government was keenly aware of its leadership on climate change, boasting in a joint statement: “This decision puts Australia at the forefront of international action to reduce emissions of all greenhouse gases” ( 1990). As with many governments in these early days of climate policy, the Australian Government had yet to thoroughly investigate the costs and benefits of achieving the Toronto target.209

In a March 1990 federal election, the Labor Party shed a few seats but still maintained a majority in the House of Representatives.210

5.1.5 Early Think Tank Advocacy on Climate

As the federal government started to develop its first climate policy, industry-funded think tanks began to publish their first reports on climate change and to weaken the case for climate action. In 1991, the now-defunct free market think tank the Tasman Institute authored a report that dispelled some of the “myths” of global warming (Moran and Chisholm 1991).211 It warned of the economic calamity if the Toronto target was achieved in Australia: 16 per cent drop in GDP

208 This no-regrets strategy provided a similar off-ramp as the Brundtland government used in Norway. 209 The Senate Standing Committee on Industry, Science and Technology was tasked with this investigation and reported back to Parliament in January 1991 (Senate Standing Committee on Industry 1991). 210 The Hawke government’s pre-election promise of swift action on climate change may have been made to sway the environmentally-minded voters (Seaccombe 1990), such as those who voted for him in 1983, when he took a stand against the construction of the controversial Franklin Dam. Conversely, the pledge to be at the “forefront of international action” could have been real. 211 This report quoted the Richard Lindzen, one of the world’s most notorious climate skeptics.

181 from business as usual by 2020 and a loss to the coal sector of $50 billion in value.212 “Far from adopting any leadership role in advocating early measures to abate emissions of carbon dioxide, we have strong reasons for rigorously testing the need to take any action,” the report stated (Moran and Chisholm 1991: 3, italics added). The Tasman Institute, along with CSIRO and several universities, sponsored some of the first visits of U.S.-based climate change skeptics to Australia.213

5.1.6 Labour Unions Stake Out Position on Climate Policy

It was not only industry and neoliberal think tanks that advocated on climate change. At the 1991 Congress of the Australian Council of Trade Unions (ACTU), Australia’s trade unions adopted a climate change policy. The peak labour association in the country endorsed the federal government’s adoption of the Toronto Target with the same no-regrets proviso requiring no economic harm. A year later, the ACTU developed a more detailed report on climate policy (ACTU 1992). The prescient document highlighted the imperative to move away from fossil fuel use, the challenge for Australia to make a transition given the carbon-intensity of its electricity and export sectors and the disproportionate burden that would be placed on workers from climate change.214 The ACTU was critical of the Australian federal government adopting the Toronto Target without a clear plan that considered the high emissions-intensity of the country’s economy. As with industry, it cautiously promoted no-regrets policies that involved negligible costs but still reduced emissions, such as voluntary education and energy efficiency programs. Also similar to industry, the ACTU was clearly against a carbon tax.215 Erwin Jackson

212 Curiously, the report did not monetize the costs of climate inaction or the potential economic benefits of climate action, distorting the analysis and inflating the costs of climate action in Australia. Dollar values are stated in nominal Australian dollars unless otherwise stated. 213 In 1991, the Tasman Institute invited Robert Balling from Arizona State University. The following year Richard Lindzen was invited by CSIRO to speak at the National Press Club, where he disagreed with the need to take action on climate change. According to then federal science minister Barry Jones, the CSIRO had several senior staff who were climate skeptics, including Brian Tucker, head of the Division of Atmospheric Science, as well as John Zillman, head of the federal Bureau of Meteorology (Taylor 2014). Brian Tucker would later voice his climate skepticism through the influential Institute of Public Affairs, another free market think tank. 214 The report relies upon analysis from ABARE, the Australian Coal Association and the Australian Manufacturing Association. The economic modelling of ABARE will be discussed in more detail below. 215 Concurrent to the climate policy debate, Australian industries were already going through a structural adjustment from trade liberalization. It was argued that additional decarbonization costs would create additional uncertainty.

182 recollected, “[…] in the early 90s, the unions actually worked quite closely with industry to delay action. And that’s part of the reason that the Labor Party and the Coalition were so closely aligned in that period. You don’t really see that anymore” (A24). Taking a step back, Erwin Jackson continued (A24): “What makes Australia’s unions very different, I think, to what happens in many other countries is that the coal miners led the national conversation—led the conversation within climate within the union movement […] And because the people who were going to cop it in the neck the most were the coal miners, then—if they were saying it’s okay, it’s okay” (A24).

Unlike the environmental movement, there is a strong tradition of unity or solidarity on policy demands across the labour movement. Unions that have ‘skin-in-the-game’ become the lead on a given file. For climate policy, this meant unions such as the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) that had members in emission-intensive industries. Peter Colley, National Research Director for the CFMEU noted:

The ACTU has mechanisms in place to deal with climate policy and by-and-large we have everyone in the boat. We don’t want to get split on the climate issue. There are some green groups seeking to cause splits in the union movement. And in the United States you’ve got significant splits, and I don’t think it does the union movement any good. To see major unions disagreeing with each other on major public policy issues—it just weakens the union movement (A08).

In sum, early Hawke government efforts and mounting public concerns were increasingly out of step with the goals of industry and unions seeking status quo high carbon development. Soon, industry efforts to shape climate policy become much more sophisticated and effective. Bold climate policy ambitions and a weak state created considerable political risk for elites.

183 In December 1991 Keating replaced Hawke as Australia’s 24th Prime Minister.216 In contrast to Hawke’s well-known personal interest in the environment, Keating “treated environmental issues with a dismissiveness bordering on contempt” (Hamilton 2001: 34). Graeme Pearman, one of Australia’s most senior climate scientists, who had briefed both Prime Ministers on climate science, recalled that Keating was “nowhere near as positive” about climate action as Hawke (A02).217

5.1.7 Rising Industry Pressure

During the first few years of Keating’s term, more business associations cautioned against unilateral action on climate change. Binding emission reductions targets should be avoided, they argued. For instance, in January 1992, the Australian Coal Industry Council issued one of its earliest publications commenting on climate change in the hopes of shaping Australia’s position regarding the UN climate change convention that was to be finalized at the UN Conference on Environment and Development, otherwise known as the Rio Earth Summit, in June of that year. It urged policymakers and other industries to, “hasten slowly rather than rush headlong into ill- considered commitments” (Australian Coal Industry Council 1992: i). Instead, it urged more research and economic modelling and advocated for burden sharing arrangements. The coal industry was very aware of the severity of the climate problem and the challenges of climate policy (Australian Coal Industry Council 1992: 19):

The complexities of the greenhouse issue, the uncertainties and the responsibilities involved have created a formidable challenge for policy makers around the world. It is not an exaggeration to say

216 Leadership spills or a challenge to party leadership can occur anytime in Australian federal politics. All is needed is a simple majority of caucus members to remove a leader or deputy leaders of the House, Senate or party. Spills are an increasingly common occurrence in 21st century politics in Canberra. 217 That said, an ecologically sustainable development (ESD) policy initiative started by his predecessor was still active during the early Keating government. This process engaged a broad swath of Australian society, bringing together environmental, business, government and labour leaders to determine more sustainable economic strategies. As part of this process, a working group created to recommended emission abatement opportunities from the energy sector (Bulkeley 2000). Like the National Greenhouse Advisory Committee, this working group had a relatively broad membership of bureaucrats, scientific advisors, economic and environmental groups.

184 that the magnitude of greenhouse as a policy issue is only rivalled by war—though that perspective is yet to be widely appreciated.218

The political risk for coal industry elites was extremely high as they foresaw effective climate action an existential threat to the industry (Australian Coal Industry Council 1992: 27-28, italics added):

At this time it would seem to be totally irrational to be initiating measures that will have the effect of closing down the Australian coal industry […] As a policy principle, while “polluter pays” is upheld, the amount to be paid should be the minimum possible to remedy the problem—and this requires a preparedness to look for remedies beyond that of simply attempting to remove the problem’s cause.

Opposing binding targets and mandatory emission reductions, the Coal Industry Council preferred the El Dorado of climate policy: a global carbon tax or cap-and-trade system at the global level.219 This framing of limiting fossil fuel extraction as “irrational” and the stated preference to shift the site of policy action to the global commons were critical early developments in Australia’s climate policy history. Nevertheless, the strident position against domestic measures to limit climate change had yet to be fully adopted by the Commonwealth government or the states and territories.220

218 This language, not by coincidence, echoed the language from the opening statement in the conference proceedings from the 1988 Toronto conference, which was quoted earlier. 219 “Whether it is possible to negotiate agreement between the world’s nations to subject themselves to internationally imposed CO2 taxes or emissions quotas remains to be seen. It is a tall order” (Australian Coal Industry Council 1992: 24) 220 The Council of Australia Governments (COAG), the peak intergovernmental forum in Australia, endorsed the Toronto target in February 1992 (COAG 1992b). Like the national government target, the COAG agreement took a no-regrets approach, noting it was “subject to Australia not implementing response measures that would have net adverse economic impacts nationally or on Australia’s trade competitiveness, in the absence of similar action by major greenhouse gas producing countries” (COAG 1992b: Schedule 5, Section 2).

185 5.1.8 Rio Earth Summit and Australia’s Response

At the June 1992 Rio Earth Summit, Australia signed the United Nations Framework Convention on Climate Change (UNFCCC). Minister of Environment Ros Kelly (1992) in a press release at the Rio meetings stated the following:

There is no greater potential problem for the world than greenhouse induced climate change—particularly for Australia and for our region […] It is no secret that this convention does not go as far as Australia wanted in terms of doing something about the problem [of climate change], but I recognize that we have to start somewhere.

During the negotiations of the UNFCCC, Australia had a “highly cooperative and progressive stance” and actively promoted mandatory emissions reduction targets (Christoff 2005b: 31), quite distinct from its approach to the Kyoto Protocol negotiations five years later. However, before long the early moral and environmental frames compelling Labour and Coalition politicians in the late 1980s was soon usurped by a nearly exclusive economic lens. This effectively painted the environmental movement and other civil society actors into a corner and marginalized them. Victoria McKenzie-McHarg, Chair of Climate Action Network Australia noted, “I don’t think environmental groups have enormous credibility in some circles when it comes to economic issues. And that’s just the reality” (A04). As a result, for many from the environmental community, it became a rather closed “cabal of voices” being heard on climate policy in Australia (A04).

5.1.9 National Greenhouse Response Strategy

Six months later in December 1992, the National Greenhouse Response Strategy (NGRS) was released. It was the outcome of a two-year process that broadly consulted with representatives from peak business and labour associations, major social and environmental groups, scientists and bureaucrats (Christoff 2005b). The NGRS enjoyed a rare consensus and the Commonwealth, state and territory government endorsed it at a Council of Australian Governments (COAG) meeting (National Greenhouse Steering Committee 1992; COAG 1992a). This strategy

186 contained a range of voluntary mitigation measures to achieve a non-binding goal of stabilizing national emissions at 1988 levels by 2000 and reducing them by 20 per cent by 2005.221

The NGRS contained similar no-regrets language as the February COAG agreement, noting it was “subject to the budgetary priorities and constraints in individual jurisdictions” (COAG 1992a). However, the NGRS framing of no-regrets was markedly different from that of the Greenhouse Working Group of the Ecologically Sustainable Development process started by Prime Minister Hawke. The NGRS document, victim of a lowest common denominator approach, interpreted no-regrets as meaning no adverse economic impact in any sector compared to business-as-usual.222 By contrast, Hawke’s Greenhouse Working Group process saw no- regrets from the broader perspective of the overall economy, where some sectors would decline and new ones would grow offsetting any potential declines of particular sectors (Bulkeley 2000). The Institution of Engineers, a typically conservative organization, did not mince its words: it stated that the NGRS “encourages procrastination on all actions—even on those measures which are well-proven as being cost effective” (Dack 1992). In short, the views of major emitters and trade unions prevailed.

Implementing climate policy that would tackle the largest source of carbon pollution in Australia, coal-fired electricity was only just beginning to prove toilsome.223 It did not take long before the inadequacy of voluntary no-regrets climate policy became apparent. A string of

221 Many of the mitigations measures in the new policy were simply a compilation of existing policy (Glover 2012). 222 An increase of GDP by 250 per cent rather than 275 percent by 2050 was deemed an unacceptable burden causing serious harm to the Australian economy. 223 At the same time as the Keating government was moving forward with implementing the NGRS, it was also moving forward with significant reform of its electricity market. This reform was meant to develop a more efficient national electricity market, rather than state-based markets. It was also meant to consider the environmental impacts of power production, however the new National Grid Management Council did not have any members with an environmental background (Pears 2004). It consisted of five representatives from power generators and two government representatives (Pears 2004). Similarly, no environmental considerations were considered by the National Competition Council, which guided energy market reform (Pears 2004). While some statements were made by the Management Council regarding more efficient use of electricity, such as a 1994 report stating the benefits of demand-side management, little action was taken to reduce the emissions-intensity of Australia’s national electricity market in the 1990s. In fact, energy and environmental policy expert, Alan Pears (2004) argued that the move to a national electricity market, in fact caused greenhouse gas emissions to rise.

187 reports in 1994, 1995 and 1996 all depicted the NGRS as highly ineffective at reducing emissions.224

5.1.10 Preparations for the Berlin Conference of the Parties

As parliamentary committees and governmental advisory bodies issued critiques of the NGRS, the industry and government were preparing for the first Conference of the Parties (COP) of the UNFCCC in Berlin in 1995.

Major emitters organize climate policy network

In 1994 major emitters created the Australia Industry Greenhouse Network (AIGN) (Bulkeley 2000).225 The AIGN’s goal was to bring together the largest carbon polluters in the country to share knowledge, build relationships and lobby against climate policy that is detrimental to business-as-usual.226 The AIGN’s members include individual companies and industry associations representing the aluminum, coal, electricity, petroleum, automobile, cement, steel, paper, mining, plastics and chemical industries, along with the Business Council of Australia, the peak association for big business.227 Twenty to thirty company and association representatives met monthly. Alex Gosman, former CEO of the AIGN (2012-2017), relayed a story that underscored the coordination role played by the organization (A19):

So, one member once said to me, “The value of AIGN actually starts when I’m in the flight lounge of Qantas on the way up to Canberra or Melbourne, because I’m beginning—I can talk to my

224 A March 1994 House of Representatives Standing Committee on the Environment, Recreation and the Arts released a damning review of the 1992 National Greenhouse Response Strategy. A 1995 review of the NGRS by found that it had not resulted in any emissions reductions (Wilkenfeld, Hamilton, and Saddler 1995). A 1996 report from an official advisory group, the National Greenhouse Advisory Panel, on federal climate policy was particularly damning of the NGRS’s shortcomings (Panel 1996b). This panel, created in 1994, had similar members as the earlier Greenhouse Working Group, but with fewer bureaucrats (Bulkeley 2000). 225 Also in 1994, the Business Council of Australia formed a greenhouse committee. 226 Alex Gosman, former CEO of the AIGN, shared that “[…] competitiveness is the reason for the AIGN’s existence […]” (A19). 227 Individual company members of AIGN have included: BHP Billiton, Rio Tinto, Chevron, Woodside Petroleum, BP, ExxonMobil, CalTex, Shell Australia, Xstrata, Santos, Wesfarmers, Alcoa, Mitsui, CSR and Origin Energy.

188 colleagues around issues that they are dealing with. And that can be from filling in a form to a policy issue.” […] It’s a very trusted relationship and we have long morning teas, long afternoon teas, and an hour for lunch and people wanted that because they could go to a corner and chat.

Similarly, Mitch Hooke, former Chairman of AIGN and former CEO of the Australian Minerals Council (2002-2013), saw the AIGN as important for getting major emitters on the same page. He recalled the Business Council, the Australia Industry Group, the Minerals Council, the Aluminum Council, “[…] they’re all in there swapping notes and comparing positions and working things through. So, it was good in that sense” (A35). It played a similar role as AREA, ISC3 and CCRES in Canada but with far greater longevity.

The AIGN has always been a very small operation with around two full-time equivalent employees; even the CEO was a part-time employee.228 Gosman did not see the AIGN as a lobbying organization but more of a facilitator, using its resources to bring people together and hire consultants.229 According to Alex Gosman, the “[…] Department [of the Environment] saw the AIGN as very strong because we were a collective voice. By talking to us, they could talk to a group rather than having to do twenty individuals” (A19). The AIGN was an integral part of Australia’s UN negotiating team and had privileged knowledge of climate policy over the federal government. According to one industry representative, the AIGN membership (Pearse 2007: 231):

[…] actually sits at the [UNFCCC] conference table as part of the Australian delegation. That makes the Australian alliance different to anywhere else in the world. In the United States they sit in the gallery; in Australia they sit in the room. They are a part of the

228 According to Mitch Hooke, when he started his role at the AIGN in 2002, “the AIGN was essentially, for all intents and purposes, a subsidiary of the Minerals Council of Australia” and the Executive Director of the AIGN was legally an MCA employee (A35). To his credit, Hooke pushed to have the AIGN become a standalone entity. 229 Lobbying of elected officials was left to other industry associations, individual companies and contracted lobbyists.

189 team. Within industry, you have a corporate memory of international greenhouse negotiations from 1988 until the present day. The government does not have that.230

Beyond the AIGN, there was a raft of other umbrella business associations engaged on climate policy: the Business Council of Australia (BCA), the Australian Chamber of Commerce and Industry (ACCI), and the Australian Industry Group (AIG).231 In essence, these organizations, which shared many members, advocated a more-or-less common policy position on climate change based on shared policy principles. Even though the actual number of businesses or associations strongly opposing climate policy may have been relatively small, because of this thriving ecosystem of private sector organizations, the views of the recalcitrant entities were replicated and amplified when engaging the government.232

Green groups slow to organize

Environmental groups in Australia were not as swift to organize as business, labour and government on climate change. During the early 1990s there were almost no environmental groups that had a constant presence in Canberra. In fact, it took until 1997 before there was a full-time environmentalist from a national ENGO working in Canberra.233 Erwin Jackson, a climate campaigner with Greenpeace Australia in the 1990s, recalled that climate change:

230 Alex Gosman described the AIGN’s role at the UN climate meetings (A19): “So, each year, the good part of my job was that I’d get to go to the UNFCCC meeting. Rarely was I ever asked for a view on anything. You would present views at the meetings, but it was mainly so that the bureaucrats knew we were interested in international development. You know, I bet bloody Alex Gosman’s here again. We’ve got to keep on consulting with the AIGN.” 231 The BCA is the national business association for Australia’s 100 largest corporations. The ACCI represents all businesses large and small that are members of local chambers of commerce. The AIG represents manufacturers in Australia. 232 Peter Colley from the CFMEU explained this phenomenon (A08): “There’s a huge number of industry groups in Australia [but …] there aren’t many big businesses in Australia, but they tend to be members of multiple industry groups. So, companies like BHP—is a member of the Business Council of Australia, it’s a member of the Minerals Council of Australia, it’s a member of the State Chambers of Mines in every state. I believe it is probably a member of the Australian Petroleum and Exploration Association because of all the industry connections. So, it keeps popping up in multiple forms under various industry associations. And a lot of the big companies are like that. So, they get multiple fingers in the pie, so to speak […] So, there’s disproportionate influence by business groups, without a doubt.” 233 Anna Reynolds shared that when she started as the National Liaison Officer for the Australian Conservation Foundation in 1997, she was the only paid environmentalist working in Canberra (A21).

190 […] wasn’t like a traditional environment issue. It didn’t involve protecting a place, it didn’t involve stopping toxic chemicals being dumped into the environment with driving localized health effects. So, it [climate change] created some fairly significant challenges to the environmental movement at the time in terms of how they thought about approaching the issue and […] how they could campaign on the issue (A24).

In the meantime, linkages to emergent international climate advocacy networks were few and the basic knowledge within the environmental movement of climate science was low. Anna Reynolds, who went on to found Climate Action Network Australia in 1998 reflected:

I spent a lot of time getting the CSIRO climate scientists in to brief the environmentalists because at that stage they didn’t really know anything about the issue. I don’t think many people working for environment groups even quite believed climate science was as bad as it was or they just saw it as a very long term issue. So, there was very low capacity in the Australian environment movement at that time (A21).

Pre-Berlin COP Climate Policy

By 1995 it became clear that the country would be unable to meet the initial aim of the UNFCCC to reduce greenhouse gas emissions to 1990 levels by 2000. Attempting to realize international pollution reduction commitments and implement the NGRS fell by the wayside. The government had to develop a new approach. In March 1995, in time for the Berlin COP, the Keating government released the Greenhouse 21C plan. The plan was in addition to the NGRS and introduced a number of new programs to reduce emissions. One of these initiatives was the Greenhouse Challenge program, a voluntary scheme for large emitters to sign covenants with the national government to reduce greenhouse gas emissions.234 The Keating government had used

234 The other initiatives of the Greenhouse 21C plan included: support for the Cooperative Research Centre on Renewable Energy and a Green Paper on renewable energy.

191 the threat of a modest $300 million ‘carbon levy’ earlier in 1995 to “soften up industry” to accept the Greenhouse Challenge program, but it did not follow through with the threat (A36) (Hamilton 2001: 39). Industry was generally supportive of the limited, voluntary program as it was preferred over regulation or market-based policies that may impose costs, and it publicly demonstrated the private sector’s commitment to tackle global warming. However, the estimated emissions reductions as a result of this plan was a three per cent emissions increase above the 2000 emissions stabilisation goal (Faulkner 1995). The Commonwealth government did not conduct any independent, public reviews of the actual emission reduction resulting from the program.235

To summarize, the early ambitions and international leadership provided by the Hawke government on climate policy were soon eclipsed by efforts during the Keating government which sought to maintain business-as-usual among Australia’s largest polluters. As the government implemented neo-liberal economic reforms, an already weak state eroded further. This increased the risks faced by economic elites. These elites were no longer able to hide behind tariff walls and were now far more exposed to the volatility of global markets. Major emitters began to organize and commissioned apocryphal economic modelling to counter the apocalyptic visions of climate inaction with scenarios of economic disaster if substantive climate action was taken. Unions often echoed industry, as they were deeply concerned about potential job losses. Environmental groups were slow to organize and were unable to push back against this new narrative. The climate policies that did emerge were anemic and narrow with little transparency or accountability. Many so-called no-regrets energy efficiency initiatives failed or were severely weakened.236 Meanwhile, the Hawke and Keating governments continued to permit and build new coal power plants.237

235 A government review would have been needed as the voluntary emission reduction agreements were kept secret, eliminating the possibility of a thorough, data-based critique from environmental groups. Moreover, many of the projects announced under the program, companies had planned to do anyways, making additionality difficult to claim. And lastly, the projected emissions reductions were based on the highly suspect assumption that under business-as-usual companies would not increase their energy efficiency at all. 236 This includes mandatory energy performance standards for water heaters and fuel efficiency standards for passenger vehicles (Hamilton 2001). 237 For example, the 135 MW coal-washery plant in the Hunter Valley, NSW (Hamilton 2001).

192 5.2 The Howard Government (1996-2007)

After the March 1996 election, the conservative Coalition formed government in Canberra. Led by Liberal MP , this government ended 13 years of rule by the . Howard presided over a time of phenomenal wealth generation in Australia thanks to a global commodities supercycle and the export of many of these valuable primary resources to Asian markets. The government did not use this windfall or the worsening weather to increase state strength with respect to climate change. Rather it stepped back, letting subnational jurisdictions lead and permitted the increasingly clamorous debate in climate policy networks to become even more polarized. In the lead up to the 1997 Kyoto Protocol, environmentalists began to meaningfully engage on climate change and industry groups ramped up its tactics to undermine climate science, and delay and weaken climate policy.

The Coalition’s environmental platform for the 1996 election was 50 pages in length yet spent less than a page on climate change (Liberal and Coalition Parties 1996). Compared to the Hawke government or the Coalition when it was in Opposition, this unprecedented global threat was clearly not a political priority for the new government. It did not take long for the Howard government to offer more explicit support for growing domestic use and export of fossil fuels, and the expansion of emissions-intensive industry such as aluminum smelting. The discourse on climate change action quickly narrowed from global responsibility and future social and environmental impacts to immediate domestic economic impacts (Christoff 2005b).

Buoyed by the outcome of the election, the Australian Coal Association increased the stridency of its climate policy engagement. In July 1996, it published a report entitled Greenhouse: Not Just An Environmental Issue (Australian Coal Association 1996). The report began by extolling the environmental benefits of the natural greenhouse effect and concluded disputing that the world is actually warming and questioning the validity of Intergovernmental Panel on Climate Change (IPCC) science. It suggested several policy actions, all of which outsourced the site of emission reductions away from coal mines or coal-fired power generation and towards energy consumers, towards other sectors such as transport or agriculture, and towards developing

193 countries. The Association noted its opposition to mandatory reduction targets and timetables. It also clearly stated that Australian industry writ-large opposed a carbon tax.238

In a September 1996 speech by the Minister of Resources and Energy, Warwick Parer, underscored the importance of the Keating government’s voluntary Greenhouse Challenge program for industrial emitters (Parer 1996).239 He announced that 17 companies representing 50 per cent of Australia’s industrial emissions had signed non-binding covenants with the Commonwealth government to reduce total emissions by 15 per cent by 2000.240 The Howard government continued to support this voluntary program of confidential emission reduction agreements, even taking out full-page newspaper advertisement to celebrate the enlisting of particular companies (Hamilton 2001). The 1997 budget allocated an additional $27 million to the program.

5.2.1 Preparing for the 1997 Kyoto Protocol

The new Howard government was keen to put its own mark on the country’s climate policy, especially in the lead up to the third UNFCCC Conference of the Parties in Kyoto. The government soon struck a panel to review the effectiveness of the Keating-era National

238 That same month, Senator Robert Hill, the newly appointed Minister of the Environment, announced that Australia will participate in a trial for the UNFCCC’s Activities Implemented Jointly program. This UN program had been negotiated at the COP 1 in Berlin in 1995 and was the result of lobbying from a subset of the JUSCANZ coalition (named after the founding members of Japan, the United States, Canada, Australia, and New Zealand) in exchange for legally binding targets and timelines pursued by the EU bloc. This program was to evolve into the Joint Implementation Program and the Clean Development Mechanism in 1997 at the Kyoto COP. As part of the program, highly aligned with the burden shifting goal of the Coal Association, Australia would fund emission reductions in the Asia Pacific region in order to claim these reductions as part of Australia’s national effort. In a media release, Senator Hill noted, “[…] it is pointless to curtail the efficient activities of sectors such as our coal and beef industries if they are to be replaced by less efficient practices in other nations. The end result would in fact be a global negative for greenhouse limitation efforts” (Hill 1996). 239 Parer was well-known to be a climate skeptic and in 1998 abolished the government’s renewable energy research corporation before resigning due to conflict of interest based on his coal holdings (Taylor 2014). 240 Signatories include the Australian Aluminium Council (representing Alcoa, Capral, Comalco and Tomago), Australian Paper, the Australian Petroleum and Exploration Association, BHP, BP Australia, CRA, the Electricity Supply Association of Australia, Hunstman Chemical Company, ICI, Integral Energy, Johnson & Johnson Pacific, Kencor Australia, Kimberly-Clark Australia, Pulp and Paper Manufacturers Federation of Australia, Shell, the South-East Queensland Electricity Corporation, Westpac, and the Australian Chamber of Manufactures (Parer 1996).

194 Greenhouse Response Strategy. The panel’s report, released in late 1996, concluded that the “NGRS had little if any effect in achieving the necessary policy coordination and integration within and between jurisdictions; with few exceptions, greenhouse issues have not been considered” (National Greenhouse Advisory Panel 1996a). The government then set about to create its own climate policy.241

Concurrently, the government was also reshaping Australia’s foreign policy, which had lasting impacts for climate policy.242 This new policy effectively signalled to business and political elites that the Australian state was focussing much more on protecting short-term national economic growth and bilateral relations and less on multilateral initiatives from the United Nations.

Major greenhouse gas emitters in Australia also wanted to frame the policy discussion. They staged a now infamous conference in August 1997 called Countdown to Kyoto. Conference organizers assembled a wide range of high-profile climate change skeptics and pessimists of international coordination from Australia and the United States.243 Fossil fuel, mining and aluminum companies, among others, paid for the conference. The program for the conference revealed strong links to U.S.-based far-right think tanks, such as the Frontiers of Freedom Institute.244 The views shared at Countdown to Kyoto were clearly out of step with the majority of the business community and broader public.245

241 In February 1997, Senator Hill released a discussion paper, Future Directions for Australia’s National Greenhouse Strategy, for public comment (Hill 1997a). The submissions received would help guide the principles and measures in the 1998 National Greenhouse Strategy. 242 In August 1997, the Department of Foreign Affairs and Trade released a White Paper In the National Interest that shifted Australia’s trade and foreign policy from one of strong support for multilateralism and the United Nations to a more geographically and temporally constrained view of Australia (Department of Foreign Affairs and Trade 1997). 243 The idea for the widely publicized conference came from Hugh Morgan, a mining executive that would go on to found the climate denial organization, The Lavoisier Group, described below (Hamilton 2001). 244 U.S. Senators Chuck Hagel and Malcolm Wallop, along with U.S. Congressman John Dingell gave speeches at the conference. 245 According to an August 1997 poll of 2200 company directors across a range of sectors, 70 per cent of company directors favoured legally binding targets at Kyoto (Taylor 1997). Public opinion polling from November 1997 found 79 per cent of the 2000 Australian surveyed supported Australia signing a treaty to cut global greenhouse emissions (Hogarth 1997).

195 During the lead up to Kyoto, Erwin Jackson recalled that green groups were “fairly effective in putting pressure on the government to support a legally binding international commitment,” even though those years were a “lean shift” with very few people working on climate issues (A24). It did not take long for the number of environmental groups engaged on climate policy to mushroom. Anna Reynolds recounted there were only five people in the Climate Action Network Australia delegation to the Hague COP in 2000. By 2006 at the Nairobi COP, the delegation had grown to 100 Australian NGOs (A21). Unions, during the first half of the Howard government were still closely aligned with major emitters. Clive Hamilton, founder of the Australia Institute and Professor of Public Ethics at Charles Sturt University, looked back on this time:

At that point the trade unions, in my view, were hopeless on climate change. They were captured by the view that the only thing that matters is jobs. And so, they were putty in the hands of the fossil fuel lobby who could pull out some economic study saying that these greenhouse policies will cost X jobs in the fossil fuel industries and the trade unions then lent on the Labor Party to say, “Well,” you know, “We don’t like these policies. They should be watered down.” So, the trade unions at that point played a negative role in the whole debate (A33).

Unlike some other members of the JUSCANZ coalition, Australia vocally decried the adoption of mandatory emissions reduction targets, even after provisions for flexible mechanisms had been negotiated at the 1995 Berlin COP.246 The EU had been advocating for a uniform emission reduction commitment for all industrialized countries of 25 per cent below 1990 levels by 2010. In response the Howard government launched a major diplomatic campaign in 1997 in the lead up to the Kyoto Protocol. Australian diplomats fanned out seeking consideration for Australia’s special circumstance under the principle of ‘common but differentiated responsibilities’ enshrined in the UNFCCC. This principle was arguably meant to distinguish the different context

246 In a September 1997 media release, Senator Hill claimed that “the adoption of a uniform reduction target at the upcoming Kyoto conference would have a devastating impact on Australian industry and its ability to create jobs” (Hill 1997b).

196 in industrialized and developing countries, not reduce the obligations for carbon-intensive, wealthy industrialized countries. This international effort would soon earn Australia the status of a ‘pariah nation’ and sharp rebukes from the United States, the United Kingdom and Germany (Hamilton 2001).

In a 20 November 1997 speech to Parliament, Prime Minister Howard announced the Safeguarding the Future climate policy. With a budget of $180 million, this package included an extremely modest renewable energy target of two per cent of electricity from renewable sources by 2010 and, for the first-time ever, fuel efficiency standards for passenger vehicles in Australia (Taylor 1997).247 This fuel efficiency standard was never implemented. The Prime Minister also declared that Australia would pursue an emissions increase target of eighteen per cent from 1990 to 2010; the target would reduce emissions growth from an anticipated 28 per cent growth based on a business-as-usual projection, equivalent to a 39 Mt reduction of greenhouse gases.

5.2.2 ABARE

One of the key tools to help the government prepare for Kyoto was the economic model from the public sector economic research agency known as the Australian Bureau of Agriculture and Resource Economics (ABARE).248 During the Howard government this agency was the dominant source of internal economic advice on climate change. In 1993, ABARE built what would become MEGABARE — a model that was highly inappropriate for informing climate policy decisions.249 Notably, the general equilibrium economic model ignored a) the potential for

247 The majority of this funding was backloaded. Only $22 million in annual spending during the first two years (Pearse 2007). In April 2001, the Mandatory Renewable Energy Target Scheme finally begins. Originally announced in 1997, the policy requires electricity retailers or other large electricity buyers to source an additional two per cent of electricity from renewable or specified waste-product energy sources above 2001 levels of around eight per cent (Hill 2001). It was also a tacit acceptance by the federal government that mainstream electricity market reforms had failed to the development of renewable energy (Pears 2004). Predictably, the energy generators opposed the new policy. The Howard government eventually set the price of the penalty for not complying with the target below the actual cost to purchase a renewable energy certificate (Hamilton 2001). 248 ABARE was formerly housed within the Department of Primary Industry and Energy and as of 2019 is within the Department of Agriculture and Water Resources. 249 Howard Bamsey, a former head of the economic division of the Department of Foreign Affairs in the early 1990s commissioned ABARE in 1994 with the first economic analysis on the impacts of climate policy in Australia. With hindsight, he recalls using models MEGABARE was “a terrible thing to do” and led to results that were “very, very misleading […] because they assume equilibrium which returns to the

197 demand management, b) technology change in response to climate policy, c) economic benefits from reducing emissions, and d) the significant emissions from land clearing. It also overstated the likelihood of job losses, and multiplied the economic costs over 20 years for a family of four to make the consequences of climate policy seem even more severe (Hamilton and Quiggin 1997). In short, this model, which had not been peer-reviewed, reinforced the views of economic and regime elites that substantive climate action would not only be economically perilous for their businesses but catastrophic for the entire Australian economy (Christoff 2005b). ABARE’s work purportedly provided the economic rationale for Howard’s decision to not ratify the Kyoto Protocol and to quash a 2003 cabinet proposal for a national emissions trading scheme (Pearse 2007).

While industry had always partially funded ABARE’s work, its contribution increased as the Keating and subsequently Howard governments sought to reduce public sector spending and increase private sector funding of government research.250 The agency’s goal was to secure 50 per cent of funding from industry for climate change modelling (Australian Ombudsman 1998). External funding is not per se a problem if there are clear mechanisms to ensure transparency of process and to guarantee that a balance of societal views is considered. However, there is serious doubt that this has been the case for ABARE.

ABARE’s clients signed contribution agreements, which are kept confidential, even from Parliament (Pearse 2007). However, as a result of questions from the Australian Democrats in the Senate, the income sources for ABARE’s climate change modelling became public. The companies that paid for the modelling were Australia’s largest polluters.251 No civil society

economy. They’re good for comparing the relative impacts of shocks in the economy. But they’re useless at looking twenty, thirty, forty years ahead for an economy that’s fundamentally changing. They just don’t give you useful information. And unfortunately, in the work we commissioned in ’94, you know, what it was showing was very significant costs of climate action.” (A37). 250 This was the result of a 1993 decision to formalize external funding targets for many public sector research agencies including: ABARE, CSIRO, the Australian Geological Survey Organization, and the Australian Institute of Marine Science. In the 1992/1993 budget, 20 per cent of ABARE’s funding came from external sources by 1997 the target had risen to 40 per cent (Australian Ombudsman 1998). 251 1993/4: Australian Coal Association paid $50,000 for a total of $50,000; 1994/5: Australian Coal Association $50,000, Business Council of Australia $60,000 for a total of $110,000; 1995/6: no data is provided; 1996/7: Australian Aluminium Council $25,000, BHP $50,000, Business Council of Australia $50,000, CRA Ltd (Rio Tinto) $25,000, Statoil $50,000, Electricity Supply Association $50,000, Exxon Corporation $50,000, Mobil Oil Australia Ltd $50,000, Texaco Corporation $50,000 for a total amount of

198 organization, including environmental or public health groups, were members of the influential Steering Committee. Industrial members of the ABARE Steering Committee took a hands-on approach and were able to oversee model development and advise on project management for this public sector program, skewing the research agency’s economic model towards results that supported the economic interests of major emitters. When the Australian Conservation Foundation applied to be a member and requested a fee waiver, it was declined (Hamilton 2001).

In 1997 the Commonwealth Ombudsman, at the request of the Australian Conservation Foundation, examined ABARE’s funding model and the role of the Steering Committee. The report, released a few months after the Kyoto climate meeting, was damning. It revealed that ABARE had shown poor judgement in failing to safeguard itself against “allegations of undue influence by vested interests” and that it mislead the public by not disclosing funders (Australian Ombudsman 1998: 3). As a result, the Ombudsman found that Government’s climate change analysis was “compromised.” Following Australia’s success at the Kyoto negotiations, ABARE received a special award for public service from Prime Minister Howard.

In sum, ABARE embodied the weak state’s lack of autonomy from industry. Fearful elites constrained the model’s analytical scope and the range of stakeholders engaged in this very influential modelling. The calamitous economic scenarios predicted by this model reinforced elite understandings of the political risks of climate policy and were critical in informing Australia’s position at the Berlin COP and a few years later in Kyoto.252

$400,000. Senate Hansard, Questions on Notice no 565, 2 May 1997. 252 ABARE was not the only organization conducting doomsday economic modelling of climate policies during the Howard government. ACIL Tasman and Charles River Associates were also important consultancies hired by the Commonwealth government and industry associations to estimate the economic downsides of climate policy and recommend business-as-usual economic development. ACIL Tasman, later ACIL Allen Consulting has been a key player. One of its predecessor’s Tasman Institute, was an early advocate of climate skepticism (Moran and Chisholm 1991). During the Howard years, Pearse (2007: 155) calls the firm “the most constant private analytical presence in the greenhouse debate in Australia.” It consistently emphasized the cost of emissions reductions and the unviability of emissions trading, carbon taxing and a renewable energy target. Charles River Associates was also active in Australia late in Howard’s term as Prime Minister. In the 1990s the firm was well-known for providing astronomical estimates for the costs of reducing emissions, while avoiding monetizing the costs associated with inaction on climate change (Pearse 2007). Like ACIL Allen, rather than preferring pricing carbon or promoting renewables, this firm also advocating for public subsidies for carbon capture and storage and other ‘clean coal’ technologies. Its major clients include many AIGN members and in the United States it has also provided intellectual assistance to the Global Climate Coalition, the discredited

199 5.2.3 Kyoto Protocol

At the December 1997 UNFCCC negotiations in Kyoto, Australia secured the controversial concession, Article 3.7, later dubbed the ‘Australia clause’, of including land-use change and forestry as part of the net emissions in its 1990 baseline.253 This change would mean that Australia could very easily meet its Kyoto commitment.254 Australia also agreed to a more ambitious emissions decrease from business-as-usual: an eight per cent increase in 1990 emissions by 2010. In an attempt to try and control the message at home about the negotiations, Environment Minister Hill excluded foreign media and any Australian non-media from attending his news conferences (Hamilton 2001). While environmental groups were displeased with the results, Australia’s major emitters were quite contented. Tony Beck, then Executive Director of the AIGN, in an email to Prime Minister Howard shortly after Kyoto shared the following:

I am writing to convey to you directly our congratulations on the excellent outcome in Kyoto. Your personal and long-standing commitment to an equitable outcome for Australia, together with the highly effective ‘whole of government’ approach to the negotiations, has paid off handsomely against considerable odds.255

In the lead up to and during the Kyoto climate negotiations, the weakness of the Australian state was clear. The lack of autonomy from industry for highly influential economic modelling exercises eroded the competence of its bureaucracy to promote policies that may challenge business-as-usual. As a result, there was little faith among the country’s elites that seriously tackling climate change was a wise decision. These concerns caused policy networks to shift, to become more insular, and to reach out internationally only to promote a very narrow

climate skeptic organization. 253 The relevant section of Article 3.7 of the Kyoto Protocol states (Nations 1997a): Those parities included in Annex 1 for whom land-use change and forestry constitute constituted a net source of greenhouse gas emissions in 1990 shall include in their 1990 emissions base year or period the aggregate anthropogenic carbon dioxide equivalent emissions by sources minus removals by sinks in 1990 from land-use change for the purpose of calculating their assigned amount. 254 In 1990, Australia had a particular intensive year of land clearing and bushfires that resulted in land- use change and forestry being a considerable source of carbon emissions that year. This was followed by a very successful Bushcare program that reduced the amount of land clearing and related emissions. 255 Letter dated 22 December 1997 as cited in (Hamilton 2007: 96)

200 understanding of national interest. The resultant climate policy negotiated in Kyoto, seen as a success for the Howard government and major emitters, saw Australia avoid a mandatory, uniform emissions reduction target, secure an absolute emissions increase as a national goal, and realize the development of flexibility mechanisms. This effectively outsourced the emission reduction burden to other countries and to future generations of Australians.

5.2.4 Post Kyoto Climate Policy

Not long after Kyoto, the Australian Greenhouse Office (AGO) was established in April 1998. Lauded as the first government agency in the world solely dedicated to reducing greenhouse gas emissions, the Office was responsible for implementing the suite of climate policies that Howard had announced in his November 1997 speech.256 The competence of the federal bureaucracy on climate change did slowly grow under Howard and by 2000 the number of staff in the Australian Greenhouse Office had grown to 200. This included many economists that were able to challenge the narrow economic modelling that had been provided by ABARE earlier in the decade (Hamilton 2001). The federal Environment Minister at the time, Robert Hill, recalled “the Greenhouse Office was very useful in developing programs to build community, and particularly, to build community support for those opportunities in areas of energy efficiency and sectors such as local government and lots of areas that hadn’t necessarily been thought much about previously” (A30). That said, the capacity for this office to reduce emissions from Australia’s largest and fastest-growing sources of emissions remained marginal.

A federal election in October 1998 saw John Howard hold on to his majority in the House of Representatives. Immediately after the election, Howard moved forward with plans to replace the lapsed Keating-era climate policy. In November 1998, the 1992 National Greenhouse Response

256 The new climate change organ would report to a council of three ministers: Environment; Primary Industries and Energy; and Industry, Science and Technology. This council would later be expanded to include the ministries of Finance and Foreign Affairs. This could be seen to facilitate the integration of climate policy across government or to weaken the ability of the Environment ministry to advocate for climate action by providing another veto point to block climate policy. By 2001, Howard replaced the Ministerial Council with the cabinet Sustainable Energy Committee, which Howard himself chaired. A year later, the AGO’s executive agency status was revoked, reportedly to provide more independence, although the head of the AGO was now a Howard-appointed Deputy Secretary of the Department of Environment and Heritage (Pearse 2007).

201 Strategy was replaced by the National Greenhouse Strategy, which extended and superseded the former policy (Hill 1998). The new strategy provided a framework through which issue-specific action plans would be developed.257 The plan was largely panned by the Democrats and Greens, who held the balance of power in the Senate. If the Howard government wanted to have any legislation passed, including its desired goods and services tax proposal, it had to considerably strengthen its climate policy. With this clear incentive, the government quickly responded. In 1999, the Measures for a Better Environment package was released. The $796 million funding commitment more than quadrupled the funds budgeted in the 1997 Safeguarding the Future package. This new climate policy package focused on paying companies to reduce pollution. Indeed the Greenhouse Gas Abatement Program, which received just over half of the allocated funds, paid large emitters who reduced more than 250,000 tonnes in annual greenhouse gas pollution. Even with these public subsidies, by 2004 only $60 million of the $400 million budget for the abatement program had actually been spent (Allison 2004).258

In 1999, the Australian Greenhouse Office released a series of four discussion papers on emissions trading. This was a time when countries were beginning to investigate carbon trading in advance of international trading made possible under the Kyoto Protocol. These papers were well received by environmental groups and the Australian Greens. Oliver Woldring, former political advisor to the Australian Greens, stated that these reports, “remain the best four discussion papers on emissions trading options that I’ve ever seen” (A17). Former policy advisor to Minister Hill, Peter Cosier, lamented that since the release of these discussion papers, “nothing much has changed about the debate about how you do it [emissions trading] in Australia, unfortunately” (A13).

A main reason for why the emissions trading debate stalled was arguably a lack of state autonomy from major industrial emitters. These non-state actors quickly mobilized to quash the

257 These areas included: partnership among governments; industry and the community; efficient and sustainable energy use and supply; efficient transport and suitable urban policy; and greenhouse sinks and sustainable land management. 258 The Measures for a Better Environment policy also provided $330 million to commercialize and install renewable energy technologies, especially in remote locations. Like with the Abatement Program, the government was challenged to spend the allocated funding for renewable energy deployment. This took 9 years rather than the anticipated 4 years noted in the 1999 climate policy package (Pearse 2007).

202 Howard government’s curiosity in this new policy instrument. Organizations such as the AIGN were becoming more powerful. In August 2000, the Howard Cabinet reportedly rejected the proposals by Environment Minister Robert Hill to create a national emissions trading system and ratify the Kyoto Protocol (Christoff 2005b). Howard informed Cabinet that future proposals for an emissions trading system would not be considered until a global trading system was in place (Pearse 2007). Because of the well-known challenge of actually implementing a global trading system, this caveat effectively enabled Australia’s climate policy to drift further towards irrelevance.

5.2.5 Shifting Alliances Post Kyoto

Nearing the turn of the century, the alliances that had congealed prior to the Kyoto Protocol began to shift as governments sought to ratify and implement the goals of the global climate accord. Proponents of natural gas started to strongly differentiate themselves from advocates of coal or those dependent on coal-fired electricity. In 1999, the Australian Gas Association reportedly left the AIGN. The Gas Association began to publish reports arguing that gas-fired electricity generation is less polluting that coal-fired power (Australian Gas Association 2000).259 These tensions were also present with the Electricity Supply Association of Australia, which had members with a large range of emissions exposure. Its members with major hydropower assets were willing to move forward with climate policy but many of its brown coal power generators, particularly those in the Latrobe Valley in Victoria, were firm in their opposition to domestic action.260

259 AGL, one of Australia’s largest gas companies, began to publicly criticize the approval of new coal-fired power plants in Queensland (Hamilton 2001). Meanwhile, Woodside Petroleum was aggressively lobbying federal politicians for an exemption for any constraints on greenhouse gas pollution from its planned LNG facilities. Woodside claimed that it was reducing global pollution because the gas would replace dirtier forms of energy (Pearse 2007). 260 Private sector divisions were also beginning to emerge surrounding emissions trading systems (ETS). Mining giant BHP decided to break from the Business Council position on climate policy, which was largely obstructionist throughout the 1990s, and proposed that it would support an emissions trading system if it received credit for early action (Hamilton 2001). This caused the BCA to explore taking a stronger stance on climate policy, including supporting ratification of the Kyoto Protocol in 2001. According to interviews by Pearse (2007: 155), Howard personally intervened and told the BCA to “back off.” Ever since this incident, all three multi-sectoral business groups (i.e., BCA, AIG, ACCI) have had climate policies that highly align with those of the AIGN.

203 While a gas-coal cleavage was beginning to emerge among alliances of major emitters, coalitions that advocated for stronger climate policy started to coalesce among environmental groups and a fledgling renewable energy industry. Around 2000, various community groups, partially organized by Greenpeace Australia and Rising Tide Australia, started to opposed coal mining and coal exports because of its climate impacts (Burgmann and Baer 2012). Renewable energy associations had been slow to form in Australia, lacking the history, market share, wealth, networks and influence of the coal industry. However in 2002, the Sustainable Energy Association of Australia and the Australian Business Council for Sustainable Energy were created and provided a key coordination role for the industry.

The Howard government also tried to actively divide the environmental movement through its support of WWF Australia.261 As described by Clive Hamilton, the Coalition:

[…] practised a policy of divide and rule and so they cut out groups like the Australian Conservation Foundation and Greenpeace, but they cultivated the WWF in Australia by directing money and favours to them. And that group, WWF, took up a favourable view of the Howard government’s policies, which caused a lot of angst in the broader environmental community (A33).

Individuals and organizations aligned with climate policy inaction, faced with internal fractions and growing pro-climate alliances, created the infrastructure to further heighten risk perceptions regarding climate change and scuttle efforts to ratify the Kyoto Protocol. AIGN members broadly accepted climate science but during much of the Howard Government stridently opposed ratification of the Kyoto Protocol or domestic emissions trading (Pearse 2007). Many of the

261 CEO of WWF Australia during the Howard Government, and former CEO of BP Australia, Greg Bourne characterized WWF’s influence at the end of the Howard years as “very strong” (A26). Between 1996 and 2004 there were 64 government press releases mentioning WWF and only 20 mentioning the other three large environmental groups, the Australian Conservation Foundation, the Wilderness Society and Greenpeace Australia. Despite WWF being critical of the Howard’s climate policies, all government media statements regarding WWF were positive or neutral and all mentioning the ACF were negative (Hamilton and Macintosh 2004). Similar claims of lack of independence have been levelled at the ACF and the Wilderness Society during the federal Labor government of Hawke and Keating (Doyle 2000).

204 individuals involved in the AIGN called themselves the “Greenhouse Mafia” (Pearse 2007). Mitch Hooke, former Chair of the AIGN, responded to the label’s accuracy: “I can understand why people outside would call it the ‘Greenhouse Mafia’ because the underlying tenant of what they were doing was not conducive to accepting, or, you know, not conducive to what I called earlier the precautionary principle” (A35). That is, most AIGN members in the face of potentially large climate change-related risks, advocated for a very modest public policy response. According to former CEO of BP Australia, Greg Bourne,

What was surprising was the fact that the Australian Industry Greenhouse Network purported to be pro-action on greenhouse, but when you actually look behind who was in it and what they were doing, it was much more to do with, “No, no, no, we want to know as much as we can so we can slow down as much as we can (A26).

The AIGN during the Howard government was not the only obstructionist organization. The Lavoisier Group was founded in April 2000 with the mandate to challenge the anthropogenic nature of climate change in the lead up to a potential ratification of the Kyoto Protocol in 2005. Mining magnate Hugh Morgan, former President of the Business Council of Australia, and Ray Evans of the Minerals Council of Australia co-led the group.262 At the time, it was reported that the Lavoisier Group was a spin-off of climate skeptic members of the Business Council of Australia (Taylor 2000).263 These well-connected members began to reach out to politicians. The group penned feature articles in several newspapers, ghost wrote other articles, and even convinced the Joint Standing Committee on Treaties to conduct an inquiry on the Kyoto Protocol because they were concerned with the threat of a new imperialist order (Hamilton 2001). In its submission for the inquiry, the Lavoisier Group contended that climate change is the “greatest

262 Other members included engineers, academics, free market consultant Alan Oxley, and retired government officials and politicians, notable Brian Tucker, the former head of the CSIRO Division of Atmospheric Research, and Peter Walsh, former Finance Minister (1984 to 1990) and Resources and Energy Minister (1983 to 1984) during the Hawke government. 263 Throughout the 1990s the Business Council of Australia had long been seen as obstructionist on climate policy. BCA representatives attended international climate negotiations, participate in formal government consultation on climate policy and less formal consultations with the Prime Minister.

205 fraud ever perpetrated on the Australian public” and that the Kyoto Protocol is “the most serious challenge to our sovereignty since the Japanese fleet entered the Coral Sea on 3 May 1942” (Lavoisier Group 2000: 1).

During the 1990s, a growing network of Australian free-market think tanks and climate denialist groups such as the Lavoisier Group sought inspiration from radical neoliberal organizations, for example the Heritage Foundation in the U.S. or the Institute for Economic Affairs in the U.K., along with similarly radical international networks, such as the Mont Pelerin Society and the Atlas Foundation. The Institute of Public Affairs (IPA) was at the centre of climate denialism in Australia and began inviting climate skeptics from the U.S. and the U.K. beginning in the early 1990s. The Liberal Party had long-standing connections with the IPA. The Centre for Independent Studies was another free-market think tank that served as key resources for John Howard and Rupert Murdoch (Maddox 2005). The APEC Studies Centre at Monash University was a neoliberal trade and environment-focused think tank that regularly provided the Howard government with climate policy advice.

In short, the link between all of these organizations, the Lavoisier Group, the IPA, and the APEC Studies Centre, is that they are all skeptical of allegedly alarmist mainstream climate science, have promoted the views of notorious climate skeptics, and have pushed for a delay in substantive emission reductions.264 Combined with their consistent neoliberal economic ideology which sought to weaken states, these think tanks fostered restricted climate policy networks that opposed government intervention to reduce greenhouse gas emissions in Australia.265

264 They also allegedly share a host of individual and corporate donors with the Liberal Party. In Australia, there is no limit for donations to political parties and very poor disclosure on donors. These think tanks can push extreme positions on climate science and policy, while keeping the powder dry for the Liberal Party. 265 The influence of these think tanks is often informal, with little direct attribution. According to one senior player inside the Lavoisier Group the main goal “is an understanding in Cabinet that all the [climate] science is crap” (Pearse 2007: 150). Graeme Pearman, former head of Atmospheric Science at CSIRO, who briefed many private sector CEOs during the Howard government, remarked: “So, the public position [of the CEOs] was often about skepticism, but privately in the company they were all about actually trying to manage the risk” (A02). This public private divide in framing begins to lay bare the motivation of these climate skeptic organizations: mitigating short-term risk.

206 5.2.6 Failure to ratify the Kyoto Protocol

Despite Australia signing the Kyoto Protocol, negotiating an eight per cent emissions increase and securing the so-called Australia clause which enabled the country to easily meet its target, the Howard government and aligned policy networks opposed ratification of the Protocol. In March 2001 when U.S. President George W. Bush officially announced his opposition to the Kyoto Protocol and unilaterally declared it dead, Australia’s Minister of Foreign Affairs, Alexander Downer, swiftly endorsed the laggardship of the United States (Christoff 2005b). This contingent alignment with U.S. climate policy by the Howard government also was seen in the private sector. According to a former senior climate policy advisor in the Rudd and Gillard governments (A06):

I did notice that for a while there it became very fashionable among some of our industry stakeholders to say, “Look. We really shouldn’t do anything until the U.S. does.” […] They’re not particularly competitors of ours for most of those industries. Yet, that became the big thing which got picked up politically for a while there. “We have to follow the U.S.” There was no sound trade-based reason for that whatsoever. It wasn’t when China does, it wasn’t when—it wasn’t any of it. It was when the U.S. does. I think they picked the U.S. because they thought, “Well, there’s no prospect of national action happening any time soon.” So, it was really kind of interesting. It was convenient. So, I’m not sure if the actual realities of trade make much difference, really.

The reluctance of the United States to ratify the Kyoto Protocol did not stop the international pressure for Australia to formalize the international climate pact. In May 2002, the EU and Japan ratified the climate agreement. However, a month later—on World Environment Day—Howard declared that Australia would not ratify the Protocol as it was not in Australia’s interest (Howard 2002). The Prime Minister’s announcement reportedly surprised the Environment Minister, David Kemp, who had hours earlier given some hope at the UN climate negotiations in Bali that Australia might still yet ratify the Kyoto Protocol (Pearse 2007). Minister Kemp had made a submission to Cabinet that was supported by several other departments recommending

207 ratification of the Kyoto Protocol. Yet the Prime Minister decided to not ratify before the submission was ever discussed by the Cabinet (A30). This unilateral decision by Howard clearly demonstrated the importance of direct appeals to the Prime Minister, from the individuals and organizations opposing action on climate change. According to Minister David Kemp, ratification of Kyoto had become an emblematic issue for the government:

[…] symbolizing the idea that Australia would have its interests determined by the Australian government and not as a result of international environmental agreements. In other words, it was a sort of assertion that Australia was in control of its own policy (A10).

Ironically, it could also be argued that Australian climate policy was being determined by the Bush administration and its allies in the United States. Kemp’s predecessor, former Environment Minister Robert Hill stressed the desire by Howard not to leave the U.S. isolated: “[…] the reason we didn’t ratify was not directly related to the issue of the outcome, directly related to the climate change issue. It was broader international politics” (A30). Regardless of whether the motivating impulse was from major domestic emitters or from the U.S., by not ratifying the Kyoto Protocol the Australian state showed its lack of autonomy over this political decision.

5.2.7 Continued Influence of Major Emitters

With the decision to abandon the Kyoto Protocol now behind it, the Howard government sought to move forward on other climate policies. Just in time for the World Summit on Sustainable Development in Johannesburg, also known as Earth Summit 2002 or Rio +10, the Howard government announced an August 2002 update to its 1998 climate strategy, called Global Greenhouse Challenge: The Way Ahead for Australia (Kemp and Downer 2002). The focus of this new strategy shifted away from paying polluters to reduce pollution towards developing low emissions technology that could be deployed in the long-term. A Government-Business Climate Change Dialogue was created which largely endorsed the government’s new direction. As the group’s name suggests, it had no civil society representation.

208 That is not to say there was unanimity within the private sector on climate policy. Around this time, according to then CEO of BP Australia, Greg Bourne,

[…] there was almost a war inside the Business Council of Australia, which was at that time the most influential lobby group to the Howard government by far. By far the strongest lobby group to the Howard government. By 2003 […], they eventually said, “Right. We’re not going to talk on climate change. We cannot handle it, it’s too divisive among our members.” And therefore, it went off the Business Council of Australia’s agenda, and it wasn’t revised again for another five years or something like that (A26).

Beyond the BCA’s notable absence in the early to mid-2000s, many natural allies for climate action within the private sector remained silent. The tourism, insurance, agriculture, forestry and financial communities were not active during the vocal lobbying efforts of emissions-intensive industries (Pearse 2007). With these industries and BCA not lobbying on climate policy, the AIGN, Minerals Council of Australia and other more strident industry associations filled the void.266

Meanwhile, federal bureaucrats were developing the plans for an emissions trading program. A trading program was jointly proposed to Cabinet in July 2003 by at least six federal departments, including Industry, Treasury Agriculture, Science and Environment. It was also supported by virtually all departments, including the Prime Minister’s own department. Howard Bamsey, a former official at Foreign Affairs, noted that after the Cabinet submission (A37),

[…] you started to see the more feral edges of the business community get more and more anxious and start to foment trouble.

266 There were some renewable energy associations active in this area. The Business Council of Sustainable Energy attempted to be the “capture-everyone-other-than-coal coalition,” according to one former employee (A07). They had very limited influence with the Howard government. The former employee also shared that, “compared to the likes of a BHP or something like that, those guys could walk in. And the Minerals Council, we were just chicken feed compared to those guys. But they’re more powerful now“ (A07).

209 And that set off John Howard and his office. And in the end, they killed the whole thing. He was talking to a number of different companies and sort of saying, you know, “These companies have told us that we’ll all be ruined if emissions trading goes ahead so we’re not going to do it.”

Howard himself called a halt to any further policy development until he could consult with industry (Pearse 2007; A10). According to news reports, shortly after Howard soon met with ABARE and CEOs of the minerals, aluminum, power, paper and chemicals industries, the emissions trading program was shelved at an August 2003 cabinet meeting (Minchin 2006).

In early 2004, Environment Minister Kemp took a new emissions trading proposal to Cabinet, which was rejected—a fate similar to the 2000 and 2003 cabinet rejection (Christoff 2005b). This time the proposal had the support of the Industry Minister and a group of 60 senior business representatives (A37). In an interview, Kemp shared his view that many politicians in Canberra find it challenging to untangle special interests from public interests. By not differentiating between these two types of interest, the state is weakened as it becomes less autonomous, or more captive to, narrow interests.

I have said to members of parliament that their greatest danger comes from the interest group pressures to which they’re subject and the need for them to have some sort of overarching perspective or philosophy or whatever it is that enables them to have a debate with the interest groups about whether what they propose is in their interest or is in the wider interest. It is perhaps surprising that this issue is not more widely recognised (A10).

In 2005, the Howard government established the Asia Pacific Partnership on Clean Development and Climate (AP6), a program to develop and transfer emissions-reduction technologies among six countries: the U.S., India, China, Australia and South Korea. Canada joined 2007. Countries were able to claim climate action, without requiring any reductions in emissions growth or total emissions. Technologies such as carbon capture and storage (CCS) could be used to marginally offset emissions while continuing business-as-usual fossil fuel extraction. The first meeting of

210 the AP6 was held in Sydney in January 2006, with 60 government representatives and 120 industry representatives.267 Non-governmental organizations or media were not invited (Frew 2006).

In the end, it was only Australia that was able to provide major funding for the program, which concluded in 2011. U.S. Republican Senator John McCain described the AP6 as “[…] nothing more than a nice little public-relations ploy […] It has almost no meaning. They aren’t even committing money to the effort, much less enacting rules to reduce greenhouse gas emissions” (Hamilton 2007: 190). According to a 2009 independent review of the flagship projects funded by the AP6, “[…] only a small number of projects have to date recorded data to measure benefits” such as greenhouse gas reduction and energy efficiencies, which is arguably the ultimate goal of this program (Atkinson, Castellas, and Curnow 2009: 19). Even had the partnership continued, the Australian government did not foresee any actual emissions reductions before 2012 (Pearse 2007). While this policy network expanded Australia’s climate policy reach internationally, it was an exclusive climate club with participation limited to member countries and major polluting industries that resulted in no emissions reductions.

In short, a weak Australian state during the Howard government was unable to disentangle industrial interests from public interests. Following the decision to not ratify the Kyoto Protocol, networks remained constrained and climate policy ineffectual.

5.2.8 Public opinion rallies to support climate action

By 2006 public opinion on climate change was beginning to shift and helped create a critical juncture for Australian climate policy. Many interviewees recounted the concatenation of climate-related events in Australia and how these events rallied public support for climate action. The country was enduring the worst drought since European settlement.268 The drought only

267 The CEOs of Rio Tinto, Peabody Energy, Portland Cement, American Electric Power and ExxonMobil attended along with representatives from Alcoa, Westpac, Woodside Petroleum, BP, Origin Energy, Nippon Steel and Tokyo Electric Power Company (Frew 2006). 268 Since 2001, there had been a prolonged drought in the Murray-Darling River system and it was increasingly a national concern. Known as Australia’s breadbasket, this often conservative-voting region held particular sway for the Coalition government. Urban water restrictions became a common occurrence and many major cities were forced to build expensive, energy-intensive desalination plants.

211 served to worsen the number and severity of bush fires. Meanwhile, an increasing frequency of flash floods were yet another cause for public concern. Beyond local environmental disasters, the so-called commodities super cycle created a booming national economy with unemployment at a 33-year low, providing economic security for many Australian households.

Environmental groups, buoyed by increased funding from the philanthropic community, ramped up their climate advocacy. One highly influential environmental organization was launched in 2006, the Climate Institute.269 Interviewees from industry, government and media all described the Climate Institute as one of the most effective environmental organizations working on climate change in Australia.270 Its early efforts at building a broad coalition to advance climate policy spurred farming organizations such as the NSW Farmers Federation to become more vocal on climate change and brought together the country’s main religious organizations (Hamilton 2007). According to Erwin Jackson, the former Deputy CEO of the Climate Institute:

It was set up to basically be counter to someone like the Institute of Public Affairs. Who could speak credibly and use the tools of the industry associations and the right wing think tanks against them. So, we did a lot of economic modelling which was traditionally just the purview of the industry associations (A24).

The Climate Institute attempted to broaden climate policy networks and use economic modelling to reduce the risk perceptions for business and political elite in Australia that meaningful climate policy would be devastating for the national economy.271

As public concern grew, labour unions and the private sector were also driven to change or clarify their position on climate policy. Australia’s peak labour association, the ACTU soon started plans to convene a national Union Forum on Global Warming and Sustainable Energy to help create a coherent policy direction for Australia’s unions on climate change (ACTU 2007).

269 The Myer Foundation provided the funding for the Climate Institute. 270 Unlike other ENGOs, roughly 75 per cent of their work was behind the scenes, building trust and quietly influencing climate policy, according to Erwin Jackson (A24). 271 The Climate Institute formally ceased operations in 2017 and the remaining funds were transferred to the Australia Institute for use on climate advocacy.

212 In May 2006, a coalition of prominent companies in Australia, including Westpac, Origin Energy, BP, the Insurance Australia Group, Swiss Re and Visy Industries, called for a 60 per cent emissions reduction (Pearse 2007).272

Meanwhile, in the fall of 2006 a series of international events added to the shifting sentiment. Tristan Edis, a clean energy researcher who has worked at the Clean Energy Council, described it this way (A07):

It was in October [2006], An Inconvenient Truth came out and the Stern Review and it was like a match that lit up the tinder-dry grass and the bush that had been created through this drought that had led to water restrictions on people’s houses — there was an awakening of awareness. And when they came out it was like, “Holy shit, I’ve been banging my head against a brick wall like this going nowhere.” And then suddenly it just went, “pffffffff,” and collapsed. And I went, “Oh, fuckin’ hell! What the hell just happened?” […] So, that was partly the drought, partly the improved communications around global warming, and it was partly people went, “Let’s think a little bit further ahead in terms of our future because I’m feeling secure in my job,” and that sort of thing. So that’s what I think drove it.

In November 2006, 76 per cent of Australians polled considered climate change to be a major problem and were willing to pay more to reduce emissions. More than 60 per cent felt the Howard government’s climate policies were inadequate.273

272 In 2006, the Australian Coal Association also responded by launching the COAL21 Fund. It originally had the goal to raise $1 billion over ten years from a voluntary levy on black coal production to fund low- emission technology development and demonstration in the black coal industry. This fund primarily supported carbon capture and storage research and involved representatives from the coal and electricity industry, unions, federal and state governments and the academic community. 273 Herald/ACNielsen poll, 6 November 2006.

213 5.2.9 Howard supports national ETS

This heightened popular concern meant that for many elites the status quo was an increasingly risky proposition. Perhaps emboldened by a somewhat stronger state, thanks to the overflowing Treasury from the commodities supercycle, Howard decided additional climate policy was needed. Initially, he proposed the development of nuclear power generation and doubled-down on the need for CCS.274 However, it soon became clear that these technologies could only be economically viable with a significant price on carbon. At this point all states and territories had Labor governments and many had already been in discussions through the Council for the Australian Federation to create a national emissions trading scheme, even if the Howard government did not want to participate. Driven in particular by New South Wales and Victoria, the Council had created the National Emissions Trading Task Force in 2004 to move the discussion forward.275 The policy networks involved in this process were open with stakeholders brought in early in the design process. A state-level official who had been working on this initiative recalled the following:

All the stakeholders—environmental groups, industry groups, all kinds of people—we talked through everything [laughs] all the time, so you know, by the time things popped out they weren’t surprised. They had been involved in discussions in every element of it, which worked really well. So we had some unlikely supporters by the end of that process, which was influential then through to the Commonwealth [i.e, Prime Ministerial] Task Group

274 Australia was already a major exporter of uranium, although no enrichment facilities or nuclear power plants existed in the country. Howard saw nuclear power as a “most exquisite dilemma to the Greens” (Tingle 2006). Regardless of the extremely high costs of nuclear power, the Prime Minister needed to convince his cabinet colleagues. Minister of Finance Nick Minchin and the Minister of Industry Ian MacFarlane were vocal opponents as late as mid-2006; however, by the end of 2006 both Ministers were fully onboard to develop a domestic nuclear power industry (Pearse 2007). Once again, the venue for emissions reduction, at least on a discursive level, was shifted away from large industrial polluters. 275 As the Commonwealth government during the Howard years became increasingly aligned with the climate policy views of major emitters, more innovation was occurring at the sub-national level. The late 1990s to early 2000s were a time when Labor governments were elected to all Australian states. For example, in January 2002, the New South Wales Government becomes the first in the world to implement mandatory emissions trading called the Greenhouse Gas Reduction Scheme.

214 on Emissions Trading because we had been working with all of these people all of this time (A06).

The Howard government wanted to take over that discussion and ensure that any outcome would be acceptable to their constituents and major emitters. During this time, one government insider remarked that the policy networks consolidated and centralized within the Department of Prime Minister and Cabinet, because of the greater risk or “sensitive” nature and cross-cutting implications of climate policy (A03). In December 2006, Prime Minister Howard announced the creation of the Prime Ministerial Task Group on Emissions Trading to provide advice on creating a national emission trading scheme (ETS) for Australia.276

Unlike earlier in Howard’s first term, the private sector became more amenable to a national emissions trading system even without a global counterpart. Banks were now receptive to an ETS and increased their pressure within the BCA relative to the mining sector to support a national scheme. Around this time the AIGN was reluctantly supportive of an ETS. A senior government official working on the ETS described the AIGN’s support this way:

It was very much in the tone of, “If we must, then do it like this” […] They certainly weren’t running around in the press going, “Oh this is great, let’s do this.” […] But behind the scenes they were actually good and constructive to work with, actually. And we kind of got to a point where people were like, “Maybe we could live with that (A06).

The Prime Ministerial Task Group members included senior civil servants and executives with backgrounds in mining, coal power, oil and gas, aviation, and banking. Support for the Task Group was provided by a government-business secretariat that included the head of AIGN and the BCA. No labour, environmental, social justice or indigenous representatives were members of the Task Group or its secretariat. Five months later, the Task Group released its final report,

276 One official involved in the state-led scheme commented that the “The Commonwealth one basically stole a whole lot of our stuff, which we were thrilled with […] we’re not trying to reinvent wheels here” (A06).

215 widely known as the Shergold Report, recommending that Australia develop an ETS (Commonwealth Government 2007). The report advised that an integral part of climate policy approach should be to use international offsets.277

Following the release of the Shergold Report, the country prepared for the upcoming November 2007 federal election. Climate change for the first time in Australia was one of the top issues for voters. Pressure for Howard to implement an ETS continued to mount. By October 2007, he promised in Parliament that we would implement an ETS, starting no later than 2012, that is two elections away, if re-elected.278 At last, both major political parties agreed on an ETS—a policy that would become what called in her political memoir, “the flashpoint partisan issue of the decade” (Gillard 2014: 364).

In sum, during the Howard government a weak Australian state was unable to allay elite fears regarding ambitious climate policy. The result was climate policy that was late, narrow, limited and not durable. There was some minor movement in state strength. The reach of Canberra decreased as Australia resisted leadership at international climate negotiations and as sub- national governments implemented a wide range of innovative climate policies. Bureaucratic capacity arguably improved as the Australian Greenhouse Office consolidated knowledge and augmented technical skills related to climate policy for the Commonwealth Government, providing an internal counterweight to the problematic economic modelling of ABARE. State autonomy from major emitters decreased even further as representatives from major emitters found themselves with far more influence than other non-state actors, such as environmental groups or labour unions.

277 This strategy aligned with an announcement made a few months earlier, in March 2007, that the Howard government would spend $200 million to help developing countries avoid deforestation. This Global Initiative on Forests and Climate would become Australia’s effort to implement a REDD+ program under the UNFCCC. The voluntary program with no timelines or targets also shifted the responsibility of reducing emissions away from Australia and towards poorer countries. It would later be called the International Forest Carbon Initiative under the subsequent Rudd government. Pearse (2007) argued that the new program was simply a repackaging of an existing plan to prevent illegal logging in developing countries without actually banning the import of illegal timber into Australia. 278 That same month, Malcolm Turnbull, then Minister of the Environment, unsuccessfully proposed to cabinet to ratify the Kyoto Protocol.

216 With the Howard government clearly dragging its feet on regulatory or market-based climate policy, yet enthusiastically supporting expensive technologies such as CCS and nuclear energy, the political risk for economic and regime elites increased. There was little confidence that Canberra could successfully implement ambitious climate policy. As a result policy networks constricted, most environmental groups and labour unions were frozen out of policy discussions.

While the Howard government may have sown some discord, green groups and unions were relatively poorly organized and lacked messaging discipline as social movements. This could not be said for major emitters, who had significantly more technical and financial resources and had memberships in an ecosystem of industry associations, nominally led by the AIGN, that pushed for similar climate policy inaction.

The climate policies announced and implemented under Howard were largely voluntary, narrow and unstable. Canberra secured an emissions increase target at Kyoto but failed to ratify the agreement. Climate policies were announced but often delayed (e.g., the renewable energy target), or never implemented (e.g., vehicle fuel efficiency standards). Funding for several major spending programs directed towards major emitters, such as those in the 1999 Measures for a Better Environment or carbon capture and storage was barely spent.

5.3 The Rudd Government (2007-2010)

In November 2007, the Labor Party led by Kevin Rudd ousted John Howard and the Liberal- National Party Coalition in Australia’s first so-called climate change election (Rootes 2008).279 The Rudd government quickly moved to signal its climate leadership ambition. It appointed a strong environmentalist as Environment Minister, . The Department of Climate Change and Water was established in the Prime Minister and Cabinet Portfolio and, more importantly, the Kyoto Protocol was ratified by Parliament—just in time for Rudd to make the announcement at the Bali COP in December 2007. Peter Castellas, CEO of the Carbon Markets Institute, remarked on Rudd’s performance in Bali (A29):

279 In the lead up to the election, Howard had promised a national ETS and Rudd had famously remarked that climate change is “the great moral challenge of our generation” (The Age 2007).

217 I remember distinctly at the Conference of Parties in Bali when Kevin Rudd came in and made this sort of presentation to the masses in the UN Assembly Hall and then he’d go to a private function with his friends, stakeholders, and he said, “This is the time. You can unleash all of your creativity and business skills to drive good climate outcomes in Australia because now it’s part of the government mandate.” So, there was a very strong sort of feeling that […] the Rudd government actually took the issue very seriously and it was a strong part of the election mandate that they had.

Here, Rudd was projecting how a strong state—despite the underlying fundamentals of state strength remaining largely unchanged—can help to dispel risk for the private sector regarding climate policy leadership. State strength is slow to change. Regardless, with its new mandate, the federal government moved quickly to produce plans for an ETS. In July 2008, the government released a 532-page ETS discussion paper and initiated extensive and broad consultation with industry, environmental groups and labour unions (Australian Government 2008b). Industry’s power remained significant with a Labor government but rather than completely oppose Rudd they decided to engage.280 As Clive Hamilton explained, “[…] with Rudd-Gillard, industry realized that its blanket resistance to the tide of climate change policies was no longer a sensible strategy. They knew that something was going to happen. And so, they shifted their campaign to try and influence the kind of policy that Rudd and Gillard would develop” (A33). It did not take long for the rent-seeking to begin. As the consultation period progressed, the media reported increasing numbers of industry associations that warned of economic ruin should they not receive the proper amount of compensation (Curran 2011).

280 According to former bureaucrat Howard Bamsey: “I don’t think business has ever had a problem with access to government under either the, you know, the Coalition or Labor. They can get in any door they like at any time […] I don’t think it’s ever been a case of business pushing against resistance. I think both in the Labor and the Coalition, there’s been — there’s been a lot of leverage available to business. They didn’t have to push very hard. And even in Labor they didn’t have to push very hard” (A37).

218 As with previous Labor and Coalition governments, the Rudd government was promoting expansion of the coal industry. In April 2008, the Rudd government approved an expansion of a coal mine near Gladstone to export 84 Mt of coal annually. Also that year, nearly $600 million in federal subsidies were given to expand coal facilities in the Hunter Valley and to double the coal export capacity of the adjoining port of Newcastle (Baer 2016). Additional multi-billion-dollar subsidies were given to railway companies to improve rail infrastructure to facilitate coal export. As during the Howard government, carbon capture and storage remained a key hope for future emissions reductions. In April 2009, the Commonwealth government created the Carbon Capture and Storage Institute with $400 million over four years to promote the technology and facilitate the creation of 20 commercial CCS projects by 2020.281 However, by 2018 there were no commercial-scale CCS projects in Australia.282 Despite being expensive and technically difficult to implement, the Australian government and major emitters did not stop from pursuing this elusive end-of-pipe technology, which would allow for continued expansion of fossil fuel use in an era of carbon constraints.283

Early into Rudd’s mandate the structure of policy networks changed. Environmental groups and labour unions saw far greater access and influence. Many regime elites no longer saw these groups or their policy ideas as risky. Greg Bourne, then CEO of WWF Australia, shared that environmental groups had “very much easier access” under the Rudd government compared to the previous Howard government (A26). Bourne went on to note that, “all the work that was done leading up to the CPRS was done in a very, very coordinated fashion, with, for example, as we were working with them, we actually had a coalition of environmental and social NGOs” (A26). This coordination was under the auspices of the Southern Cross Climate Coalition, whose members included WWF Australia, the Climate Institute and the Australian Conservation

281 In the end, the Commonwealth government only funded $230 million over five years, according to Brad Page, the CEO of the CCS Institute (A38). The CCS Institute was a member-owned company with at one point 380 members, largely companies and governments. CCS received substantial public sector subsidies and policy support from the Victoria, New South Wales and Queensland governments. 282 In 2019, after multi-year delays, Chevron’s Gorgon Carbon Dioxide Injection project is slated to be operational with an annual permanent sequestration rate of 3.4 to 4 Mt per year (Global CCS Institute 2018). 283 Adam Fennessy, Partner at EY and former Secretary of Environment for the Victorian Government, recalled “ten years ago we didn’t know if CCS was going to work; we still don’t really know” (A05).

219 Foundation, along with the Australian Council of Social Services and the Australian Council of Trade Unions. Clive Hamilton recalled that (A33):

[…] the optics of the Southern Cross group were pretty powerful— sending a message to political leaders that it’s no longer possible to characterize the push for lower emissions policies as an environmentalist issue. It was now an industry issue and the future of Australian energy policy was now becoming a shared vision between previously competing organizations.

This diverse and novel coalition was not institutionalized. It was organized on an ad-hoc basis and proved ephemeral, lasting a little more than a year.

5.3.1 Rudd’s Carbon Pollution Reduction Scheme

By December 2008, with the comments in from a wide range of stakeholders on the ETS discussion paper, the Australian government released a White Paper outlining new emission reduction targets and a ‘final’ design of an ETS, called the Carbon Pollution Reduction Scheme (CPRS) (Australian Government 2008a).284 While less ambitious than the policies recommended in the Garnaut Review, this white paper laid out the most comprehensive national climate policy to date. The new climate plan set the 2020 emissions reduction target at five per cent below 2000 levels at a minimum and 15 per cent below 2000 levels should a global agreement be reached

284 Journalist Marcus Priest (2013) has written that the CPRS name was “devised by Kevin Rudd’s former chief of staff and boy wonder Alister Jordan over the objections and disbelief of government advisers and senior bureaucrats (who wanted the simpler title Emissions Trading Scheme), CPRS was an acronym that signified the scheme’s very incomprehensibility—and hence unsaleability.” The title of the ETS irked Brad Page, then CEO of the Electricity Suppliers Association (2004-2011): “And I think that the industry was really quite disturbed by the way that there was a messianic approach taken by the Prime Minister and using language like Carbon Pollution Reduction Scheme. We couldn’t just call this an Emissions Trading Scheme. We had to become emotive about it. And I think that that wasn’t helpful because it became pretty quickly a distraction, people starting to say, ‘Why am I talking about carbon pollution?’ CO2 is actually quite fundamental to our lives. Carbon sits right at the heart of our very existence and we might have too much of it, but carbon per se is not a pollutant. And so, that sort of argument starts running and what is this trying to achieve? And you know, we got a big distraction running off down this whole emotive line. So, that didn’t help […] even inside the association, my view is that that did cause some change of, ‘Hang on. We were talking about a simple, straightforward, economic instrument to give us investment confidence and so on. We weren’t ever on this pathway of, We’ve got the solution to all of the world’s ills or that this is somehow a pollution issue’” (A38).

220 where all major economies substantially restrained their emissions.285 The CPRS covered 75 per cent of total emissions and allocated free permits to emissions-intensive trade-exposed industries for 90 per cent of their emissions. In the White Paper, major emitters that were not trade- exposed, such as electricity generation, would receive significant direct payments and investment into ‘clean’ coal research. Low-income households would also receive assistance to offset the additional costs.

Even though there already had been extensive and broad consultation leading up to the release of the White Paper, this did not stop interested parties from trying to shape further the design of the trading scheme. Environmental groups were upset at the weak target and industry wanted more concessions.286 Based on public comments and extensive lobbying by business and environmental groups, Rudd’s government announced another version of the CPRS in the May 2009 budget (Australian Government 2009). This latest iteration, in a concession to environmental groups, strengthened the emissions reduction target discussed in the December 2008 white paper and detailed a number of additional major climate policies, including an energy efficiency program called the Australian Carbon Trust and a Clean Energy Initiative to advance renewable energy. For some industry representatives such as former Minerals Council CEO Mitch Hooke, such increasing demands from environmental groups was unfair and self-serving: “And they [ENGOs] keep shifting the goal post to more extreme positions because that’s what actually keeps them in the spotlight, keeps them relevant” (A35). For people like this, ENGOs are not advocating based on climate science but based on satisfying their egos and raising money.287

285 The Intergovernmental Panel on Climate Change had recommended that developed countries commit to no less than a 25 per cent emissions reduction below 2000 levels. By 2050, Rudd hoped to reduce emissions by 60 per cent. 286 In February 2009, a protest in Canberra over the CPRS was organized by 140 climate groups (Milne 2017). 287 Furthermore, Mitch Hooke thought the jury is still out on whether or not the Earth is warming (A35): “It’s just that there’s no substantive science. At the moment, we’re all still dealing in concepts. There’s no real empirical evidence. And so, even though people will point to all different concentrations and what have you, but again, the assumption is that rising concentrations of CO2 are what gives you temperature rises. Others are saying no. So, this debate goes on.”

221 Industry was also accommodated. The start date for the ETS was delayed by a year and an unlimited number of carbon permits would be granted in the first year at the very low price of $10 USD per tonne. The number of free permits for EITE industries was increased from 90 to 95 per cent.288 These concessions, plus $2.2 billion worth of additional compensation for specific emitters, did not prevent some industry associations from demanding additional compensation.289 One policy insider lamented that because the concessions were developed on a case-by-case basis, more compensation went to those better at complaining or who had more political resources or could better rally public support (A27). The CPRS was intended to be revenue neutral but ironically, more compensation was to be paid out to industry in the early years than what was received in revenue.

In August 2009, the rejected the CPRS legislation. The Greens, along with the Liberals and Nationals and some smaller parties, voted against the CPRS. The Greens believed the plan was far too weak and that they could negotiate amendments (Milne 2017). Meanwhile, Coalition politicians wanted further industry concessions. According to Christine Milne, former Senator and Leader of Australian Greens:

He [Rudd] had a chance of either browning it down further for the Coalition or greening it up and getting it through with the Greens because we had the numbers. He decided to brown it down. So, there were six weeks of intense negotiations between the Coalition, Ian MacFarlane, and , who was the Labor Party’s spokesperson. And at the end of that, they introduced a piece of legislation that was so bad, all of the environment groups, including the Greens, all campaigned against it and said, “There’s

288 The Garnaut Review advised against such generous concessions: “there are no identifiable circumstances that would justify the free allocation of permits.” This assistance “undermines these industries’ restructuring responsibilities” (Garnaut 2008: 332). 289 Mitch Hooke, then President of the Minerals Council of Australia, wrote in an op-ed than the latest version of the CPRS would result in 66,000 jobs lost in the mining sector by 2030 and $10 billion in lost revenue in the first five years (Hooke 2009).

222 no way you would pass this.” There were no voices favouring it on the climate voices in the Parliament (A23).

Rudd did not reach out to the Greens to negotiate (A17). Instead, he worked with Malcolm Turnbull’s Coalition to attempt bipartisan support. In October 2009, having granted additional concessions to industry and to the Coalition, yet another version of the CPRS legislation was re- introduced into the House of Representatives. This time, 100 per cent of offsets could be sourced internationally and another $1.1 billion was provided for mining and manufacturing companies. The Australian Aluminium Council now felt that they could live with the costs imposed by the CPRS. However, this further alienated environmental groups and The Greens, who held the balance of power in the Senate. The Southern Cross Coalition dissolved as all of the environmental groups could no longer support the CPRS. The environmental movement wanted to have a strong Australian climate policy going into the international negotiations in Copenhagen in December 2009 and Rudd’s CPRS was unacceptable for them. Power companies outbid one another on the amount needed from the government to retire old coal power plants.290 Tristan Edis, a clean energy researcher in Australia, recalled that major emitters,

[…] had a lot of concessions for them that they didn’t have to pay […] They got that out of Rudd, but Rudd kept on giving them — they’d lobby and push, and he’d give them something. So, they just kept on going. They went, “He’s giving us more concessions. He’s weakening this thing as he goes.” They were trying to make lots and lots of noise […] And they went, “Oh! This thing seems to work. Let’s keep on pushing!” It wasn’t necessarily they wanted to destroy the whole thing. It was kind of like, “Well, lobbying pays off. This government is prepared to concede things.” But it never shut them up. So, Rudd would concede stuff and he would think,

290 According to Christine Milne, former Leader of the Australian Greens, some states had indicated they were going to re-commission retired coal power generating units because they could be economic under CPRS (A23).

223 “This is going to shut them up.” But it just encouraged them [laughs] (A07).

Greg Bourne, former CEO of BP Australia, when asked if the competitiveness concerns raised by industry were representative of the true economic risks face by those industries, responded in the negative; in fact, industry positions reflected “a huge amount of posturing” (A26). In the eyes of what he described as sunset industries in Australia (i.e., coal power, aluminum, automotive manufacturing), “I would milk as long as I possibly can. I will argue that I will go out of business and lose a thousand jobs in your particular marginal seat electorate. Give me a handout and I’ll go on another couple of years” (A26). When asked if the industry concessions in the CPRS were more for political rather than economic necessity, Howard Bamsey, the former head of the economic division at DFAT and one of Australia’s most experienced climate negotiators, replied: “Oh, yes. Definitely. Definitely. I mean, you know, there’s no question about that at all. I think any analyst would tell you that. That they weren’t necessary economically” (A37). In short, many of the apparently objective competitiveness risks voiced by industry were in reality gratuitous rent-seeking.

To secure these concessions, industry strategically used different messages from different messengers. Unlike unions, which emphasize solidarity and ENGOs which as a movement generally lacks messaging discipline, industry provided a nuanced spectrum of demands to make certain actors appear reasonable. For instance, BHP will advance more constructive, progressive climate policies and allow the Minerals Council of Australia—of which it is the largest dues- paying member—to be a strong and vocal opponent of climate policy.291 A senior executive at an industry association noted that sometimes, “I’m running a line on something knowing that my member companies may well compromise on that issue.”292 One senior official during the Rudd

291 Tom Arup, former Environment Editor at The Age, likens the relationship between BHP and the MCA to that of China and North Korea (A01): “North Korea is valuable for China because they can always kind of say they keep relations with North Korea because it’s useful because they can kind of say that they have this sort of barking dog on a leash that if anyone gets too near the Korean peninsula, they can always say, well, you know, don’t upset this barking dog otherwise they might get off the leash.” 292 Ken McAlpine, former Chief of Staff to the Energy Minister of Victoria (2002-2007) noted: “[…] often it’s a deliberate tactic because you don’t want your company branded by being associated with a campaign that is unpopular or might ultimately be unsuccessful. You want to be associated with winning things or, you know, popular things […] They’re just not prepared to campaign for it under their own banner. So,

224 Gillard government recalled how companies such as BHP and RioTinto could be “[…] sending the sort of attack dogs out, but they could be a bit “holier than thou” over here” (A06).293

Despite individual companies and associations having differences in policy positions, in general they were framed within a common set of principles.294 Mitch Hooke, former CEO of the Minerals Council of Australia, stressed:

[…] the debate around the particular initiatives is framed within an agreed set of policy principles, then if you keep coming back to those and testing the initiatives against your principles, it’s a very good and sound way of mitigating against the shadowboxing or the tilting at windmills. Or, you know, the kind of knee-jerk reaction stuff […] I wasn’t Jesus Christ or bloody God, but I used to say to my guys, “Never put shit on another footballer to make yourself look good (A35).

5.3.2 Tony Abbott Spills Malcolm Turnbull

Turnbull’s earnest engagement with Rudd over the ETS proved the perfect wedge for fellow Liberal MP Tony Abbott to successfully challenge Turnbull’s leadership of the Coalition. On 1 December 2009, while the Prime Minister was in Copenhagen at the international climate negotiations, Tony Abbott toppled the leader of his own party, by one vote. Abbott immediately sought to cancel the deal that Rudd had reportedly brokered with Turnbull to ensure safe passage of the re-introduced emissions trading bill through the Senate. The next day the CPRS legislation was rejected in the Senate. Gillard recounted in her memoir that “the Opposition went from

that’s why you have industry associations. To do that dirty work, if you like. Or to act as the battering ram, in a way that no individual consumer brand would want to do” (A15). 293 Christine Milne, former Senator and Leader of the Australian Greens, suspected this hard line taken by peak associations was so that companies “[…] didn’t have to answer to their shareholders about the statements they had made. It was the Minerals Council that gave anonymity to a lot of these companies to take some of the extreme positions that they did” (A23). 294 Erwin Jackson, former Deputy CEO of the Climate Institute reflected: “The industry groups focused on principles and work to get things implemented that are in their interests and oppose things that are going in the opposite direction, the environment groups argue about things that are never going to be implemented which puts them in a much harder position” (A24).

225 divided but mostly rational on carbon pricing, to united and irrational almost overnight” (Gillard 2014: 370).

Regardless of political affiliation or occupation, all interviewees regarded Tony Abbott as a masterful politician. Tom Arup, now media manager at the Australian Conservation Foundation, described how Abbott used climate policy as a “political attack tool, like a brute strength. He was an unbelievable kind of negative campaigner, and he grabbed climate change and drove it into the political context as the most divisive kind of issue going around” (A01). Allan Behm, former Chief of Staff to Gillard’s Minister for Energy and Climate Change Greg Combet, described Abbott as “the best retail politician we’ve had in Australia in half a century and he was able to turn the [climate] debate by the use of very, very clever sloganeering and the very, very useful use of fear” (A20).

This sudden switch in Australian climate politics evaporated NGO access to the Opposition and encouraged further rent-seeking from industry. Greg Bourne, then CEO of WWF Australia, noted:

NGOs [become] personas non grata to Abbott in Opposition. You know, he’s coming in with a mandate to shut down the carbon tax, get rid of all of this climate shit, to curb the union power, to cut taxes, all the standard sort of right-wing agenda. So, access to Abbott and his government in-waiting, just cut off. Cut off completely (A26).

According to a key architect of the CPRS when Abbott became Leader of the Opposition (A06): “I think a lot of companies who were previously thinking, ‘Oh, there is no point in really objecting’ […] All of a sudden, you could jump up and down about it a lot more.” An already challenging political environment became even more fraught.

Meanwhile, it just became more difficult for ENGOs to realize their agenda. The global climate talks in Copenhagen failed to reach an agreement on binding post-Kyoto commitments. The much-hyped negotiations were billed as a spectacular failure, and now with no domestic emissions trading scheme in hand, Rudd returned to Australia despondent. Many described him

226 as unable for many weeks to make decisions regarding climate policy, meanwhile Abbott was moving forward with a new proposal.

In February 2010, Rudd introduced the ETS legislation for a third time. This iteration included key amendments supposedly agreed to by the Coalition.295 On the same day that the bill was tabled, Tony Abbott released his Direct Action Policy on climate change, which proposed voluntary emission reduction measures for industry and households and an Emission Reduction Fund that paid efficient industries and penalized inefficient ones. What little hope that remained for the CPRS was now gone. A former policy insider recalled the very strong confusion and opposition to the CPRS from stakeholders and that in the end there were very few vocal supporters of the policy (A27). On 27 April 2010, Prime Minister Rudd announced that the CPRS would be delayed until the end of 2012 (Rudd 2010). This pushed the release of Rudd’s centrepiece climate legislation beyond the next election and beyond the end of the first commitment period of the Kyoto Protocol.296 This effectively extinguished any hope in the CPRS and precipitated the removal of Rudd as Prime Minister.297

295 The Greens had offered to negotiate with Rudd but stayed the course on seeking bipartisan support for the CPRS. In February 2010, Greens Leader Bob Brown and Greens Senator Christine Milne requested to meet with Environment Minister Penny Wong in Hobart to present a compromise position that would garner the needed votes in the Senate from the Greens. According to Milne, who was at the meeting, Penny Wong refused to show the new position to Prime Minister Rudd, which included a $23 per tonne price on carbon. “But the minute she arrived, it was apparent that there was no interest. So, something had shifted, and we didn’t know what it was. But obviously after Copenhagen, Rudd had decided that’s it. He wasn’t going to bother” (A23). 296 With the benefit of hindsight, Rudd has since admitted that the decision to delay the CPRS was wrong (Megalogenis 2012). 297 Just after Rudd dropped the CPRS, the Prime Minister proposed a Resource Super Profits Tax of 40 per cent on profits over $75 million per year, while dropping the corporate tax rate to 28 per cent and increasing pension payments for workers. This was the hallmark recommendation from a recently completed two-year expert review of the country’s tax system by the Treasury Secretary Ken Henry. Commodity prices quickly rebounded after the Global Financial Crisis and thanks to the high demand for Australia’s export commodities, the country was spared an economic recession and the mining industry was booming. In 2010, the value of mining production surpassed $120 billion and represented 55 per cent of export earnings (Bell and Hindmoor 2013). The Rudd government was determined to get a fair share from selling nationally owned minerals to mining companies. Unsurprisingly, the mining industry did not support this new tax and very quickly intervened. Mitch Hooke, President of the Minerals Council of Australia recalled the MCA spent “$26 million in 52 days on the tax” (A35). The vast majority of these funds supported an advertising campaign to dissuade Australians and signal to other elites that paying more taxes would cripple Australia’s economy. The government ran ads promoting the tax reform. Mining companies cancelled supposedly planned development. The Rudd government subsequently made several concessions but industry opposition remained unified.

227 Since the death of the CPRS, many interviewees from industry, government, and even environmental groups shared the view that Australia’s environmental movement have been ineffective at shaping national climate policy. Erwin Jackson called environmental groups largely irrelevant in shaping climate policy since Abbott pushed the issue as the rallying cry for a culture war. Since then, Jackson contended, “there isn’t a lot of capacity to influence anything in Canberra. There isn’t a lot of international networks. There isn’t a lot of ability to influence the media. It’s sort of very much a sort of grassroots, sort of social media, sort of Twitter, sort of very superficial campaigning” (A24).

In sum, despite the early signal that the Rudd government would adopt a leadership position on climate policy, it also pursued business-as-usual fossil fuel-powered development. The state remained weak and was unable gain the autonomy and capacity it needed to implement an ETS. While networks expanded under Rudd to include a broader range of civil society, elites remained fearful of ambitious climate policy, especially after Abbott became Leader of the Opposition. The result was a policy paralysis and rising emissions.

5.4 The Gillard Government (2010-2014)

By mid-June 2010, Labor lost a key safe seat in a by-election and Rudd’s approval ratings fell to all-time low. An internal Labor Party challenge ensued and Deputy Prime Minister Julia Gillard ousted Kevin Rudd and became Prime Minister on 24 June 2010. Despite the same political party governing, the access of non-industry actors changed at a moment’s notice, since these policy networks and relationships had not been formally institutionalized. Victoria McKenzie-McHarg, Chair of Climate Action Australia, was lobbying in Parliament House the day that the Rudd was overthrown by Gillard, “[…] people who beforehand who had been very keen were just out— didn’t want to talk to us at all—but some really important power players in that process, some people who’d been behind that process, all of a sudden did want to talk to us, and wanted to see our [polling] numbers” (A04).298

298 Beyond these policy network changes, Gillard immediately suspended the government’s pro-tax television ads and quickly began negotiations with BHP, Rio Tinto and Xstrata (now Glencore) to introduce, a week after becoming prime minister, the Minerals Resources Rent Tax. This new tax was an extremely-less stringent version of Rudd’s failed Super Profit Tax. The new tax rate was lowered to 30 per cent from 40 per cent and the profit threshold was raised. The tax was also limited to iron ore, coal and

228 Gillard quickly called a 21 August 2010 election to establish a mandate for her government. In an oft-quoted media interview from 10 August 2010, she admitted that “there will be no carbon tax under the government I lead”(Gillard 2010). Not long afterwards, she stated that the fixed- price ETS was essentially a carbon tax. In her memoir, Gillard later confessed that allowing the Opposition to get away with framing the ETS as a tax was “the worst political mistake I have ever made, and I paid for it dearly” (Gillard 2014: 394). As Allan Behm, Chief of Staff to Greg Combet noted:

[…] once that cat was out of the bag, Abbott was able to use the term ‘carbon tax’ to beat Labor to death […] Once the Opposition began calling the Labor carbon price a ‘tax’, so too did the government ministers! In other words, Labor went about describing its own climate change policy in the terms used by the Opposition to denigrate the policy (Behm 2015: 96).

In the aftermath of the election, Gillard lost Labor’s majority mandate. The Green Party’s sole MP held the balance of power in the House of Representatives. In the Senate, the support of the Greens and a handful of independent Senators became crucial for overcoming the strong opposition from the Coalition. Labor could no longer afford to ignore the Greens. Gillard (2014: 386) admitted that she “bet my future, the government’s future on two things. First, that I could

gas extraction. Moreover, a new mining exploration subsidy was implemented. Partly as a result of falling commodity prices and also from weakened thresholds and exemptions, the tax collected zero revenue in its first three months of operation in 2012 (Bell and Hindmoor 2013). Christine Milne, former Leader of the Australian Greens put it this way: “[…] she [Gillard] got the political kudos and the big miners went quietly because they actually designed her tax […] the big miners went, ‘Ahh, look! This is terrible, but we’ll just have to live with it and so on.’ And Gillard’s going, ‘Look at me, I’m the great negotiator.’ And the miners go home going, ‘Don’t worry, guys. We’re never going to have to pay this’” (A23). Gillard’s revised mining tax signalled the power of the Australian mining industry to essentially block the policy intent of a Labor majority government. A campaigner with an Australian labour union noted (A40): “If you look at the way that the industry dealt with the mining tax, that kind of showed that they got the power to either knock down or make ineffective legislation that they don’t like. And I think that, you know, the rest of us could only dream of having that kind of power to be able to kind of decide that you can pour millions of dollars into an ad campaign and make it impossible for even a progressive government to do what they want to do.”

229 get the Greens to accept a workable scheme. Second, that if an ETS started and people lived with it, then opposition would fall away.” The first bet would prove an easier, albeit temporary, win.299

5.4.1 Multi Party Climate Change Committee

By 1 September 2010, an agreement was reached between the Labor Party, the Greens, and three independent Senators to create the Multi Party Climate Change Committee (MPCCC) (Party 2010). This committee, resourced like a Cabinet committee, ensured that Gillard had the necessary votes in both the House and the Senate to pass emissions trading legislation. The Gillard government also appointed four independent experts to the committee to provide advice on climate science, economics, electricity markets, and social welfare.300 Greens Senator Christine Milne, one of the members of the MPCCC, shared why the expert involvement was so critical:

[…] it enables people to change their mind without losing face. But it also means that if an expert has sat there and said, “That’s actually really wrong. That is not right.” You can keep on saying it, but—you know, you can’t really sit in a meeting saying, “Well, I don’t care. I still think that,” when someone has just explained to everyone around the table why it’s completely wrong. So, if you set up a committee with your experts and you have confidentiality and respect on the committee, then you can thrash out these things and people can say, “No, that’s not right,” or, “Actually, that is right, but only if you added this, you know, saver or whatever” (A23).

Throughout the fall the MPCCC met and in December 2010, it released a communiqué that set out a set of shared principles that would guide the Committee’s work, apparently at the behest of

299 On 19 February 2013, Christine Milne announced that the Greens were withdrawing from their September 2010 agreement with the government. 300 These experts were Professor Ross Garnaut, who had released the Garnaut Review on climate economics during the Rudd Government; Professor Will Steffen, a climate scientist from Australian National University; Rod Sims, then chairman of the NSW Independent Pricing and Regulatory Tribunal; and Patricia Faulkner, a KPMG partner and social welfare policy expert.

230 Environment Minister Greg Combet (Behm 2015).301 This list of principles was intended to avoid an impasse on details and remind committee members of the larger policy objectives.302 The diverse expertise and objectives among Committee members helped produce a far more comprehensive climate policy package than Rudd’s CPRS.303 Economist Ross Garnaut, one of the four expert advisers on the Committee, lauded its transparency:

[There was] a good public exchange of views. It wasn’t dominated in the way that the CPRS discussion had been, to some extent, by attempts by large interest to negotiate nontransparent corners of things. It was one of the best exercises in transparent public policymaking process that I’ve been involved in. And the Greens contributed constructively to that (A28).

The MPCCC had a relatively transparent consultation process with a broad range of stakeholders, including business, union, environmental and welfare organizations and academics to receive advice and feedback on policy proposals.304 The role of the Climate Institute changed during the Gillard government and the MPCCC, unlike during the much more instrumental influence with Labor during the CPRS and the Southern Cross Climate Coalition, the Climate Institute now played an advisory role. According to Erwin Jackson:

301 These principles are printed out in full in the back of Allan Behm’s (2015: 251-53) book and, at high level, include the following: environmental effectiveness, economic efficiency, budget neutrality, competitiveness of Australian industries, energy security, investment certainty, fairness, flexibility, administrative simplicity, clear accountabilities, supports Australia’s international objectives and obligations. 302 According to Behm (A20): “What we were wanting to do was to make sure that if there was going to be a semantic argument of any kind as we drafted the legislation, we could always push back to say, ‘Okay, which of these principles to which you’ve agreed do you think that offends?’ That’s why we did it. And it was a very important thing to do because it clarified the canvas on which we were then going to paint the CPRS.” This was also a common tactic within industry associations to avoid deadlock on detailed policy positions. 303 According to Gillard, each member of the MPCCC stressed different objectives. Combet sought to ensure trade-exposed industries remained competitive and the electricity system would remain stable. Windsor focused on the role of agriculture in sequestering carbon. Oakeshott on the role of biodiversity and the Greens on the research, development and deployment of renewable energy. Gillard takes credit for the income tax reforms of the negotiated package (Gillard 2014). 304 The MPCCC invited written submissions from these interested parties and engaged these groups in face-to-face meetings. Apparently, the Opposition did not engage the MPCCC, despite being invited to sit on the committee, make submissions, or receive briefings about committee’s work (Behm 2015).

231 […] when the legislation was being negotiated, we basically worked with the Greens office to say, ‘Okay, you need to make sure that these words are in the legislation on particular things like carbon budget …’ And we got the Greens to do that (A24).

Beyond the MPCCC, climate policy networks further broadened under the Gillard government, in part because the minority government status meant that it could not ignore the demands of the Greens and civil society as much as the Rudd government.305 The NGO Roundtable on Climate Change was established in October 2010 to better engage civil society and provide government with additional input (Combet, Burke, and Ludwig 2010). Membership included many of the large environmental organization, labour unions, social services organizations and a single indigenous organization. Anna Skarbek, CEO of ClimateWorks Australia, attended the Roundtable meetings and was able to present research on energy efficiency, which was conspicuously absent from the CPRS but was included in the subsequent Clean Energy Future climate policies (A34).

5.4.2 Clean Energy Future Package

In February 2011, a leaked Cabinet document about the MPCCC negotiations forced the government to release key details on climate policy design that would become the Clean Energy Future Package.306 Climate policy announcements soon started to roll out. A few weeks later, the Gillard government launched the Climate Commission, headed by Professor Tim Flannery (Combet 2011). The Commission’s purpose was to provide the government with independent expert advice to government and educate the public, increased bureaucratic competence and autonomy from industry. In March 2011, legislation for the Carbon Farming Initiative was introduced; it provided financial incentives to farmers, ranchers and Indigenous land managers to reduce emissions and store carbon on their land. This voluntary program, which came into force in September of that year, has proven to be one of the most resilient national climate policies in

305 Adam Morton, former Environment Editor at The Age, recalls the Gillard climate policy package “[…] was a better mix of policy because it had those range of perspectives. And the Greens certainly played a role in that” (A22). 306 According to Combet’s Chief of Staff, Allan Behm (2015: 116), this leak ended up making the government look “naïve and ridiculous.”

232 Australia. Rowan Foley, General Manager of the Aboriginal Carbon Fund, who was instrumental in bringing together Indigenous communities to have a unified position on carbon farming, observed that until then, “no one was doing any work in this space whatsoever” (A41). The consensus view that resulted from that meeting directly shaped the final Carbon Farming Initiative policy.

In general, Indigenous groups in Australia have been nearly absent from national climate policy discussions. As with many other public policies, Indigenous people have been systematically excluded and have been challenged with limited capacity to engage Canberra.307 The Carbon Farming Initiative was notable because it was an exception.

Connections between the environmental movement and Indigenous communities and organizations have typically been scarce. Save for a few site-specific environmental campaigns, such as stopping the Adani Carmichael coal mine, enduring and mutually beneficial relationships with local Indigenous communities have been practically non-existent. Rowan Foley of the Aboriginal Carbon Trust put it this way:

[…] when it came to standing up with and for Indigenous people, they [environmental groups] were often nowhere to be found. They’re there for the trees, they’re not for black fellows. But, you know, they’re quite happy to have their photo taken with Indigenous people. You know? Time to demonstrate to their own investors. The sexy photos rev up them. But when it comes to doing the hard yards in Canberra, they just won’t do it (A41).

307 Part of this exclusion is based on a narrow understanding of the relevance of Indigenous knowledge. One senior architect of Rudd’s CPRS and Gillard’s climate policy recollected that, “The techy stuff wasn’t in their natural interest, you know, the design arrangements. There might have been on the kind of general support, but I can’t—it’s just not something that I recall playing a big role” (A06). Allan Behm, Chief of Staff to Gillard’s Environment Minister, when asked if Indigenous groups were involved in the policy development in areas beyond land management, said “they didn’t have the skills for that, I might say. But no, they stuck to their knitting and spoke very passionately, often, about their connections with the land” (A20).

233 On 10 July 2011, a detailed framework for a new ETS was released. A three-year fixed price of $23 per tonne would start on 1 July 2012.308 It was based on the forecasted, although not realized, carbon price for the EU ETS and a compromise between the Greens and the business lobby.309 In 2015, the fixed price would transition to a cap and trade system. The actual emissions cap would be recommended by the Climate Change Authority, in a role similar to the U.K. Climate Change Authority. The price on carbon was limited to electricity and would directly impact electricity generators, oil refineries, aluminum smelters, steel manufacturers and other large industrial users of electricity. Households, small businesses and agriculture and transportation fuels were not directly subject to the carbon price.310

The 2020 emissions reduction target remained at 5 per cent below 2000 levels, as negotiated during Rudd’s time as Prime Minister. However, were a global agreement negotiated, Australia’s target would increase to a 25 per cent reduction.311

In addition to these climate policies, two additional climate change-related institutions were created. The Clean Energy Finance Corporation (CEFC) was founded and capitalized with $10 billion from the Australian Treasury.312 This government-owned green bank intended to stimulate additional private sector investments and help commercialize and deploy renewable

308 The carbon price applied to around 350 of the country’s largest emitters. The three-year fixed price period was decided upon because the MPCCC could not agree on an emissions cap for the cap and trade system. 309 The MPCCC also agreed that the ETS should be periodically reviewed by the Productivity Commission. Greens political advisor Oliver Woldring admitted that this shift in venue for setting the emissions cap was strictly political compromise: “Now, in a way you might say, ‘That’s weak, isn’t it? Because you just deferred the future and you don’t have any control over that.’ But really, it was the best we could do. And we had some confidence in the people that were on that Authority” (A17). 310 Although, electricity generators and retailers would pass along the carbon costs to households and small businesses, hence the need for reducing personal income tax. 311 The 2050 emissions target was also raised from 60 per cent to 80 per cent from 2000 levels. The idea for this additional ambition came from a meeting convened by the Deputy Secretary of Environment with business groups and a few environmental groups to get feedback on a proposed 15 per cent target. According to Erwin Jackson, who was present at the meeting, “the Gillard government, […] were obviously quite worried about where the stakeholders were at because they were being smashed by business for other reasons. And I proposed - and this is where Miles from the Aluminum Council and I had a bit of a tag team at lunch. It was an accident, but. I said, ‘Well, why don’t you do a 25 per cent target and we’ll allow unlimited international access.’ And the business groups said, ‘You know, we’d be happy with that’” (A24). 312 The CEFC was modelled after the U.K. Green Investment Bank.

234 energy, energy efficiency and low-emissions technology. In addition, the Australian Renewable Energy Agency was also formed and given $3.2 billion for research and development, demonstration and commercialization, and building knowledge and networks regarding renewable energy in Australia. Both of these new institutions are independent statutory authorities, building the competence of the bureaucracy and autonomy from the interests of major emitters.

The Clean Energy Future Package also had major redistributive elements. For major emitters, there was $9.2 billion in free permits to emissions-intensive trade-exposed industries, $3 billion in assistance to brown coal generators, $1.2 billion in grants to manufacturers, $300 million to steel producers and $1.3 billion to certain coal mines (Priest 2013). Pensioners and low-income households would see no price impacts and most of the costs for middle-income houses would be covered. The federal tax-free threshold for wage earners was tripled to $18,000, exempting one million people from any federal income tax.313 This $2.5 billion in tax cuts for low-income earners proved remarkably durable, unlike the carbon price.314

In November 2011, the Clean Energy Future package became law.315 This suite of climate policies was the most ambitious and comprehensive in Australia’s history. Among many other policies, for the first time there was a mandatory price on carbon for major polluters. Treasury modelling showed the Clean Energy Future package would reduce the country’s greenhouse gas emissions by 160 Mt per year by 2020 (Combet and Davis 2014).

Briefly, the Gillard government had sent a strong signal to economic and regime elites that it was moving forward with significant climate policy reform, bounding industry’s input to the details of an ETS, not whether there should be one. There was greater industry acceptance of the Clean Energy Future policies compared to the Rudd’s policies, although this did not mean unanimous

313 For households, electricity prices were modelled to increase by $3.30 per week, which would easily be offset by $10.10 per week in reduced personal income taxes, higher benefits and other payment assistance (Combet and Davis 2014). 314 As Christine Milne, former Leader of the Greens, explains (A23): “So, the Liberals abandoned the carbon price but kept the tax-free threshold at $19,000. And so, no wonder the debt and deficit that they were all whingeing about—well, hello folks! You can’t have it both ways. But, he knew it would have been toxic for him to go back to reflecting the reality of income and expenditure on that equation.” 315 The Clean Energy Act 2011 is a package of 18 bills that provided a framework for the ETS.

235 or enthusiastic support.316 The MPCCC enabled more autonomy from industry than previous attempts at climate policymaking. Compared to prior efforts to formulate climate policy, the scope of Gillard’s policy package was broad, touching on all sectors of the economy, and its means were diverse, employing voluntary, economic and regulatory policies.

5.4.3 Industrial Rent-seeking

Despite the MPCCC’s structure and the importance of climate policy to the Gillard government, the Australian state remained weak and clientelist. It still lacked the bureaucratic capacity and the autonomy from industry to say no to special concessions. Diversity and transparency were insufficient to stop rent-seeking from major emitters. Allan Behm, former Chief of Staff to Greg Combet, noted that “for most of the time” during the negotiation of the Clean Energy Future package (A20):

[…] there was special pleading going on. And many of these companies are looking for handouts. I mean, it’s a rent-seeking business, I’m afraid. And what you have—I mean, right across any number of sectors as we were designing the climate policy, the rent-seekers came out in force. They could [makes sniffing noises] smell the money and would want to get in there, whether they were ethanol producers from Manildra, whether they were steel producers from BlueScope or OneSteel, which became Aryan, or whether they were foundries like Bradkens; anybody who could smell the possibility of some sort of handout. And major car

316 According to Peter Castellas, CEO of the Carbon Markets Institute, there was a notable difference in industry views towards the Gillard ETS compared to the Rudd ETS (A29): “I think by the time the Clean Energy Package came, there’s much more similarity with the fact that, you know, if this comes in, then companies can work out how to make their complaints and look at ways to, you know, to mitigate compliance costs. So, there was a much—there was greater competency in terms of coming into understanding it.” A key architect of the Clean Energy Future package recalled how supportive most industry representatives were that they consulted. For some of these individuals, “there was almost a reverse regulatory capture thing going on where they had been a part of this conversation for so long that they felt quite a bit of ownership about the—like some of these individuals, I wouldn’t say the whole company—these individuals who had been a part of this co-design process that had gone on, and on, and on for years” (A06).

236 manufacturers were a prime example of that. Billions and billions of dollars in handouts. And they’ve all closed up anyway!

Clive Hamilton, founder of the Australia Institute, was unequivocal about the reasons why the Gillard government said yes to industry demands:

They were a political buy-off. Almost wholly. I mean, it made no sense to make massive pay-outs because the industries had been flagged for ten years that these kinds of changes were coming. And instead of adjusting for them in a way that was in the interests of their shareholders, they resisted and resisted and pretended that it wasn’t going to happen and then demanded massive pay-outs when it did. There was no justification for them. Now, there is a case for good economic transitional policies to help regions particularly affected by these policies to develop and find new employment opportunities. I’m always in favour of that. But, massive pay-outs that just basically go into the pockets of shareholders I think is very bad policy (A33).

While less than what was proposed in the CPRS, Gillard’s policy provided billions in compensation to brown coal power generators in Victoria and New South Wales. Ross Garnaut, an economic advisor to the MPCCC noted, “I didn’t think any compensation was warranted for them. They were going to recoup the various proportion of their carbon price by passing it on to consumers. That’s why the consumer price was expected to rise” (A28). Furthermore, power generators are not trade-exposed, unlike export-oriented industries. Brad Page, former CEO of the Electricity Suppliers Association (2004-2011) said, “It was hard to imagine that the amounts being talked about for the brown coal generators were appropriate” (A38). Similar to Garnaut, Page noted the writing has been on the wall for some time now for coal power companies:

I think it’s unreasonable ten years later to be saying, “Oh, I couldn’t have seen this coming. You’ve got to compensate me for what you’re now about to do to me.” I think that that’s wrong. I think that’s a circumstance where it’s a question at what rate does

237 that impost come in and at what rate can capital investment decisions be changed? I don’t believe it should be a situation where you start handing over large sums of money to individual companies who’ve been benefiting from polluting the commons for some time! […] We handed them large sacks of money, right?317 (A38).

This rent seeking may have been expected with the industry-friendly Coalition but it occurred with the Labor Party, given its importance placed on maintaining well-paying, unionized, industrial employment, especially if those jobs are in a region that is held by the Labor Party or in a swing riding. Former Minister of Environment Robert Hill (1996-2001) put it this way: “That industry, as I said, they’ll take the benefits but still complain and they influence community attitudes, as well, so. But industry doesn’t vote, the community votes. That’s what you watch” (A30). Labor party elites and senior union leaders did not want overly ambitious climate policy to endanger these key constituencies. Allan Behm bluntly explained the rationale for the $300 million compensation package to two steel producers, BlueScope and OneSteel, with operations in Illawarra and Whyalla (A20):

It was to keep them in business so that they didn’t sack their workers. And that was really directed towards—the politics here are very important. Those electorates are Labor electorates. There are two of them around Wollongong, south of Sydney, and those two electorates are where the workers who work at BlueScope live. So, we wanted to keep them in employment.318

317 Investigative journalism by The Australian Financial Review and the Australian Broadcasting Corporation using the Paradise Papers, a of leaked confidential documents from the Bermuda legal firm Appleby, have revealed that the French power company Engie paid itself nearly $1 billion in dividends from its Loy Yang B brown coal power plant in the Latrobe Valley just days after it received $500 million in cash and tax credits for the fixed price ETS scheme (Chenoweth 2017). Financial analysts call the strategy aggressive but legal. A few years later, the company nearly breached loan covenants on the power plant, a move that should have been avoided if such an unusually high dividend had not been issued in 2012 (Janda 2017). 318 Coincidentally, Whyalla had also been issued an apocalyptic warning by Leader of the Opposition, Tony Abbott. He warned that “Whyalla will be wiped off the map by Julia Gillard’s carbon tax. Whyalla

238 Environment Minister Greg Combet was from the Hunter Valley, an electorate where several dozen coal mines operate and ship coal to the world’s largest coal export port in Newcastle, New South Wales, and also the former head of the ACTU. Former Greens Leader Christine Milne was quick to point out that “when it came to the compensation issues, he [Combet] was super sympathetic to massive compensation for coal-fired generators […] and he was the one who was singularly responsible for the massive compensation to leaky coal mines” (A23). This lack of autonomy from powerful labour and business interests caused overly-generous compensation to be given to industry. Despite this generosity, industry did not support the continuation of carbon pricing.

The Clean Energy Future package was highly lucrative for industry but it failed to provide a sufficient financial signal to industry to substantially reduce emissions.319 Tony Wood, Director of Energy Program at the Grattan Institute and then an executive at Origin Energy recalled that, “business got, in some ways, what it wanted but not what it needed” (A14). Alex Gosman, former CEO of the Australia Industry Greenhouse Network, shared his personal opinion on industry’s approach to government policies such as climate change (A19):

And industry won’t give up anything without a fight or just make changes because someone thinks it a good idea. So for example, look at the history of removing tariff protection. And so, even if a new program is agreed to reduce assistance, they’ll try to string it out, they’ll try to get exemptions, they’ll try to—this is me speaking, not AIGN. You know, they’ll try to get pauses. And so, that’s just the nature—that’s why protection is such a bad thing, because people then spend so much time trying to protect their rent-seeking.320

risks becoming a ghost town, an economic wasteland if this carbon tax goes ahead” (Owen and Kelly 2011). Ironically, the steel companies still laid off workers after Tony Abbott repealed the carbon price. 319 According to Alex Gosman, some sectors could write off 95 per cent of the $23 per tonne cost and essentially pay around a dollar per tonne for their carbon emissions (A19). 320 Frank Muller, former climate policy advisor to the NSW government: “[…] at the end of the day, the lobbies didn’t want to solve the problem. They just wanted to stop anything happening” (A36).

239 By supporting Gillard’s climate policy and its generous compensation package, while simultaneously not curbing Abbott’s growing enthusiasm to ‘axe the tax,’ industry found itself in a win-win-win situation. It received immediate public subsidies, the perception of constructive engagement on an issue of strong public concern, and a likely repeal of carbon pricing when Abbott formed government. A former senior official in the Rudd Gillard government recalled: “By-and-large, a lot of those industries are quite happy with them [the concessions], like the aluminum industry. I don’t know if they ever said this to anyone out loud—like the press—but they’re happy. ‘Yup, that’s a good deal. We can live with that’”(A06). Privately, companies could admit this.321 But publicly, many key associations were not as content. The Business Council released a strongly worded press release when the Clean Energy Future legislation package was passed by both houses of Parliament on 8 November 2011.322 This public-private divide in how industry reacted to the Clean Energy Future package would foreshadow their reaction a few years later.

5.4.4 Environmental NGOs during Clean Energy Future development

Environmental groups were more unified during the development of Gillard’s climate policies than they were during the CPRS whose low emission reduction target and growing industry concessions they had criticized. This time, they formed a Say Yes campaign. This coalition brought together eleven environmental and social justice NGOs, including Greenpeace Australia, WWF Australia, the Climate Institute, GetUp! and several trade unions, who along with celebrities such as Cate Blanchett urged fellow Australians to ‘say yes’ to the proposed climate policy package. Some of this unity was strongly suggested by Environment Minister Greg Combet, who said he “had some very difficult early meetings” with environmental groups such

321 Some industrial associations were unhappy privately and publicly, despite multi-billion dollar concessions. Representatives from the Australian Coal Association and the Minerals Council of Australia ”played hardball” during the development of the CEF (Behm 2015: 174). A senior government official close the climate policy deliberations recalled (A06): “The kind of most obnoxious people were the Australian Coal Association, and even they weren’t universally terrible all the time—although they were pretty terrible most of the time. Back in the day, their head was someone called Mitch Hooke, who is kind of famously aggressive. So, if anyone was—if there was a side of out-and-out kind of aggression—it was usually to be found in the Australian Coal Association.” 322 The BCA noted, “It is extremely disappointing that the parliament has not heeded the council’s calls to include essential safeguards in the legislation and act in Australia’s national economic interest” (Westacott 2011).

240 as the Australian Conservation Foundation and the Australian Youth Climate Coalition (Priest 2013). Combet explained further:

Essentially what I said to them is that it divided the progressive side of politics. It undermined our capacity to tackle climate change and to grow up. If we are going to get this through and we were up against Tony Abbott and climate change sceptics and [far- right wing Sydney radio broadcaster] Alan Jones and a hostile number of stakeholders in the business community, then those who support action on climate change have to have a unified view, put aside differences and stop obsessing about targets (Priest 2013).

This newfound unity among environmental groups did not translate into policy influence. After the failure of the CPRS in 2010, Erwin Jackson estimated that Australian environmental groups have had a “fairly limited impact” on shaping climate policy (A24). Speaking more broadly, and more critically, Tony Wood, Director of Energy Programs at the Grattan Institute, assessed that environmental groups have made no impact on Australian climate change policy, even the large groups such as Greenpeace, WWF, and the Australian Conservation Foundation, for the same reason that Combet identified: the movement is too fragmented. For example, Wood described that “some of those environmental groups will argue with each other well until the early hours of the morning and over things nobody can seem to understand what they’re talking about. Fine points of difference, right? So, they never really captured a major voice” (A14). This is in stark contrast with the shared policy principles and talking points across an ecosystem of private sector associations and major emitters.

In the 2010s, many environmental groups began to organize local protests against coal and coal seam gas (i.e., coal bed methane) industries in Australia.323 While this community organizing is far from the power politics of Canberra, Melbourne and Sydney, if successful it could begin to shift public opinion and in doing so, pressure politicians to follow suit. Meanwhile, the

323 These groups include: the Green Party, Greenpeace Australia, Friends of the Earth Australia, Climate Energy Action Network in South Australia, numerous local climate action groups, Lock the Gate in Queensland and New South Wales (Baer 2016).

241 movement lacked the complex, interlocking network of associations that major emitters have in Australia, or the clear affiliation with a political party. Environmental groups had no formal connection with the Greens or with the Labor Party. Anna Reynolds, founder of Climate Action Network Australia reflected: “it’s not necessarily easy to manage a really big movement that the governance of which is all broken into different organizations” (A21). Moreover, compared to unions or industry, environmental groups have extremely scarce financial resources and must allocate accordingly. Fostering relations with a hostile government, especially the bureaucracy, is seen as a waste of money and time.324 The ephemeral nature of these civil society coalitions was also mirrored throughout Canada’s climate policy history.

5.4.5 Impacts of Gillard’s Clean Energy Future policy

In its first year of operation the $23 per tonne fixed carbon price reduced total emissions from the National Electricity Market by 7 per cent or 12 Mt (Combet and Davis 2014).325 Renewable energy generation increased by 25 per cent and brown coal generation fell by 13 per cent (Combet and Davis 2014).326 The Coalition’s predicted ‘Whyalla Wipeout’ and $100 roasts did not come to pass. Given the billions in concessions, these were rather expensive emissions reductions for the Treasury, not for industry. An analysis by the Australian Financial Review found no company market statements noting a material impact on earnings, despite the strongly worded concerns of companies and business associations in the media.327 Frederic Papon,

324 Ironically, the bureaucracy may be the most important actor to influence, contended Erwin Jackson: “You know, the amount of times I’ve seen an environment group saying they’re going to Canberra and they spend all of their time at Parliament House; it’s a waste of time. If you’re going to go to Canberra, you’ve got to spend most of your time in the bureaucracy. Because they’re the people advising the government on what they do. And if you—if a Cabinet brief is not going out supportive of what you want to happen, then it’s got—you’re not going to get it” (A24). 325 This was aided, of course, by the increased renewable energy target. 326 Some analysts, like Hugh Saddler, contend that emissions drop can in part be explained by the incentives given to hydro-producers to over-generate. In other words, they found it advantageous to draw reservoirs down at a faster rate than they could be replenished. According to Saddler, “The Labor government was in place, but it looked likely to lose. So, they, you know, if they ran flat-out for a year and then it was reversed, there was a good bet” (A31). 327 Woodside Petroleum asserted that a carbon price could be the “breaking point” for the LNG industry, resulting in project delays and tarnishing the country’s investment reputation. By contrast, Citibank estimated that the cost for Woodside would less than one per cent of earnings before tax (Priest 2013). According to Adam Morton, former environment editor at The Age: “There is no case that can be made that one major operation, or any major operation shut down because of a climate policy that was in place from then until, you know, 2013 when the election and then 2014, when the legislation was repealed”

242 Director of Climate Change and Sustainability Services at EY Australia noted (A25) “[…] after the carbon price was implemented you could see behaviour change! People consuming less. So, it was effective. Less electricity. You look at the ABS [i.e., Australian Bureau of Statistics] statistics, we had less electricity consumed across the economy. Yes, it was effective.” Ross Garnaut, economic advisor to the MPCCC, reached a similar conclusion (A28):

Emissions went down at the rate they were supposed to go down at […] Went down in covered sectors, didn’t go down in non-covered sectors […] The increase in the cost of living was as projected. Therefore, the compensation that was paid in to lower middle- income homes and tax cuts and social security adjustments adequately met what was required. There was no damage to energy intensive industries. Normally, when you introduce a change […] you get lots of hiccups. There were no hiccups. It was the smoothest major reform that’s ever been introduced. And it worked well for two years and it was gathering public support. It had just been accepted and it was peculiar politics at the time, with Tony Abbott making this a central issue.

Even though Gillard’s climate policies were bringing down emissions and not impairing economic growth of major emitters, Tony Abbott continued his attack on Julia Gillard’s carbon price. A number of interviewees closely connected to the development of the Clean Energy Future package confided that Labor was unable to reframe climate policy in a way that spoke to the broader implications, and instead engaged Abbott’s fear mongering and became lost in minute details.328

(A22). 328 Christine Milne, Leader of the Australian Greens recalled: “It was all Abbott saying, ‘This is going to wipe out towns. It’s going to destroy […] whatever.’ And so, all they wanted to do was argue on that, which was arguing on the Conservatives’ ground. They wouldn’t go to the big picture. Appealing to people’s sense of Australia in the region, in the world, what we might be able to do. But rather, just covering people’s backs” (A23). A former climate advisor with the Rudd Gillard government lamented the lack of political energy devoted to framing the importance of climate action: “It became this really technical discussion and debate, and it was a real problem because, if looking back, politicians had not spent as much time working with us on all of these techy details and spent more time just hammering the

243 5.4.6 Rudd briefly regains control of Labor Party

The inability for Gillard to effectively counter Abbott’s searing critique of her government’s climate policies played a role in fomenting discord among the Labor Party caucus. On 26 June 2013, Prime Minister Julia Gillard was removed in an internal party leadership spill and former Prime Minister Kevin Rudd once again became Prime Minister. Within a few weeks of returning to the Prime Minister’s Office, Kevin Rudd announced that the move from a fixed price to a full ETS would be accelerated by one year to 2014. This move was thought to help him distance himself from Gillard’s so-called carbon tax, placating major emitters and voters critical of the carbon price. It was estimated that this action would reduce the cost from $25.40 per tonne to around $6 per tonne (Rudd 2012). But none of these changes materialized. He promptly called an election for 7 September 2013 and lost.329

To summarize, over the course of the Rudd and Gillard Governments, the Australian state remained weak. The government went to great lengths to increase bureaucratic capacity and formed the MPCCC to create more evidence-based policy that was less captured by narrow industrial interests. The Rudd and Gillard governments did consider more interest groups than did the Howard government. Environmental groups and especially labour unions were closely consulted and involved in climate policy deliberations. However, major industrial emitters continued to be a central and influential stakeholder group. The state still lacked autonomy from this powerful non-state actor.

Nevertheless, the perceived risk of climate policy for elites shifted. With a few notable exceptions, including Abbott and his allies once he assumed leadership of the Opposition, most major emitters and private sector associations worked within the new frame that climate action was going to take place. Thanks to interventions by the Rudd and Gillard governments, policy networks opened and stabilized; but the Labor government did not last long enough for these

message that climate change is a really important thing and look at the risks and all of those sorts of things. That would have been good. We weren’t having a public conversation about—not enough of one—about the risks of climate change and all of those sorts of things. Everyone was experts on techy detail” (A06). 329 According to Greens Senator Christine Milne, during this 2013 election, “Labor did not campaign on the win of the ETS because it was Gillard’s policy: Gillard’s achievement and not Rudd’s” (A23).

244 networks to have a lasting legacy. The climate policy that resulted had broad sectoral coverage and employed a ranging of voluntary, economic, and regulatory measures. However, many of these policies proved to be short-lived.

5.5 The Abbott, Turnbull and Morrison Governments (2013- 2018)

In the aftermath of the September 2013 election, the Liberal and National Party Coalition won a majority of the seats in the House of Representatives and formed government. Tony Abbott, who had forced out Malcolm Turnbull in 2009 over his support of bi-partisan climate policy, became Prime Minister of Australia. Within a few weeks, the Abbott government began to dismantle Gillard-era climate policies. Legislation was quickly drafted to repeal the ETS. The Clean Energy Finance Corporation ceased investments. Abbott also announced his intent to abolish the Climate Change Authority. The Climate Commission, unlike the Climate Change Authority, had not been enabled by an Act of Parliament and was immediately dismantled.330 Through feedback, these actions also made the state somewhat weaker as bureaucratic capacity and the reach of the Commonwealth government decreased.

On 13 November 2013, the government introduced an omnibus House bill to repeal the ETS, the Clean Energy Finance Corporation and the Climate Change Authority. This bill was voted down in the Senate in December 2013. The Coalition did not control the Senate and needed the votes of a handful of independent or small party Senators to repeal the Gillard-era climate change institutions nominally protected by legislation. It took until July 2014, when Abbott was able to convince a majority in the Senate to repeal the carbon price; however, in the end, he failed to abolish the Clean Energy Finance Corporation, the Climate Change Authority, and the Australian Renewable Energy Agency. In the meantime, the Coalition approved more major fossil fuel projects and starved these difficult-to-extinguish institutions of funding. For example, it gave the green light for the construction of one of the world’s largest coal ports in Abbot Point and more coal mines and associated rail infrastructure in Central Queensland, including a proposal for the

330 Ironically, Abbott’s attempt to do away with the Commission caused it to be reborn. The Commission’s former leaders fundraised $900,000, at the time Australia’s largest crowdfunding campaign, to continue its mandate but now as a non-profit called the Climate Council.

245 world’s largest export coal mine, the Adani Carmichael project (Hunt 2013, 2014). In April 2014, the government cut the Department of Environment’s budget by 25 per cent and eliminated 250 positions, reducing the capacity of the government to develop and implement climate policy (Department of Environment and Energy 2014). The following month, the 2014- 2015 federal budget cancelled all funding for the Climate Change Authority and slashed the Renewable Energy Agency budget by $1.3 billion over five years. Low Carbon Australia, an energy efficiency investment government agency closed and the Energy Efficiency Opportunities Act was repealed later that year. This ETS repeal, effective 1 July 2014, made Australia the first country to repeal a national carbon pricing regime.

5.5.1 Industry backs repeal of climate policies it supported

The same day that Abbott first introduced legislation to repeal the ETS, the country’s private sector publicly turned its back on the policies that all of these groups, except the Minerals Council, supported under the Rudd and Gillard governments.331 Not surprisingly, the concessionaires did not volunteer to return $5 billion in lump sum payments from these same policies.332 Abbott made no attempt to recoup these costs.

When asked why industry did not resist Abbott’s desire to repeal the Clean Energy Future policies, interviewees stated a range of reasons. For some, it was an interest in short-term financial gain, for others it was a desire to maintain constructive relations with the government. A senior executive at an industry association said:

[…] when someone comes along and says, “Look,” you know, “I’m going to remove this small cost now and large cost later on.” You know, we’re not going to fight that […] Our response was,

331 In a joint press release entitled Industry Groups United: Carbon Tax Must Go, the Australia Chamber of Commerce and Industry, the Australian Industry Group, the Business Council of Australia and the Minerals Council of Australia plainly endorsed Abbott’s position (AUstralian Chamber of Commerce et al. 2013). 332 Brad Page, former CEO of the Electricity Suppliers Association (2004-2011) recalled (A38): “Then, there were general elections, there were changes in government, so of course a brown coal generator that took $350 million in compensation under Julia Gillard’s government and then two and a half years later would have been laughing when Tony Abbott got in and repealed the carbon price. You just would have went, ‘Great! Thanks for that!’”

246 “Well, you’re telling us you’re going to remove this carbon price. If you can go about removing it, make sure you get these bits right.” We didn’t—I don’t think we could reasonably be expected to have come out and said, “No, no, no. You’ve got to keep,” you know, “Even though you got elected from the basis of “Axe the Tax” kind of thing.333

This executive went on to argue that it is also the fiduciary obligation of the company to never support a price on carbon should the option exist to avoid the cost:

And in fact, you can argue—there’s an argument that says legally that […] you have an obligation to maximize your shareholder value. If there’s an opportunity there, why would you go and argue to have an extra $10 million cost imposed on you than you would otherwise. So, there’s that.

The Clean Energy Future package was left with no powerful private sector supporters.334 Even companies without major emissions liabilities were unwilling to disagree with Abbott’s desire to gut Gillard’s climate policies, as they had other pressing policy issues to advance. Peter Castellas, CEO of the Carbon Markets Institute put it this way (A29):

Many large businesses have other agenda items that they want to deal with the government of the day and so I think they—largely, I think Australian large industry associations took a very timid

333 Similarly, Tony Wood, former executive at Origin Energy, explained, “if Labour had stayed in government, the price would have been $10 and if the Liberal Coalition got into government it would be $0. So, why would you do anything that depended on a price of $23 staying in place?” (A14). 334 Former Labor Environment Shadow Minister and MP Kelvin Thomson offered an explanation why large, but non-emissions intensive industries like banks or pharmaceuticals acquiesced to Abbott’s call to repeal carbon pricing (A09): “If the Liberal Party says, ‘Our position is this,’ then they want to go along with that position in order not to annoy them because they have some other fish to fry, you know? The regulation of the banking sector or things on the pharmaceutical health benefits schedule, or whatever. So, they’re cultivating a relationship with government which is multi-layered and complex.”

247 position. And that was probably driven by membership bases wanting to sort of advocate at the lowest common denominator.

Alex Gosman, former CEO of the AIGN, noted the following:

You know, I’m not a believer in fighting hopeless causes, you know. You don’t go tilting at windmills when one, you’re not going to win, and two, you’re going to piss off government. If AIGN came out and said, “We want to support the carbon tax,” we were nowhere near that position. I'll give you that. If we were to come out and say that, we would have been laughed out of town (A19).

Whether it was timidity or fear of being a laughingstock, industry did not resist Abbott’s policy with the same vigour that it had resisted Rudd’s mining super-profits tax. Indeed, Australian industry has a long history of pushing back against government policy that it does not find advantageous. In reality, one of the major reasons these companies opportunistically backed Abbott’s efforts to delay progress on climate change was because of the short-term financial dividends.335

To add to this political morass, competitiveness risks were clearly identified by industry in the early 1990s by industry and still remain nearly three decades later. Climate policy delay has not improved the competitiveness of many of these major emitters. In fact, the uncertainly over climate policy has worsened industry competitiveness through rising power prices. Adam Fennessy, the former Secretary of Environment for Victoria, noted:

[…] the conservative view that a carbon tax or an ETS will add cost to our international exports—that hasn’t come to fruition. What, in fact, I think happened, is because of about 10 to 15 years

335 Tony Wood, Director of Energy Programs at the Grattan Institute, alluded in a Kingdon-esque fashion to the contingent timing of Abbott (A14): “[…] if you can get something done when the politics and the policy align then you’re more likely to be successful. I think that’s what happened when the politics of Tony Abbott aligned with the policy position that resources companies wanted, namely to at least slow down, if not push back on climate change action. It worked beautifully for them.”

248 of uncertainty, the overall cost of our energy system has risen because people are not investing in new supply and that’s putting pressure on our exports (A05).336

5.5.2 Abbott’s Direct Action Plan

In June 2014, the government introduced its first new climate legislation of the Coalition’s Direct Action Plan; it became law by November 2014. Direct Action had remained untouched since Abbott overthrew Turnbull to become Opposition Leader in 2009. The plan included the same emissions reduction target as Rudd and Gillard and a soon-broken commitment to source 20 per cent of Australia’s energy from renewable sources.337 The Emissions Reduction Fund was the centrepiece. Essentially, public funds are redistributed, through a competitive bidding process, to companies to reduce pollution. This turns the polluter pays principle on its head. There is a firm- specific emission baseline, or safeguard mechanism, and companies polluting above this level must purchase abatement units. However, the Direct Action Plan provides numerous flexibility options for calculating this baseline so that essentially no companies are purchasing units, according to Frederic Papon, Director of Climate Change and Sustainability Services at the EY consulting firm (A25). Companies operating below this baseline level get paid by the government. In the first round of funding for the Emissions Reduction Fund, more than three- quarters of the funding went to projects that existed before the fund was created, raising serious concerns about the additionality of the fund (Butler 2017).

The Abbott government moved to further delink climate and energy policy. While shifting the cost to taxpayers, the emissions reductions responsibility was outsourced from major industrial emitters to land management and developing countries. The new government maintained Gillard’s Carbon Farming Initiative, launches a 20 Million Trees Initiative, and provided $200 million to the UN’s Green Climate Fund. The Energy White Paper 2015 only mentioned climate change once and instead stressed the need for cheap and reliable energy supplies (Australian

336 Beyond climate policy uncertainty, an inefficient national electricity market and the export of natural gas, have also driven up domestic power prices. Climate policy becomes a convenient whipping boy — a relatively small cost that becomes the scapegoat for rent-seeking and business-as-usual. 337 The emissions reduction target was five per cent below 2000 levels by 2020.

249 Government 2015). In June 2015, the Abbott government also moved to weaken the Rudd-era Renewable Energy Target for 2020.338

Abbott continued his hostility towards environmental groups while in power. According to my interviews, ENGO access to and influence of bureaucrats and government MPs and Senators reduced significantly. Anna Skarbek, CEO of ClimateWorks Australia, admitted that, “it’s pretty hard to be an environmental lobbyist when it’s just complete stonewalling” (A34). Victoria McKenzie McHarg, Chair of Climate Action Network Australia, described the futility of trying to influence the Turnbull government (A04): “we can go in there with boxes of chocolates and say we want to be besties, but if they’re—if they just don’t want to listen to us, it sort of doesn’t amount to anything.” Many environmental groups decided to shift attention away from Canberra and engage state and local governments and Australians directly, while some groups, such as the Australian Conservation Foundation, attempted to slow the retrenchment of Gillard-era climate policies.339

Unions maintained some access but saw influence considerably decrease under the Coalition government. Lance McCallum, National Campaign Coordinator for the ACTU recalled (A39):

And some [Coalition politicians] are happy for you to come in and listen to what you’ve got to say and hopefully you’ll say a lot and present your case and then they’ll go, “Thanks for that. Go away and prepare to rebut that publicly.”

Peter Colley, National Research Director for the CFMEU put it this way: “The Liberal Party in Australia, which is really the conservative party, is extremely hostile to unions. So, there’s not much point in us lobbying to them about climate change when they’re in government. They

338 The government mandates that 23.5 per cent of estimated electricity generation in 2020 be sourced from renewable energy sources. This is a decrease to 33,000 GWh from 41,000 GWh. 339 The ACF helped to bring in former U.S. Vice President Al Gore to help broker a deal with Clive Palmer, Leader of the Climate Palmer United Party in the Senate. Palmer’s votes were necessary to decide the outcome of Abbott’s legislative repeals. This attempt ultimately failed.

250 won’t listen to us” (A08).340 For example, McCallum went on to describe the futility of trying to influence Abbott’s review of the renewable energy target (A39):

[…] we had a seat at the table when I was at the ETU [Electrical Trades Union]. There were a couple of other unions. And obviously, there were representatives from the industry there, whether it was manufacturing, obviously retailers, generators, etc. I cannot think of one recommendation that was picked up—and this is through an eighteen month to two-year review process—that came from unions. And it was just incredibly frustrating because it was clearly being driven totally by business and not just business, but government-friendly business.

In June 2015, a new and short-lived environmental group, union and industry coalition emerged called the Australian Climate Roundtable. Its membership included many of the usual suspects that had been a part of the Southern Cross Climate Coalition and the Say Yes! Campaign, but now also a number of influential business associations (Australian Climate Roundtable 2015).341 Despite the broad alliance, the Abbott government remained firmly closed to input from such diverse groups.

5.5.3 Turnbull becomes Prime Minister

On 14 September 2015, Coalition Minister and former Leader Malcolm Turnbull became Prime Minister after beating Tony Abbott in a leadership spill. Coalitions MPs at the time noted they only supported Turnbull’s return as Party Leader if he retained Abbott’s climate and energy policies in their entirety (Butler 2017). That month, the Climate Change Authority was stacked

340 Colley explained further the animosity between trade unions and the Coalition: “In Australia, because we are all affiliated with the ALP [Australian Labor Party], there’s a good reason why the Liberal and the National parties hate us, because we’re never going to recommend a vote for them. There’s not even a possibility of it. So that’s why, one reason why, they hate us apart from standard class politics” (A08). 341 The industry members included: the Australian Aluminium Council, the Australian Industry Group, the Business Council of Australia, the Australian Energy Council and the Investor Group on Climate Change. The non-industry members included: The Climate Institute, the Australian Conservation Foundation, WWF Australia, Australian Council of Social Services, and the Australian Council of Trade Unions.

251 with former Coalition politicians and partisans (Hannam 2015). The Authority, which had been a thorn in the Abbott government’s side, issuing independent reports recommending that Australia increase its climate policy ambitions, now grew far less critical of the government, according to David Karoly, a CCA board member at the time (A43).

5.5.4 Preparing for the Paris COP 21 negotiations

In the lead up to the landmark December 2015 UNFCCC COP 21 negotiations in Paris, the Australian Government released Australia’s National Climate Resilience and Adaptation Strategy (Hunt 2015). While adaptation and resilience are important aspects of responding to climate change, this report attempted to shift the attention away from mitigating emissions.

Once again, the Climate Institute was attempting to coordinate NGO demands. They brokered agreements with WWF, ACF, Oxfam and World Vision, among others, to jointly develop messaging and pool resources to fund a Climate Institute staff member to organize efforts. According to Deputy CEO Erwin Jackson (A24):

We played a very strong role in the lead up to Paris to around basically providing information on the national target. But also, to make sure that the strategy that was put in place to make sure that the brief that the bureaucrats had when they went to Paris was broad enough and open enough to give them the flexibility to do their job right within Paris. And if we made a whole bunch of issues public issues, there was a fairly good chance that Abbott would have shut them down. So, we actually needed to run things under the radar quite a lot. And that meant that we actually needed—we played a role in advising the environment groups. “Okay, pick this fight. Don’t pick this one.”

In other words, learning from the success of industry efforts to block climate policy and the previous scattershot approach among the environmental movement, organizations such as the Climate Institute were key in ensuring a focused and consistent policy ask of the Turnbull government.

252 5.5.5 Vehicle Fuel Efficiency Standards

In February 2016, a year before domestic passenger vehicle manufacturing ended in Australia, a discussion paper was released on potential vehicle emissions standards (Fletcher, Hunt, and Frydenberg 2016). Historically, Australia has been the only developed country to have no carbon dioxide emissions standards on vehicles.342 The domestic car manufacturing industry was developed behind a tariff wall in the 1960s and 1970s. Ford, GM, Toyota, Mitsubishi all operated branch plants to build cars to avoid tariff charges. These manufacturers specialized in inexpensive, large, six-cylinder vehicles using old technology exclusively for the Australian market, that would not have met EU or U.S. standards. They argued limiting pollution from vehicles would cause Australia’s auto industry to collapse. Once domestic car manufacturing eventually ceased without greenhouse gas emissions standards, the vehicle importers still lobbied against standards. According to one senior climate advisor for Prime Ministers Rudd and Gillard, the car industry representatives were, “[…] the only ones who just said—they never said the competitiveness word—they said, “this will reduce our profits.” And I did admire the honesty [laughs]” (A06). In short, the case of fuel efficiency standards is another example of a state that had little autonomy from industry. Such climate regulations were perceived as high risk and groups advocating for fuel efficiency standards were delegitimized and excluded from policy networks.

5.5.6 The Finkel Review and the National Energy Guarantee

With the Abbott-era Emissions Reduction Fund not providing major emitters the incentive to reduce emissions or investors with the confidence to invest in new and cleaner electricity generation, power prices and emissions increased. In 2016, the Turnbull government floated the idea of an emissions-intensity scheme but that was quickly ruled it out after protests by energy generators. As part of a legislated review of climate policy in 2017, the Australian Energy Market Commission and the Climate Change Authority recommended a low emission target, a national energy savings scheme and demand management measures. In June 2017, The Independent Review into the Future Security of the National Electricity Market, also known as The Finkel

342 Australia has adopted EU standards for noxious emissions, such as nitrous oxides, carbon monoxide and particulate matter, but not for greenhouse gas emissions.

253 Review, issued its final report (Australian Government 2017). It proposed, among other things, a clean energy target.

With a growing number of institutions pushing for reform of the electricity sector, including reducing emissions, the Turnbull government decided to move forward. In October 2017, the Turnbull government proposed the National Energy Guarantee (NEG). The NEG would oblige energy retailers to contract capacity to meet a) a reliability guarantee on the level of dispatchable energy (i.e., electricity power generation that can be turned on or off) in each state and b) an emissions guarantee to help meet Australia’s 2030 climate objectives. It was this second obligation that proved fatal for Turnbull’s Prime Ministership. Green groups decried NEG’s “woefully inadequate response to the urgent threat of climate change” but said it was better than nothing (Stock and Brailsford 2017: 4).343 Meanwhile, many industry associations held their nose and publicly pressed for NEG’s implementation. Greg Bourne, former CEO of BP Australia, lamented:

So, there’s almost a fleeing to, “Anything will work.” So, the latest one, the National Energy Guarantee debate, which is just, you know, the industry groups have flocked to it and said, “This will do. This will do. This will do.” It has that sort of feel to it, and yet in actual fact, if you actually look at it in deep analysis, it doesn’t leave very much [emissions reductions] for you at all (N26).

Despite tepid industry support of the NEG in March 2018 Abbott along with two other former ministers and a number of backbenchers, created a faction of Coalition MPs called the Monash Forum that advocated for building new coal power plants.344 Tony Abbott was a vocal dissenter

343 One former senior official during the Rudd Gillard government put the NEG debate this way: “Let’s just do something! We’re beyond caring, just do something! So the days where people would fight over technical details—they’re gone.” (A06). 344 Meanwhile, division was growing within the Minerals Council of Australia. BHP Billiton, the world’s largest mining company, in a very rare public sign of sectoral discord, agreed to review its membership with Minerals Council of Australia and the difference in each organization’s position on climate change (Slezack 2017). Headquartered in Melbourne and by far the largest funder of the MCA, this September 2017 move by BHP sent waves through the business community. A week later, the MCA, which was advocating building more coal power stations in Australia, responded by firing its CEO. In March 2018, the MCA had released a revised climate and energy policy that softened their previous positions. A year

254 to the emission limits in Turnbull’s original NEG plan. In mid-August 2018, in an attempt to placate dissent from the conservative wing of the Coalition, Turnbull axed his own plans to legislate emissions reduction as part of the National Energy Guarantee (Murphy 2018b).

5.5.7 Morrison spills Turnbull

On 24 August 2018, Liberal MP and Treasurer Scott Morrison replaced Malcolm Turnbull to become the sixth Prime Minister in eleven years. Unlike Turnbull, Morrison was not an advocate of climate policy in the Coalition caucus. In fact, he was a very strong supporter of growing coal mining and power generation in Australia. In February 2017, Scott Morrison famously brought a lump of coal into the House of Representatives and said, “This is coal. Don’t be afraid. Don’t be scared. It won’t hurt you.” He went on to accuse the Labor Party of having “an ideological, pathological fear of coal” (Australian Parliament 2017).

Once Prime Minister, Morrison quickly followed through on Turnbull’s commitment to drop the emissions reduction component of the NEG and a few months later dropped the NEG proposal entirely (Murphy 2018a). Awaiting a federal election in mid-2019, Morrison has been reticent to implement any major energy or climate policies.

To summarize, the Abbott, Turnbull and Morrison Coalition governments have been marked by major climate policy retrenchment and a failure to broker any major energy or climate policy reforms. During these five years, a weak state was further enfeebled due to budget cuts to newly created climate policy institutions, shrinking bureaucratic capacity. The Commonwealth government’s territorial reach diminished as it withdrew from federal leadership on climate change; states and cities moved to fill the void. The lack of autonomy from industrial interests that had characterized previous Labor and Coalition governments continued under Abbott, Turnbull and Morrison.

A weak state was unable to provide the policy certainty and stability needed by economic and regime elites, resulting in the perception of climate policymaking as a high-risk activity.

earlier, the Australian power company, AGL, left both the MCA and the Australian Petroleum Production and Exploration Association over differences in climate policy. BHP would later withdraw its membership with the World Coal Council on climate grounds.

255 Compared to the previous Labor government, policy networks closed and became less stable, as labour unions and environmental groups saw access and influence diminish. These groups redirected their attention to the subnational level. The federal climate policies that did emerge focussed on shifting the emission reduction responsibility away from major emitters and towards land managers and developing countries.

5.6 Conclusion

“Australia’s energy crisis is the result of special interest politics, essentially, out of control [… and a lack of] any overarching shared analysis of what might produce a public interest response for Australia” -Hon. David Kemp, Australian Minister of the Environment, 2001-2004, (A10)

Australia’s climate policy failure is overdetermined. The high-carbon gearing of its entire economy makes decarbonization exceedingly difficult. Yet, Australia has still tried. The politics surrounding this attempt have arguably toppled five Prime Ministers and resulted in late, narrow and unstable climate policies. This chapter explained how, against the odds, these climate policies came to pass. The story of Australian climate politics underscores that developing, promulgating, and implementing climate policy is not simply a partisan issue grounded in political identities. Party politics only provides a partial explanation. Parties across the political spectrum have struggled. It is also a story of a weakened state, fearful elites empowered by business-as-usual, and unstable and unrepresentative policy networks.

It is not controversial to describe the Australian state as relatively weak on issues related to climate policy. Federalism naturally limits Canberra’s territorial reach.345 The Commonwealth government has very rarely demonstrated independence from major industrial emitters. When the Labor Party was in power, labour unions also wielded considerable influence over government. Canberra’s bureaucratic capacity on climate policy fluctuated over three decades. Meanwhile the private sector’s capacity to engage on climate policy steadily increased. This resulted in growing

345 However, across a wide range of interviewees, federalism was not identified as a barrier to national climate policy. If anything, it provided another level of government where innovative climate policy could take place when there was an impasse at the federal level—refuge from increasingly caustic national climate politics. Diffusion of climate policy was not unidirectional from the states to Canberra; important policies like the renewable energy target began at the national level.

256 information asymmetries between the public and private sector, with the private sector proficiently exploiting this differential when rent-seeking.

It is exceptionally difficult for a weak state to engender confidence among economic and regime elites that climate policy capable of substantially reducing emissions is not a foolhardy venture. The Australian state was unable to frame climate policy in a way that reduced political risk for elites. These elites then moved to restrict policy networks, excluding members with views that threatened business-as-usual for major emitters.

In general, Australia’s climate policy networks are highly unstable and relatively closed. That said, there have been some omnipresent actors. Major private sector polluters always have access and influence, regardless of political party. An ecosystem of industry and business associations ensured that if one coalition expired, there were others that could convey a similar message. This cannot be said of the environmental movement and the centrality of network organizations such as the Southern Cross Climate Coalition. Unions during Labor governments have had good access and influence; however, this privileged position all but disappeared under Coalition governments. Environmental organizations and other NGOs have had spotty access and marginal influence over climate policy in Australia, especially after Rudd abandoned the CPRS. As a result of these uncertain and unrepresentative policy networks, attendant climate policy lacked the support of a broad swath of Australian society and tilted strongly in favour of highly polluting firms.

The failure of Australia’s climate policies is non-partisan. None of the climate policies implemented was sufficiently ambitious or durable to begin the necessary restructuring of the country’s economy. As will be shown in the following chapter, Australia’s climate policy has been unable to reduce domestic greenhouse gas emissions. Fortunately, this does not mean that future climate policy should not be attempted in Australia. There is potential for future policies to reduce emissions and to better manage some of the potential risks related to decarbonization.

257 CHAPTER SIX: Comparative Analysis

This comparative chapter is divided into two parts. In the first section, the three narratives of Australia, Canada and Norway are placed alongside one another, hinged together with the shared analytical framework. This triptych of major fossil fuel exporters from the Global North reveals the common but differentiated challenge to decarbonize.

The second section of this chapter links climate policy outputs with climate policy outcomes by examining how the policy trajectories of these three countries over the past thirty years relates to national greenhouse gas emission trends. It does so by discussing how the political causal mechanisms of framing, outsourcing, positive and negative feedback and policy drift have shaped a country’s emissions profile. While this analysis occurs outside of the framework developed in Chapter Two, it does provide crucial insights into why some countries have been more successful in reducing emissions than others. The chapter concludes by extrapolating from three decades of climate political history to present an informed conjecture of the ability of these countries to transition to a low-carbon economy. The path forward for these highly developed, medium-sized economies will be strongly determined by much greater exogenous political, economic and technological developments. However, if these countries proactively build the governance foundations for a post-fossil fuel world, their respective paths will likely be swifter, with less economic and social hardship.

6.1 Analytical Framework Comparison

Australia, Canada and Norway share many similar political and economic characteristics. They are stable liberal democracies, advanced industrial economies, major primary resource extractors, large exporters of fossil fuels and adjacent to the world’s largest economies. Whatever the initial national driver for action on climate change, all three states were highly sympathetic to acting on climate change when the issue emerged on radar screen of policymakers in the late 1980s. All three countries boast relatively transparent and accountable political institutions, rule of law, and comparatively free and flourishing civil societies. These commonalities can essentially be held constant, permitting a focus on the variation that exists across these three states. The analytical framework emphasizes these differences by examining how state strength,

258 elite risk perceptions and policy networks causally impact national climate policy. This comparative chapter will move through the framework and foreground this variability.

As the detailed case studies suggest, the elements of this analytical framework change to varying degrees over time. State strength is the most resistant to change, while elite risk perceptions, policy networks and climate policy have increasing levels of variability. State strength does not shift significantly from election to election unlike policy networks and climate policy.

A comparative analysis across the different periods of national climate policy making and implementation in these three countries would yield informative insights. Alternatively, abstracting this variation to the entire study period, 1988 to 2018, permits the analyst to focus less on highly contingent, agent-centred moments and more on the enduring political dynamics. However, this summary approach unavoidably sacrifices some of the level of detail and nuance that is found in the country-specific narratives.

6.1.1 State Strength

For climate and energy policy, Norway can be classified as a semi-autonomous strong state whereas Canada is a semi-autonomous weak state and Australia is a weak state. To refresh, state strength refers to state infrastructural power (Mann 1984). It is conceptualized through territorial reach, autonomy from non-state actors and bureaucratic capacity. Given the thirty-year timespan and path dependent dynamics, there is inevitably some feedback from the dependent variable of climate policy on the independent variable of state strength. However, these assessments of state strength are not solely dependent on climate policy observations. They are also operationalized by examining the system of government, the pattern of national government intervention in the energy sector, including management of economic rents, the degree of state ownership, alignment of energy policy with policy preferences of the fossil fuel industry, environmental department budgets, staffing levels, and information asymmetries with industrial emitters. Based on the evidence provided in the empirical case studies, the degree of territorial reach, autonomy and bureaucratic capacity can be measured and result in an overall assessment of state strength using the diminished subtype concept structure explained in Chapter Two (Table 6.1).

Table 6.1: Summary of state strength components by country

259 Autonomy Territorial Bureaucratic Overall from non- Reach capacity state actors

Norway Semi-autonomous strong state High Moderate High

Canada Semi-autonomous weak state Low Moderate Low

Australia Weak state Low Low Low

Territorial reach—the constitutive and legislative ability of national governments to implement climate policy—is high in Norway relative to the other cases. In part, this long arm is a function of the Nordic nation’s unitary government and its small geographic size. It does not have to navigate the quagmire of federalism, unlike policymakers in Canada and Australia who must negotiate across vast distances with powerful subnational governments that own most of the natural resources. In the global wake of neoliberal economic reforms, the Norwegian state remained a large intervenor in its national economy, owning a substantial portion of the country’s publicly traded companies. By contrast, Canada and Australia have seen a decreasing role of the state in the economy as governments sold off state enterprises to private capital. This privatization trend included, but is not exclusive to, major emitting industries. Although, in Canada the Court of Appeal for Saskatchewan ruled in a 3-2 reference case decision in 2019 that a federal carbon tax imposed on provinces that do not have a sufficient plan is constitutional (Court of Appeal for Saskatchewan 2019). This suggests that there may be room for the federal government to implement climate policy against the wishes of provinces on the basis that climate change is an issue of national concern. This would serve to increase the territorial reach of the Government of Canada. The Province of Saskatchewan is appealing this decision to the Supreme Court of Canada.

260 The independence of the state from powerful non-state actors is a critical component of state strength.346 This autonomy is crucial when the state needs to implement policy that will disadvantage those groups that have thrived under high-carbon business-as-usual economic development. Typically, those particularistic interests that have done well include major emitters, unions representing workers in those industries, financiers profiting from free pollution, and subnational governments acutely dependent on resource rents. The reliance of the Norwegian Treasury on fossil fuel-related revenue and the considerable power of the offshore oil and gas industry and labour unions, moderated the government’s autonomy from non-state actors. That said, there were a few cases where the state clearly overruled private sector concerns to implement climate policy. They are Norway’s initial carbon tax on the oil and gas industry and, more recently, electrifying offshore platforms.

In Australia, the state had consistently limited autonomy. Compared to Canada and Norway, Australia is the clearest case of a clientelistic state. Industry in Australia has had a long history of strong influence over government, especially during more conservative governments. During the Rudd and Gillard Labor governments, Australian industry had slightly less influence over climate policy than during Coalition governments, as labour unions representing workers in polluting industries held major sway over the Labor Party’s climate policy deliberations. Regardless of the exact ratio of influence among non-state actors, even during the Rudd Gillard government, the state still lacked autonomy.

Canada has had moderate autonomy from non-state actors. That is not to say that major emitters have not been influential on climate policy. When the typically clientelist natural resources department drove climate policy development, autonomy was more limited than when the environment department took the lead. However, there have been key moments, particularly the original Kyoto commitment and the ratification of the Kyoto Protocol, when the Canadian state did demonstrate independence. Thus, it is difficult to label Canada as a clientelistic state. Canada has also demonstrated long-standing independence from labour unions. Canada’s labour-backed

346 For instance, a 2018 public opinion Pew Research Center survey found climate change to be a major threat identified by 66 per cent of Canadians and 60 per cent of Australians (Pew Research Center 2019).

261 New Democrats have never formed government in Ottawa and so industry has long been unrivalled in its ability to influence climate policy of the Liberal and Conservative Parties.

The capacity of the bureaucracy to raise revenue and develop and implement climate policy is the final integral part of state strength examined in this framework. As with the other facets, Norway remains on top. It faced far less information asymmetry than Australia or Canada. Norwegian bureaucrats have a stronger track record of discerning valid competitiveness concerns from economic rent-seeking. In part, this discernment is possible because of the breadth and depth of data captured by Norwegian regulators and government departments. From the turn of the 20th century when hydropower was nationalized to the development of the oilfields in the 1960s and 1970s, Norwegian policymakers have made a very deliberate effort to exploit the natural resources for the benefit of all Norwegians. The stability of Norway’s climate policies also helped bureaucracies to accumulate relevant competence - evidence of some recursivity or feedback within this framework.

In Canada and Australia, federalism naturally limits the capacity of the national bureaucracy, as expertise and revenue are shared across multiple levels of government. For instance, if the Canadian province of Alberta did not manage natural resources, much of the bureaucratic expertise of the provincial regulator and energy and environment ministries would be subsumed into federal counterparts, increasing the bureaucratic capacity of the federal government. Further, the volatility of climate policies in Canada and Australia, aided by massive cuts to their respective environment departments, served to exacerbate the decline in bureaucratic capacity just as climate change was solidifying itself as a permanent issue of global concern. It is increasingly common practice in these two countries, not unlike many other countries, to regularly employ external consultants, often those employed by industry, to develop climate policy. Interviewees in Australia and Canada, including those from industry, referred to an emasculated government that easily capitulated to industry demands to weaken climate policy. The state acceptance of industry demands was in part because it did not have the knowledge base to question the sometimes spurious claims made by major emitters. While this erosion of bureaucratic expertise may be reflective of secular trends, this loss of capacity still reduced state strength in Canada and Australia, unlike Norway.

262 In short, based on this analysis, Norway can be seen as a strong state relative to the weak states of Canada and Australia. The Nordic nation is unencumbered by federalism or the highly divisive regional energy politics of Canada. Norway may lack full autonomy from the oil and gas industry but since it is the majority owner and operator of offshore oil and gas production, it does not have the same clientelist relations that Australia experiences. While all three countries are dependent on revenue from major emitters, Norway has by far the greatest agency when balancing industry’s particularistic demands with larger societal concerns. Norway’s highly competent and resourced bureaucracy ensures that information asymmetries between industry and government is are kept to a minimum. Meanwhile, the beleaguered bureaucracies of Canada and Australia often lack the information needed to discern when industry is rent-seeking or when it has legitimate competitiveness concerns. Unique to Canada is the extreme trade reliance on the much larger United States, a country with a history of volatile climate policy. This trade relationship ostensibly weakens the Canadian state compared to Norway, which trades primarily with the climate policy leaders of the European Union. In relation to climate policy, the Australian state is neither weakened nor bolstered by its trading partners.

6.1.2 Risk Perceptions

How economic and regime elites perceive political risk shapes climate policy. These perceptions are informed by socially constructed understandings of policy certainty, policy stability and state strength through the causal mechanism of framing. Norway framed itself as an international leader from the very beginning. Thanks to the new term sustainable development, it could frame climate policy as a balance between environmental goals and a growing fossil fuel industry. Business-as-usual was protected. Climate policy, with some rare exceptions, was framed as a competitive advantage for Norwegian businesses and, with some minor exceptions, an enduring source of political consensus. Since the mid-1990s major emitters have had the policy certainty and stability they desired. This assurance was not just from Norway’s climate policy but also, perhaps more crucially, from its highly stable tax and royalty system for the offshore oil and gas industry.

Table 6.2: Summary of economic and regime elite risk perception components by country

263 Policy Policy State Overall Certainty Stability Strength

Norway Low High High High

Canada High Low Low Low

Australia High Low Low Low

In Canada and Australia, economic and regime elites simply did not have confidence that the state could implement climate policy sufficient to meet its emission reduction goals without instigating economic and political peril. The respective federal governments lacked sufficient strength to assuage economic and regime elite concerns. Of course, not all senior bureaucrats or government departments viewed the risks associated with climate policy in the same way. For instance, what was risky for the Ministry for Natural Resources was not for the Ministry of Environment. The dissonance of elite concerns over climate policy both within government or within industrial sectors served to heighten the contention in Canada and Australia. Moreover, both countries enjoyed bipartisan support for expanding fossil fuel extraction, which was subject to strong path dependence, but lacked a corresponding bipartisan resolve for climate action. Only a handful of climate policies have survived a change in government.

In short, Norway’s elites did not see climate policy as a risky venture, as opposed to elites in Canada and Australia for whom climate action was seen as harming business-as-usual. Regardless, status quo fossil fuel development was safeguarded in all three countries.

6.1.3 Policy Networks

Elites and other organized interests interact with the state in policy networks. Networks are crucial sites for climate policy development. The structure of these systems is in part determined by elite risk perceptions through the causal mechanism of framing. Norway’s relatively open networks with stable memberships contrasted with the highly variable networks of Canada and Australia. In Norway, where climate policy was framed by elites as enhancing the competitive advantage of various industries, it was not problematic to have relatively diverse policy network

264 membership. Aided by a corporatist tradition and the country’s small population, the same political parties, business associations, labour unions and environmental groups have been a part of climate policy development for a long time. For the other two cases, which had relatively more fearful elites, early diverse and institutionalized networks quickly became ad hoc and ephemeral. The degree to which non-industry groups were included in climate policy discussions ebbed and flowed with the government of the day.

Table 6.3: Summary of policy network components by country

Network Openness Member Stability

Norway Open High

Canada Variable Low

Australia Variable Low

There was also a common effort among the economic and regime elites of Australia, Canada and Norway to frame the climate policy discussions in a manner that shielded major emitters from potentially injurious emissions reductions. In Norway, this meant a sustained effort to frame the country’s mitigation action as primarily through international forest management, emissions trading, carbon capture and storage, and electric vehicles. It also meant strong linkages with relatively progressive EU-based climate policy networks. For Canada, elites frequently framed the locus of climate policy discussions away from Ottawa towards provinces, municipalities and private sector-led initiatives. Canadian policymakers aligned or dealigned themselves with American climate policy networks when it served to moderate domestic emission reduction efforts. For Australia, elites often steered the conversation away from major emitters and towards networks engaged in land management, climate adaptation or, depending on which party was in government, amplifying the voices of coal-dependent communities or unions representing workers in major emitting industries. This was at the expense of emphasizing the far greater number of workers, businesses and communities that would benefit from having ambitious climate policy. Antipodal elites more often than not eschewed aligning with the increasing

265 climate policy ambitions of Australia’s major trading partners, notably China, and instead routinely collaborated with conservative, climate-skeptical think tanks based in the United States.

For all the countries, there was a shared marginalization of indigenous organizations and of groups that threatened business-as-usual for major emitters. These groups were framed as having insufficient or irrelevant technical skills or, in more extreme cases, as terrorist threats or foreign agents. This restrictive framing, deeply informed by elite risk perceptions, delegitimized voices that could advocate for an absolute reduction of domestic emissions.

6.1.4 Climate Policy

Policy network structure shapes climate policy. Framing and venue shift are two causal mechanisms, among others, that enable this intervening variable to shape policy outputs. By focusing on four aspects of climate policy—namely timing, scope, means, and durability—clear variation emerges between Norway and the other two countries. Norway stands apart from its peers by having early and sustained climate policies that were broad in scope (i.e., covering multiple economic sectors) and were diverse (i.e., consisting of voluntary, regulatory and economic policy instruments) which have largely endured successive changes in governments. Conversely, federal climate policy in Australia and Canada has been late, narrow, limited and ephemeral. Of course, climate policies have varied over time in each country, something which is not necessarily reflected in Table 6.4 below. During the Rudd and Gillard governments in Australia and the Trudeau government in Canada climate policy certainly increased in scope and means. However, many of the Australian policies proved fleeting and it remains to be seen if the Trudeau government’s climate policies can withstand a change of government.

The distribution of costs and benefits were roughly the same across all jurisdictions and thus do not warrant significant attention in the case studies or in this comparison. The winners, at least over the past thirty years, have been major industrial emitters who incurred substantial benefits from polluting for free or close to free. Industrial emitters in Canada and Australia also benefited from generous state financial incentives to pollute more efficiently. The relatively modest cost has been initially borne by the state treasury in all three countries. Meanwhile, climate change- vulnerable populations both domestically and internationally will face significant costs.

266 Table 6.4: Summary of climate policy components by country

Timing Scope Means Durability

Norway Early Broad Diverse High

Canada Late Narrow Limited Low

Australia Late Narrow Limited Low

The structure of policy networks has a clear impact on climate policy. The policy network structure of Canada and Australia were largely similar and led to similar policy outputs. Norway, however, stood apart. There, an open policy network with relatively stable membership resulted in policies that stood in stark contrast to Canada and Australia. Environmental groups had access to an influence over climate policy deliberations; for example, they initiated climate policy discussions on promoting electric vehicles and emissions reductions through forest management, which arguably would not have arisen without their presence in these policy networks. Through framing and venue shift, these policy network members were able to realize these policies.

In Canada and Australia, when networks were closed with unstable membership, the framing advanced by industry and the federal governments was more difficult to challenge, such as during the Harper or Abbott governments. The high cost of climate action was privileged as a frame over the high costs of climate inaction. Network members largely shifted the burden of climate policymaking to subnational governments, other countries or future generations. All too easily, the climate policy which emerged was delayed, limited and narrow. When networks were open and membership stable, such as during the Rudd and Gillard governments or the Trudeau government, climate policy was implemented at a far swifter rate than with previous governments and included a broader and more diverse suite of policy instruments. No longer was industry able to shift the venue of policy away from major industrial emitters.

To conclude this first section, common patterns and key differences have emerged from the comparison of national climate policy development and implementation in Australia, Canada and Norway. The analytical framework provided a valuable tool to systematically contrast and

267 explain the political dynamics among these three states. In particular, this comparative exercise underscored that state strength has a foundational role in shaping risk perceptions, policy networks and the resultant climate policies. An explanation of the success or failure of climate policies must start by examining these basic elements.

6.2 Climate policy trajectories and emission reductions

Up to this point, this dissertation has sought to explain how the national climate policies of Australia, Canada and Norway have come to pass and what political elements can explain the policy variation across these cases. The second half of this chapter extends this analysis beyond my framework and explores the relationship between climate policy outputs and outcomes. In particular, I examine if the thirty-year climate policy trajectories of these three countries have led to significant emission reductions: the ultimate measure of climate policy effectiveness. Aligned with both recent developments in policy design scholarship (Peters et al. 2018) and the worsening climate crisis, linking policy outputs with policy outcomes is increasingly relevant and necessary. I conclude this chapter with a forward-looking discussion on the ability of these three countries to transition and achieve net-zero emissions by mid-century.

This section briefly assesses the national climate policy trajectories of Australia, Canada, and Norway given the last three decades of climate policy. These historic policy trajectories are then placed alongside the emission trends of the last three decades. To better understand the politics that link national climate policies with national emissions, a discussion follows which describes the causal mechanisms at work.

Bernstein and Hoffmann (2018) describe three trajectories that can result from subnational climate governance experiments: 1) unintentional reinforcement of carbon lock-in; 2) improvement or efficiency gains; and 3) transformative decarbonization. These ideal-type trajectories can equally apply to describing the trajectory of a suite of national climate policies, as will be done below.

As demonstrated earlier in this chapter, despite many similarities—including an initial shared interest in being climate policy leaders—Norway, Canada and Australia have experienced unique climate policy trajectories. Norway, a country with relatively early, broad and durable climate

268 policies has set its compass bearing on a different lodestar from its fossil fuel exporting peers of the Global North. For three decades it has consistently led this small club of countries in climate policy ambition. Its climate policies directed at the oil and gas industry have focussed on intensity reductions. It has expanded the coverage of climate policies to onshore industry and transportation and sought international emission reductions through the REDD+ program. When combined, these policies place Norway on an improvement trajectory.

Canada, even though it had a strong start in the late 1980s, struggled to convert this early leadership or political rhetoric into any comprehensive, long-lived, or ambitious climate policy. Despite notable progress with some subnational governments, federal climate policy has not challenged carbon lock-in. While the current government has made remarkable headway, it is too early to tell if these policies will be durable. In sum, Canada’s climate policies lie in between an improvement and reinforcement trajectory.

Australia’s climate policy trajectory has been even more chaotic than that of Canada. Volatility, delay and lack of ambition have plagued efforts to develop and implement climate policy in this highly-carbonized country. Australia’s climate policy is clearly on a reinforcement trajectory.

Reinforcement Improvement Transformation

Australia Canada Norway

Figure 6.1: Climate policy trajectories for Australia, Canada, and Norway based on climate policies from 1988 to 2018.

Given these three different policy trajectories and the basic assumption that climate mitigation policy ought to reduce carbon emissions, one would expect Norway to have reduced substantially its carbon emissions, compared to Canada and Australia. Ironically, this is not the case. Despite clear policy variation in timing, breadth, and scope, all three countries share the same ignominious outcome: none of these countries have experienced absolute emission

269 reductions.⁠347 Between 1990 and 2016, Norway's emissions increased 3 per cent from 51 megatonnes (Mt) to 53 Mt of CO2eq, Canada increased its emissions 17 per cent from 603 Mt to 704 Mt of CO2eq and Australia increased its emissions 31 per cent from 420 Mt to 549 Mt of CO2eq (UNFCCC 2019).348⁠

347 Some critics may say that domestic total emissions reductions is too strict as a goal and emissions- intensity ought to be the primary goal. However, reducing total emissions is reasonable given the latest climate science and the political commitments of these three countries. If we are to avoid runaway catastrophic climate change, current modelling indicates we must rapidly decrease global emissions to net zero around 2050 and likely have negative emissions well before 2100 (IPCC 2018). These emissions reductions must be swift and global, in every country and in every sector. The decarbonization imperative applies to households that consume products and businesses that produce goods and extract commodities. Therefore, reductions in emissions-intensity, while a laudable and important step, do not address the scientific requirement to reduce total emissions. Arguably, major historical emitters such as Australia, Canada and Norway also have an ethical obligation to disproportionately reduce emissions. To the extent that responsibility can be assigned, the current damage from climate change is a result of emissions from these and other wealthy industrialized countries (Matthews 2015).

348 When you consider the greenhouse gases embedded in the fossil fuel exports of these three countries, which are not included in the previous figures, all of their carbon footprints mushroom. If the total carbon embedded in fossil fuel exports is accounted for, then Norway’s emissions would increase ten times (McKinnon et al. 2017).

270

Figure 6.2: Greenhouse gas emissions without land use, land use-change and forestry, in kilotonne CO2eq, 1990 to 2016. Source: UNFCCC 2019.

Of course, these cases reveal three different shades of failure. Australia’s emissions increase is an order of magnitude higher than that of Norway. Except for a small hiatus during the Gillard government, emissions have been steadily increasing in Australia. Also, Canada and Norway’s total emissions peaked in 2007 and since then have been trending slightly downwards. These differences are noteworthy and inform the ability of these countries to transition, which is discussed at the end of this chapter.

In the meantime, a more detailed analysis on the linkages between climate policy outputs and outcomes is crucial. In a technical sense, the origin of this underachievement is easy to ascribe. All three countries sought to expand their fossil fuel industries. A growing fossil fuel industry served to wipeout many emission reductions from climate policy. Not surprisingly, the largest source of emissions and the largest source of emissions growth in all three countries was emissions-intensive industry, primarily oil and gas extraction in Canada and Norway and coal- based power generation in Australia. The transportation sector is also a large source of

271 emissions. In 2016, this sector accounted for 17 per cent of Australia’s emissions, 24 per cent of Canada’s emissions, and 32 per cent of Norway’s emissions (United Nations 2019). The economic wealth generated from a booming fossil fuel industry has knock-on effects, as citizens consume and travel more. The result: rising emissions from industry and transportation eclipsed any pollution reductions from climate policies or from other political economy factors such as the decline in manufacturing in all three countries.

Politically, the explanation is more complex. Five key causal mechanisms can explain how emission reduction policy could lead to emissions growth: framing, outsourcing, positive and negative feedback and policy drift. Some of these mechanisms manifested differently across the cases and not every mechanism is present for individual climate policy instruments, but the final outcome remained the same. The multiplicity of the mechanisms, compared to those linking the elements of the analytical framework, may be a sign that emission outcomes are overdetermined and extremely difficult to change. The next section details how these five mechanisms can explain the political dynamics that link climate policy to emission outcomes.

Framing

Framing, ubiquitous throughout the analytical framework, remains a powerful political mechanism that shapes subjective expectations and evaluations of climate policy success. It plays a powerful legitimating function when assessing the emissions impact of climate policies. By framing policy success differently, different metrics and goals are emphasized. This emphasis drives, in part, whether absolute emission reductions occur. For example, a successful policy outcome in Australia, Canada, and Norway is usually framed as one that sees a reduction in emissions intensity—the amount of greenhouse gases emitted per unit of economic output— rather than absolute emissions reductions, in other words, less overall emissions. This intensity comparison is not only with historical baselines but also with other fossil fuel-extracting countries. In Canada, the oil sands are described as cleaner than coal power, more hygienic than Californian heavy thermal oil and more ethical than Saudi crude. In Norway, its offshore oil and gas industry is heralded as the cleanest in the world and more reliable than oil and gas from its

272 main direct competitor, Russia, and far cleaner than Polish coal.349 In Australia, coal exports miraculously lower global greenhouse emissions because Australian coal is less damaging than Chinese and Indian coal. Regardless of the local particularities, expansion of emissions-intensive industry is unfalteringly framed as reducing emissions. This intensity framing causes attention to be shifted away from a policy outcome of absolute emission reductions to an outcome of emission efficiency. Framing successful climate policy as that which reduces emission-intensity enabled climate policies that perversely incentivized more extraction over the long term. These efficiency improvements follow the logic of Jevons’ Paradox and can partially explain Norway’s emissions trend.350

In all three countries, climate policies are framed as cost-effective and complementary to business-as-usual for major emitters. For example, carbon capture and storage could offset the pollution from Australia’s growing LNG industry, Norway’s increasingly remote offshore oil and gas production, and Canada’s burgeoning oil sands. Yet CCS was highly subsidized in all three countries and after three decades remains cost-effective. Moreover, the absolute emission reductions from CCS in all three countries has been far lower than anticipated.351 The government and industrial emitters focus on intensity-reduction targets, on complementarity with

349 To be clear, some of these attributes of Norwegian petroleum are true regardless of climate policy. For instance, oil and gas are almost always less polluting than coal, regardless of jurisdiction. Interestingly, neither I nor my interviewees, who included senior analysts and executives from the oil and gas industry, could find evidence to support the claim that Norwegian gas is actually displacing coal.

350 Policies, like Norway’s carbon tax or platform electrification, in many instances lower the marginal production cost and extend production horizons. With mature and economically marginal fields, of which there are an increasing number on the Norwegian Continental Shelf, more power is often needed to extract petroleum than from newer and typically more profitable fields. By electrifying some of these platforms, clean onshore hydropower can be used to boost production in fields that may have ceased production earlier or not have entered into production at all. Of course, this electrification decreases the per barrel emissions intensity but it extends overall production, which results in far more overall emissions than if these platforms ceased production.

351 Calculating the emissions outcomes from CCS policy is relatively straightforward. There have been only two full-scale CCS projects in Norway, Sleipner and Snøhvit, which have abated approximately 1.36 Mt per year. Statoil’s 2017 Sustainability Report noted that both projects have stored a cumulative 22.3 Mt of emissions (Statoil 2017). However, both outcomes have been realized not because of the CCS policy but because of the high CO2 content of the gas and due to the carbon price. The Snøhvit LNG processing facility, although less polluting than gas from an LNG facility without CCS, still emits around 1 Mt of emissions per year even with CCS (Delphi Group 2013).

273 business-as-usual, and on cost-effectiveness while celebrating the decoupling of economic growth from emissions.352 These highly successful frames avoid a meaningful policy discussion on what ultimately matters, total emission reductions, while legitimizing expanding domestic fossil fuel production.

Outsourcing

Outsourcing emission reductions is a political act. It shields highly organized major industrial emitters and shifts emission reductions towards other sectors, citizens, developing countries and future generations. Akin to venue shift, except that instead of changing locations of authoritative decision making, outsourcing changes the physical location of emission reductions. The rationale for outsourcing is often because of lower cost abatement elsewhere. In conjunction with other causal mechanisms, such as framing, outsourcing helps to explain why climate policy fails to reduce domestic emissions. For instance, climate policy can exploit outsourcing by shifting the abatement burden away from large industrial emitters. In doing so, the site of emission abatement is shifted to other sectors, to consumers of fossil fuels, to other countries, or to future generations. It is now these other venues, not the fossil fuel industry, that must make decisions to reduce their emissions. If those reductions are not made domestically and presently, then national emissions, the policy outcome, will increase or at minimum, fail to decrease. In part, this inability to reduce emissions is because the largest and fastest growing source of emissions— which in all three countries is the fossil fuel industry—does not face transformational climate policies.

Norway is the most ambitious outsourcer among the three countries. It has spent billions of dollars on international offsets in developing countries through the REDD+ program, despite the 353 program having a questionable emission reduction record. ⁠ Norway has also spent billions of

352 The dominant framing in all three countries is decidedly ecological modernist, where environmental outcomes can be improved via technological improvements (Spaargaren and Mol 1992). As Dauvergne and Lister (2014) contend, an ecological modernist framing ensures business-as-usual at a time when transformational change is needed.

353 It is difficult to calculate the emission reductions associated with REDD+. Payments to some of the countries did not directly lead to emissions cuts but to “REDD-readiness activities,” building the institutions and capacity so that a REDD+ market could be established (McNeill 2015). Adding to the

274 dollars in domestic electric vehicle incentives. Sustained EV policy development can also be seen as outsourcing from the far larger and faster growing source of emissions in Norway: the offshore oil and gas industry, whose emissions have increased 80 per cent since 1990 (SSB 2017). This bait-and-switch manoeuvre has been deployed, intentionally or not, by political parties across the political spectrum to advance climate policy in general but to avoid even more public attention and potentially threatening or contentious measures directed at Norway’s golden goose. Like with REDD+, the EV policy in Norway has and emissions record that is open to question.354 To date, there has been a net emissions increase in road transportation: emissions have risen 10 per cent since 1990 and are the third biggest source of emission in Norway (SSB 2017). Of course, EV policies are not the only determinant of transportation emissions. This growth in emissions is partly a result of modest population increase and the lag time of changing a country’s fleet of vehicles, typically 15 to 20 years.

Beyond Norway, Canada pushed emission reduction responsibilities to the provinces and to future generations as it doubled down on highly polluting oil sands development. Australia staunchly protected large polluters while placing the responsibility to reduce pollution on indigenous land managers and citizens. These are two groups of people that traditionally have fewer resources and a less supportive policy environment than major industrial emitters.

Positive Feedback

At the core of path dependency are positive feedback mechanisms, “through which rules generate consequences that, over time, enhance the power resources of their advocates and

complexity, Norway has also funded many projects that were already operational before 2008. While this likely enhanced the legitimacy of these existing projects and reduced the perceived risk by elites to be involved in these efforts, according to a Centre for Global Development report on Norway’s efforts in Brazil (Birdsall et al. 2014), it has made it difficult to determine just how much carbon has been sequestered by REDD+.

354 At the household level, electric vehicles in Norway are typically second vehicles and result in greater distances travelled per household than those households with a single fossil fuel-powered car (Klöckner et al. 2013). Beyond the unintended consequences of these vehicle incentives, as wealth has increased in Norway, so has household consumption of goods, and its corresponding carbon footprint. A study of the total carbon footprint of Norwegian household consumption from 1999 to 2012 found a 26 per cent increase in annual emissions, a portion of that increase being linked to transportation-related pollution (Steen-Olsen et al. 2016).

275 broaden supporting coalitions” (Jacobs 2010: 96) by providing these actors with cues and information which encourage certain interpretations of the political world (Pierson 1993). Positive feedback is present for those policies where major beneficiaries can rally behind a policy to ensure its continuation. This political dynamic is often portrayed as an ideal situation, one that creates the policy stickiness which can hasten a low carbon transition (Levin et al. 2012). For example, major emitters realize cost savings from energy efficiency initiatives and press government to maintain these incentives. Conversely, as Levin et al. (2012) recognize, positive feedback can also mean that major emitters, who benefit from weak, ineffective climate policies, marshal resources to maintain these policies. Policy change is, far more often than not, incremental and a marginal adjustment of the status quo (Lindblom 1959).

Evidence of positive feedback can be marshalled in all three cases. Notable examples include Norway’s electric vehicle users rallying to maintain generous electric vehicle policies and renewable energy companies and environmental groups pushing to save Australia’s Clean Energy Finance Corporation and Renewable Energy Agency from Abbott’s chopping block. However, the positive feedback dynamics are much stronger when climate policies directly impact major industrial emitters and is an important part of explaining emissions outcomes. Perversely, these large polluters have also benefitted from climate policies that lack the potential for transformative emission reductions. In Norway, the oil and gas sector rallied behind a carbon tax as emissions in that sector mushroomed. In part, this was because the communications benefit that the carbon tax brought for the sector far outweighed any marginal financial cost, as 78 per cent of the stated price could be written off. Large polluters in Canada have long supported intensity-based carbon pricing at the expense of policies based on absolute emission reductions. These intensity-based policies do not threaten the growth potential for major emitters, particularly as exporters are exempt from any carbon price, but enable the government and industry to publicly communicate support for climate action. Amidst Canada’s volatile climate policy, support for an emissions-intensity approach has endured, even among right-wing parties.

Negative Feedback

Negative feedback can occur when actors react to a given policy and attempt to render it less effective (Béland 2010; Jordan and Matt 2014; Weaver 2010). These backlash dynamics attempt to restore the original system. Unanticipated costs to earlier supporters or anticipated costs to

276 earlier opponents can result in a contested policy being overturned. Of note, negative feedback need not lead to retrenchment. It can also cause new policies to replace older policies. In certain circumstances, negative feedback can also attempt to improve the original system. For instance, if climate policies are retrenched a subsequent government can restore these policies. With some exceptions, negative feedback tends to manifest after a change in government.

This causal mechanism is particularly pronounced in Australia and Canada, where climate policy has been volatile. This backlash most auspiciously occurred in Australia when the Abbott government dismantled or neutered many Gillard-era climate policies. For instance, Gillard’s carbon price was a major contributor to an absolute reduction in carbon emissions during the short-lived tenure of the policy. The Rudd-Gillard era was the only time since 1990 when national emissions decreased in Australia. From 2008, when the first Rudd climate policies took effect to 2014, when Gillard’s carbon price was abolished, Australia’s emissions decreased from 535 Mt to 527 Mt, a drop of 2 per cent (United Nations 2016).355 Once carbon pricing was removed by Abbott, national emissions once again began to increase. In Canada, negative feedback was seen in the perennial failure to stick with a climate plan for more than a few years or the more recent delays plaguing implementation of the Trudeau government’s climate policies. Norway has experienced far less negative feedback. However, one instance it shared with the other cases was reneging commitment to the so-called Toronto Target.

Policy Drift

Unlike positive feedback which spurs reactive change, policy drift stresses policy status quo. As the climate crisis deepens, more ambitious climate policy is needed that results in much faster rates of absolute emissions reduction. Yet, policy drift is omnipresent. Hacker (2004: 246) defines drift as “changes in the operation of effect of policies that occur without significant changes in those policies’ structure.” This causal mechanism is present when a group with the power to block policy change resists strengthening the policy despite strong evidence or

355 Excluding emissions related to land use, land use-change, and forestry. Also note that this time also coincided with the Global Financial Crisis which slowed the Australian economy - although not enough to cause a recession.

277 democratic pressure (Hacker 2004; Hacker and Pierson 2010). In short, drift reduces the relative effectiveness of a policy over time simply by staying put. The result is policy stasis. In effect, this stasis is a form of policy change through “nondecisions” (Bachrach and Baratz 1963). Yet, policy stability is often considered fundamental to good governance, even if policies fail to meet stated objectives. The status quo is portrayed as the most sensible, risk-averse option. If climate policy does not clearly foreshadow and enact increasing resolve, policy drift results. In this context, policy stability can become a millstone for future efforts to reduce emissions.

Despite the growing scientific imperative to increase climate policy ambition, the short-term beneficiaries of ineffective climate policy, namely major emitters, their investors and dependent governments, resisted attempts to strengthen climate policy in all three countries. Norway successfully fought off attempts to link opening up new acreage for oil and gas production to domestic climate policy goals or to substantially increase the price on carbon. Australia’s Mandatory Renewable Energy Target has only increased once, under the Rudd Government, despite being in place since 1997. For thirty years fossil fuel producers in Canada and Australia have successfully defused federal attempts for a carbon price. By failing to strengthen climate policy as the climate crisis deepens, these countries and status quo promoters make domestic decarbonization even more difficult.356

In sum, the climate policy histories of Australia, Canada and Norway indicate that each country is on a different policy pathway. Thus far, Australia’s path has reinforced carbon lock-in, Norway’s path is one of improvement, and Canada’s path lies somewhere in between. The emission outcomes of these countries align with these three policy pathways, where no country has reduced total emissions but all have experienced different degrees of emission gains. There are many possible explanations why climate policy has not resulted in absolute emission reductions. The most obvious explanation in all three countries is the growth of the fossil fuel sector, followed by a rise in fossil-fuelled transportation. These economic factors swamped any

356 It could be argued that beyond simply promotion of the status quo, promotion of incremental climate policy can be seen as a form of policy drift. The science-based urgency to reduce emissions has increased tremendously over the past three decades, despite climate policy in these three countries clearly not keeping pace. In this way, drift can result from small forward steps in a context when large leaps are needed.

278 emission reductions from effective or potentially effective climate policy. While not disputing this explanation, it does not provide insights on the politics behind the implementation of climate policies. To better understand the political relationship between climate policy outputs and emission outcomes, evidence is marshalled regarding five key causal mechanisms. These political insights can help policymakers chart a new climate policy pathway that is more likely to lead to transformative decarbonization. The next and final section of this chapter will transpose the learnings from the past thirty years of climate policy in Australia, Canada, and Norway onto the future and offer informed conjecture on the potential for net-zero emissions in these countries.

6.3 Looking Forward: the Potential of Decarbonization

Given the shared struggle to reduce total emissions, are Australia, Canada and Norway doomed to a high carbon future? No, some hope remains. This need not be an existential crisis for these countries. Failure to reduce total emissions after three decades of climate policy does not mean the next thirty years will spell no change for each country. Norway, Canada and Australia are on different pathways to a shared low carbon future. Factors beyond these countries will, in all likelihood, compel national change. However, domestic decisions will still largely shape the ability to hasten this transition and to make it more durable and just. Decisions by policymakers within these countries can help to better manage the risks and opportunities from absolute reductions of domestic emissions.

6.3.1 Norway

Norway offers the most hope. There, the state remains relatively strong. Its long territorial reach endures. To spur transformative domestic emission reductions the state must actively reduce its reliance on oil and gas-related revenue. This is happening as profits decrease from the oil and gas industry and as Norway’s sovereign wealth fund continues to grow and decarbonize. This trillion-dollar fund’s investment income already exceeds the state’s proceeds from the oil and gas production and can help support economic diversification and worker retainer programs.357 As

357 In 2017, revenue from Government Pension Fund Global was just over 1 trillion NOK, over five times the net government revenue from the oil and gas industry (Norges Bank Investment Management 2018;

279 the reliance of the Treasury on oil and gas revenue decreases, it will become much more possible for a managed decline of oil and gas production. This is also arguably less difficult with a largely state-owned company that is responsible for three quarters of total oil and gas production than with a host of privately-owned companies. As state reliance on the oil and gas industry for revenue and employment decreases, autonomy will increase from non-state actors, primarily oil and gas companies and unions representing workers in that sector. Bureaucratic capacity on climate policy, already high, will increase further as decarbonization efforts proliferate across the Norwegian economy. This is already being seen in the state’s electrification policies for electric vehicles and maritime transport and with ambitious goals for freight transport and aviation (Lemphers 2019).

For Norway’s economic and regime elites, status quo fossil fuel-driven economic development is increasingly seen as a risky venture. Statoil has rebranded itself as Equinor, ostensibly redacting the word ‘oil’ from its moniker. The Norges Bank Investment Management, which manages the state’s sovereign wealth fund, seeks a full divestment from all fossil fuel investment, not simply a partial divestment from coal and some oil sands companies. The state fund has recently divested from all upstream (i.e., only exploration and production) oil and gas companies. The Progress Party, the most right-wing party of the ruling Conservative coalition, has dropped all of its previous climate skepticism and has embraced Norway’s political consensus on climate change. Meanwhile, some domestic environmental groups are growing increasingly bold in pushing for no more expansion of the oil and gas industry. In 2019, a majority of Parliament agreed to not explore or produce oil around the Lofoten Islands. Moreover, the mainstream business press is increasingly raising the issue of stranded assets as offshore development pushes further North. Once seen as far too costly, domestic emissions reductions are increasingly seen by Norway’s elite as wealth-generating. Norway’s once-mighty shipbuilding industry has the prospect of reinventing itself as the leading builder of zero emissions ships and exporter of low- emission maritime technologies (Lemphers 2019).

Norwegian Petroleum 2019).

280 Norway’s climate policy networks are likely to become even more open and stable. As the perceived risks of reducing carbon emissions continue to fall and the economic opportunities increase, more actors are joining these networks. Beyond the aforementioned maritime transport industry, non-hydro renewable energy developers will be increasingly present in Norwegian policy networks as profitability rises. Automotive dealerships that are now selling more hybrid and battery electric vehicles than fossil-fuelled cars are beginning to positively engage in climate policy development. There is no sign that existing climate policy network members will be forced out, regardless of the government of the day. Also, as the EU continues to increase its decarbonization ambitions, Norway will continue to be pulled into its orbit.

As more actors pile on and as the number the number of beneficiaries increases, climate policy in Norway will likely remain broad and durable. Currently, there is increasing civil society pressure for emissions reductions to occur on home soil or territorial waters, rather than shifting that obligation to other nations. This pressure will only increase. Unlike Canada and Australia, there has been no major coordinated effort to repeal any major climate policies in Norway. In fact, the opposite is happening. The number of climate policies is increasing and is likely to expand over time.

Compared to Australia and Canada, Norway will most likely be the first to decarbonize. Norway’s domestic emissions peaked in 2007 and are very slowly decreasing. As climate policies broaden and domestic markets for low-carbon technologies mature, there could be the potential to see transformative decarbonization. For instance, there are increasing signs that Norway’s EV policies are now starting to reduce overall emissions in the personal transportation sector, a trend that will surely continue.358 Norway’s strong state and emboldened elites and civil society make it the most likely candidate for substantial absolute emission reductions. The state treasury is decarbonizing and other sectors of the economy are growing, while actors promoting keeping fossil fuels in the ground are gaining access and influence within policy networks. However, this vision is highly dependent on the fate of Norway’s oil and gas industry. On one hand, if the country continues to exploit increasingly distant and depleted reservoirs and grow

358 Between 2016 and 2017, Norway experienced its largest ever year-to-year drop in road transportation- related emissions, 9.5 per cent (SSB 2018).

281 the industry, emissions intensity will increase and may likely negate the gains made elsewhere in Norwegian society. On the other hand, the relatively high production costs of Norwegian gas compared to hydraulically-fractured shale gas or reduced demand for gas from the European power sector may curtail access to capital needed to exploit these reserves, making substantive reductions in domestic emissions much more possible. Clearly, the fate of Norway’s oil and gas industry is not completely determined by domestic policy decisions. That said, Norwegian policymakers do have some control over the rate of change and the degree of hardship faced by its citizens. Norway’s climate policy history and recent trends suggest that the country is well placed to be the first major fossil fuel exporter to achieve net zero emissions.

6.3.2 Australia

As with previous energy transitions, Australia’s ability for transformational emission reductions will be very strongly influenced by external forces. This does not mean that domestic decarbonization will not occur; rather, it will very likely be delayed and highly contingent on factors beyond the control of Australian policymakers, such as access to capital markets, commodity prices, and breakthrough technologies. Given the long history of weak climate policy, disruptive technology that is foreign-developed and manufactured, international capital markets, and global commodity prices will be defining pacesetters for Australian decarbonization. Of course, these exogenous forces also shape the transition for Canada and Norway. However, long-standing clientelist relations between major industrial emitters and policymakers in Australia may increase the uncertainty and inhibit the ability for the state to be prepared for change. As a result, Australia may capture fewer domestic benefits than Norway and Canada and likely worsen the suffering for negatively impacted workers and communities. Of course, leadership from certain subnational governments, companies or civil society groups may catalyze change in Canberra. However, given the inconsistent engagement of these domestic actors on national climate policy over the past three decades, future sustained effectiveness is questionable.

The strength of the Australian state may increase somewhat as it decarbonizes. While it is reasonable to assume the territorial reach of the Commonwealth government will not change, the state’s autonomy from non-state actors, particularly the coal industry and unions representing coal workers, will increase. This newfound independence will be the result of growing

282 profitability and adoption of non-coal power, cost-effective energy storage technologies, the collapse of coal export markets, and diminished access to international capital. Bureaucratic capacity may continue to rise incrementally but perhaps not fast enough to keep pace with paradigmatic change in global energy markets.

Australian business and political elites may desire to live in a splendid, highly carbonized isolation. However, they may also follow the lead of growing numbers of elites in the United Kingdom and the United States and reject coal while seeking to profit from decarbonizing Australia’s economy. What is assured is that the economic risks from unsubsidized renewable energy and other low-carbon technologies, such as electric vehicles, will decrease as prices continue to fall. As the power grid concurrently decarbonizes, the industrial elites who have long sabotaged the development of ambitious climate policy may ease their concerns as the true high costs of coal power are laid bare. Australian civil society will increasingly press elites to accelerate the transition and provide a clear plan. In this environment, the political risks from status quo climate policy will rise dramatically.

Climate policy networks may change. The hyper-polarized political environment around climate change shows no sign of abating in Australia. In the near future, this means continued oscillations between open networks and closed, industry-dominated networks. This could diminish as business elites push the Liberal Party to meaningfully reengage on climate policy. The increasing coordination between labour unions and environmental groups and the rise in rural activism against fossil fuel development are positive signs but may be of little impact if these organizations cannot leverage that into access and influence within climate policy networks.

The resultant climate policy could arguably be unstable and highly risk-averse. In other words, this would equate to a continuation of traditional Australian climate policy. However, the focus may change. More funding could once again flow to carbon capture and storage as a technological saviour for the failing coal industry. Australia’s investments in LNG will continue to rise as the country’s extractive heritage lives on. Undoubtedly, national climate policy in Australia will be highly contingent on global commodity demands and externally-imposed technologies.

283 As one of the most carbon-intensive developed countries in the world, Australia’s emission reduction opportunities are legion. Emissions will likely decrease; however, the rate of decline remains anyone’s guess. Future greenhouse gas reductions could just as easily have nothing to do with national climate policy. For example, they could be the result of shifting consumer preferences, asset retirement and external forces.359 The social and economic dislocation will be particularly acute for many rural, coal-dependent regions in Australia. Unless the many benefits of a decarbonized society can tangibly reach these communities, climate politics in Australia will remain unnecessarily divisive.

In sum, the pace of decarbonization in Australia will likely be determined by forces outside the country’s control. However, these exogenous forces will create opportunities for domestic political actors to lessen the acute harm from decarbonization and create economic opportunities. Just as a strong Australian state managed the economic dislocation caused by trade liberalization in the 1980s, so too can Australia manage the dislocations from decarbonization if it strengthens its governance foundations.

6.3.3 Canada

Canada’s ability to transition is not assured. Unlike Norway, this other Arctic nation currently lacks the state strength needed to decarbonize. Political and business elites continue to push for expansion of the fossil fuel industry. As international oil companies leave the oil sands, Canadian investors and companies are buying up these assets and banking on business-as-usual. Modest attempts by the Trudeau government to intervene have been met with fierce resistance by the oil and gas industry, its workers and the provinces where these fossil fuels are extracted. If the past three decades provide any lessons, they are advancing climate policies without addressing Canada’s foundational governance shortcomings is a recipe for climate policy failure.

That said, there are glimmers of change. With respect to climate and energy policy, the Trudeau government stopped the multi-front retreat of the federal government witnessed during the

359 Approximately 25 per cent of Australia’s coal power capacity is anticipated to retire within a decade (IEA 2018b). No new coal-fired generating capacity has been built since 2009 and there are no private sector proposals to build any at the present (IEA 2018b). However, the Coalition government has considered requiring existing private coal power plant operators to continue operating at a loss.

284 Harper government. It has attempted to expand the territorial reach through the leadership of the Pan-Canadian Framework on Clean Growth and Climate Change and the federal carbon price backstop with its citizen-issued climate dividends. Canada is attempting to be more autonomous from non-state actors. A modernized National Energy Board, a new federal environmental assessment process, and the appointment of senior environmentalists to influential political posts speak to this attempt. The Liberal government is also seeking much more than the previous government to diversify Canada’s economy. Initiatives are underway to improve bureaucratic competence. New institutions have been proposed to provide better policy advice to governments and Canadians on energy transitions, improve transparency and accessibility of energy and climate data, and deepen the in-house climate change modelling capacity.

Many of these policies are valuable and over time will slowly strengthen the state and improve the ability for Canada to transition. However, they also lack coherence. Some new initiatives, such as increased subsidies for LNG projects or the nationalization of an oil sands pipeline, work at cross-purposes with domestic decarbonization. There is also no political consensus on these new steps. It remains highly uncertain if these new policies will prove durable beyond the Trudeau government.

For Canada to successfully transition, its business and political elites will have to consistently and vocally advocate for stronger climate policy and oppose attempts to claw back existing policies. History has demonstrated how these elites can come around and support certain climate policies when the government provides clear signals that it is moving forward. In Canada, this coming around could be seen in the unprecedented private sector support of Trudeau’s carbon pricing. But, doing nothing remains a highly tenable option, as exemplified by the federal Conservative Party or its counterparts in Ontario and Alberta. With increasing climate policy polarization there is currently nothing preventing the same retrenchment of national climate policy in Canada that was witnessed in Australia during the Abbott government.

This fickle or highly contingent position on climate change means policy networks for the near future will likely remain unstable and unintegrated with broader economic policy.360 However,

360 For instance, in 2018 Industry Canada roundtables for natural resources sector promoted a 40 per cent

285 there are some signs of improvement, such as the development of a federal Task Force on Just Transitions for Canada’s coal industry. Expanding the scope of the Task Force to include the oil and gas industry remains, for the time being, out of the question.

As government and industry seek to expand the production of oil and gas, decarbonization in Canada will likely remain elusive for some time. This will place even more pressure on future generations in Canada to curb carbon pollution. As with Australia, this strategy also ties the hands of decision makers, making them captive to many forces beyond their control. In this context, rapid global adoption of new technologies, such as connected, autonomous and shared electric vehicles, could devastate unprepared and poorly diversified oil exporting nations, especially those with high-cost oil sands or LNG facilities. By consistently avoiding planning for the decline of these major industries, Canada hamstrings its ability to lessen the attendant social and economic suffering for oil and gas-dependent communities and to more fully realize the benefits of a competitive, low-carbon economy. Moreover, Canada’s extreme trade dependence on the United States—a country known for its volatile federal climate policy—makes it even more risky for Canadian policymakers to lead on climate policy.

In short, while the last thirty years have borne witness to the challenges of implementing effective climate policy in Canada, the next thirty years will need to show a markedly different approach to the politics of climate change if the country is to largely decarbonize by mid- century. The role of the state will be central to hastening the transformation and ensuring it does not leave any one behind.

6.4 Conclusion

In summary, this chapter leveraged the dissertation’s analytical framework to compare the climate policy histories of Australia, Canada and Norway. I found significant policy variation between Norway and its peer countries. Canada and Australia, when examined over the entire thirty-year period, exhibited remarkably similar political dynamics. However, these dynamics arguably varied in amplitude: Australia had more extreme manifestations. For instance, the

increase in oil and gas exports (Government of Canada 2018f).

286 clientelist state had even less autonomy from non-state actors and more volatile policy networks than Canada.

The second half of this chapter examined the political relationship between the climate policy trajectories and the emission trends of these three countries. It outlined five causal mechanisms that link climate policy with emissions outcome: framing, outsourcing, positive and negative feedback, and policy drift. While there are important differences in the degree of emissions increase in each country, there were many shared political dynamics that have made absolute emission reductions unobtainable for all three countries.

The chapter concluded by extending the framework into the future to speculate on the ability of these three fossil fuel-exporting nations to achieve decarbonization. This prospective analysis found that all three countries will be highly shaped by external forces. Technology diffusion, commodity and capital markets, and major trading partners will be key determinants of future change. Nevertheless, some agency does remain for the state to modify what this change looks like. As outlined further in the concluding chapter, states can use their semi-autonomous status to strengthen their infrastructural power and deepen democracy. By shoring up their governance foundations, states and societies can better weather climate change.

287 CHAPTER SEVEN: Conclusion

“You cannot solve a problem using the same thought process that created it.”

-attributed to Albert Einstein

Is the story of climate policy in Australia, Canada, and Norway just another case of economic interests trumping any attempts to meaningfully reduce greenhouse gas emissions? The economic interests of those who have prospered from pollution, be they industry or the state, are a potent political force which can explain some of the resultant climate policy in these three countries. Bookstores and libraries are full of academic and journalistic accounts of the unprecedented and overwhelming influence of a rapacious fossil fuel industry and a feckless state that is captive to or shares expansionary industrial interests (Meyer 2010; Schulman 2014; Coll 2012; Pearse 2007; Sampson 1975; Hoggan and Littlemore 2009). This is not a new story. However, it glosses over the actual complexity present in climate policymaking. Interest-based accounts fail to explain the climate policy variation within Australia, Canada, and Norway. They also fail to consider how interests can evolve over time as they interact with ideas to shape institutions. That is why an interest-based explanation cannot untangle why elites would support a certain climate policy and subsequently advocate for its removal or why states sometimes override the interests of the fossil fuel industry.

An interest-based explanation minimizes the semi-autonomous role of the state, the power of civil society and potency of ideas. The state need not be viewed as a puppet of the polluters or immune to a clamorous public. There is more room to manoeuvre than interest group accounts may suggest. This additional room is crucial if Australia, Canada, and Norway are to implement more effective climate policy that can reduce absolute emissions and mediate some of the avoidable negative economic impacts on communities and workers dependent on fossil fuel extraction that will accompany decarbonization.

This chapter begins with the main argument and empirical contribution of this dissertation. Then, the theoretical implications are discussed. Next, the policy implications and recommendations emerging from this dissertation are shared. Following this, future avenues of inquiry are outlined before I provide a few concluding thoughts.

288 7.1 Argument and Empirical Contribution

My framework explains why the climate policies of Australia, Canada and Norway are so varied and why, regardless of the initial drivers of concern on climate change in each country, responses from sympathetic governments were able to make headway and entrench policies in some cases but not others. I argue that the governance foundations of each country can explain the climate policy variation. State strength, but also elite risk perceptions and policy networks, explains why switching governments can mean slow shifts and easy policy reversals in some countries or swift and durable change in others.

In short, state strength matters. It is the first link in the causal chain. It connects governance at the micro and macro levels. A strong state can placate elite concerns, restructure policy networks and create ambitious climate policy. In so doing, a semi-autonomous state can also deepen its democratic commitment and enhance its legitimacy. It can increase its independence from powerful vested interests and tilt the policymaking process to favour voices that both accept the decarbonization challenge and present solutions.

Norway, a relatively strong state, has the territorial reach, autonomy from powerful interest groups, and bureaucratic capacity that Australia and Canada lacked. The Nordic country’s main trading partner is the EU, an ostensible climate policy leader. Consequently, Norway could calm elite concerns over the political risk from climate policy, and open and stabilize its climate policy networks. The result: Norway was able to lead early and create broad, diverse and durable climate policies.

Canada and Australia are relatively weak states with major trading partners that are known as climate policy laggards. As a result, these two states could not allay elite concerns over many proposed climate policies. In some cases, this was even when the anticipated economic cost to major emitters was not significant. Policy networks were unstable and often constricted. The resultant national climate policy was late, narrow, and volatile, especially for Australia. At the same time, both countries rapidly expanded their fossil fuel industries.

Despite the variation in state strength and climate policy, all three countries had a similar outcome: a failure to reduce absolute greenhouse gas emissions. The expansion imperative of

289 fossil fuel production eclipsed state or civil society interventions to substantively reduce emissions - the ultimate measure of climate mitigation policy effectiveness. However, this is not a uniform story of carbon lock-in. Norway’s emission increase was an order of magnitude less than Australia’s and six times less than Canada’s increase. Even though Norway’s territorial reach and bureaucratic capacity are already high, there remains potential to further increase the third aspect of state strength: autonomy from non-state actors. For instance, if the Norwegian state signalled to elites that it can finance its welfare state, generate export earnings, and employ Norwegians whilst not relying on fossil fuel extraction, then arguably the perceptions of economic and regime elites to the political risks of transformative climate policies could diminish. Using the logic of my analytical framework, it follows that those environmental groups that call for a managed decline of fossil fuel production could no longer be excluded from mainstream climate policy networks. If that were to happen, the odds of ambitious policies being implemented that could lead to absolute emission reductions could likely increase. Instead, business-as-usual governance prevailed.

This analysis does not feign that climate policy and potential emissions reductions are the sole result of domestic institutions. Exogenous factors, such as the influence of major trading partners, technological change, and commodity markets will continue to play a key role in decarbonization regardless of domestic policy decisions. As my analysis on the ability for these three countries to transition and as my policy recommendations indicate, policymakers in Canada, Norway and Australia must, for the most part, take these external conditions as a given and learn how to better navigate and shape domestic institutions to help realize more effective climate policy. The seemingly fixed economic interests of a fossil fuel-producing state to extract ever more fossil fuels can be, and indeed must be, shifted.

Given the inertia of business-as-usual, implementing climate policy without bolstering state strength amounts to mere window dressing. Indeed, the noisy debates around policy instruments and settings can be likened to quarrelling over which type of defective good is best, ignoring the quality of the goods, their provenance or, most importantly, their effectiveness. Three decades of a scattershot approach to addressing climate change has paid insufficient attention to the foundational politics of environmental governance. Indeed, most policy shapers and academics have focussed on implementing and evaluating singular policies to the detriment of looking at

290 the bigger political picture. Rather than obsessing about a certain policy instrument and its setting, far more fundamental questions must be asked. What political conditions are needed to implement a suite of policies that could decarbonize the country? What policies are working at cross-purposes with this net-zero emission imperative? By tackling these larger questions, enduring and seemingly immutable political dynamics and interests can be shifted. Rather than reinforcing business-as-usual, a new political environment can be fostered that catalyzes far more ambitious, coherent, just and effective climate policies.

This investigation has illuminated how constrained climate policy is by the time it is announced by politicians. However, the background elements of state strength, elite risk perceptions and policy networks appear to be less constrained than the climate policy that emerges from them. These three elements may be less politicized and subject to less contestation by major emitters. That is not to say shifting these foundations is easy; however, it may be less hard than continually repeating a highly constrained policy making process and hoping for different outcomes.

This first-ever comparative analysis of the climate change policy and politics of Australia, Canada and Norway provides a detailed understanding of the foundational politics that need to change in these countries. Indeed, the state can augment its strength in a democratic manner, even in decentralized federations such as Canada, as detailed in the section on policy implications and recommendations later in this chapter. Through this enhanced capacity, the state can better calm elite fears and, in turn, open the door, create room and legitimize the decarbonizing voices of civil society.

7.2 Theoretical Implications

The dissertation has relevant theoretical implications for the comparative environmental politics literature, particularly scholarship on the green state.361 Briefly, the green state literature has two major strands. One strand emerges from normative and green political theory and focuses on the

361 As discussed in Chapter One, the empirical puzzle engages numerous academic literatures. However, for the sake of brevity, the discussion on theoretical contributions will be limited to the comparative environmental politics literature.

291 green state as a normative or utopian ideal. It views the hallmark social, economic and political goals of the state as being grounded in ecological sustainability and biocentricity (Christoff 2005a). Eckersley (2004: 2) presents a definition of the ideal green state:

By ‘green state’ I simply do not mean a liberal democratic state that is managed by green party governments with a set of programmatic environmental goals, although one might anticipate that is most likely to evolve from liberal or social democratic states. Rather I mean a democratic state whose regulatory ideals and democratic procedures are informed by ecological democracy rather than liberal democracy. Such a state may be understood as a postliberal state insofar it emerges from an immanent (ecological) critique, rather than an outright rejection, of liberal democracy.

The second strand views the green state as an empirical phenomenon whose performance can be compared across countries (Dryzek et al. 2003). These comparisons are largely among advanced industrialized democracies and welfare states (Bäckstrand and Kronsell 2015). This dissertation contributes to both strands.

This section outlines three main theoretical contributions. First, this dissertation helps to bring the state back into comparative environmental politics. While the state was brought back to the broader comparative politics subfield long ago by such scholars as Skocpol (1985) and Krasner (1984), the state has been long neglected within comparative environmental politics (Purdon 2015; Bäckstrand and Kronsell 2015; Duit 2014). Recent scholarship has focussed on non-state, sub-national or transnational governance, as national governments and intergovernmental organizations struggle with governing climate change (Hoffmann 2011; Bulkeley et al. 2014; Bulkeley et al. 2010). This dissertation emphasizes the unique and critical role that states play in providing the governance foundations needed to decarbonize domestically. Indeed, states have unique power and authority to respond to this unprecedented collective action problem. They can facilitate positive environmental change, and not simply environmental harm (Barry and Eckersley 2005).

292 The second theoretical contribution of this dissertation is to refine the theoretical focus of the green state literature. In particular it develops linkages that can reconcile the green state literature with economic and environmental imperatives. Green state scholarship remains under theorized; particularly for climate governance, it lacks systematic empirical evidence (Bäckstrand and Kronsell 2015). Studies of comparative environmental performance over the past decade have focussed on comparing policies, modes of governance and institutions (Wurzel, Zito, and Jordan 2013). Less attention has been given to the role of state action and the broader state polity in shaping environmental outcomes. State strength is not alone sufficient to create a green state. Eckersley (2004) argued that Scandinavian countries bear the closest resemblance to an ideal green state. Of the three countries compared in this dissertation, Norway is the closest to an ideal. However, the Nordic country still has much work to do if it is to reduce absolute emissions and truly become green. Successful policy outcomes must be central to achieving green statehood. Thus, this dissertation helps to link understandings of green states theoretically with climate policy development and performance. In particular, it provides theoretical refinement on key variables and causal mechanisms that can hasten or delay climate policy that can realize the environmental imperative of transformational emission reductions.

Beyond linking green state theory to environmental outcomes, this dissertation also tethers the green state literature to the economic imperative facing countries in the 21st century. The economic necessity to grow the fossil fuel industry is a driving force behind the failure of all three states to reduce emissions, including the so-called green state of Norway. Barry and Eckersley (2005) see the imperatives of economic growth and capital accumulation as barriers for the development of the green state. This sentiment is also shared by neo-marxist theorists, critical political ecologists and proponents of the metabolic rift theory, who are skeptical of ecological modernization theory. As explored in Chapter Six, by considering the need for absolute emission reductions—and not simply policy outputs or emissions-intensity—this dissertation confronts the challenge of reconciling capitalism’s growth imperative with science- based climate action. In doing so, it theorizes critical political linkages between climate policy and emission outcomes.

Third, this dissertation provides theoretical insights into the transformative and democratic role of the state in addressing environmental issues. Green political theory often stresses the power of

293 social movements and the crucial role of deliberations of civil society in the green public sphere. By contrast, it minimizes the role of the state in facilitating a green transformation and creating deliberative and democratic spaces (Dryzek et al. 2003). In part, this can be explained by a strong anti-statist influence among green political theorists (Bookchin 1990). For them, the state is a problem and not a solution. In contrast, my research has shown this assumption does not always hold; the state can also be a crucial part of a solution.

State strength matters but it is critical that it be inclusive. A state having long territorial reach, autonomy from non-state actors and high bureaucratic capacity need not be democratic or result in a healthy environment. Indeed, Ward et al.(2013) found that rising state capacity in authoritarian states can result in worse environmental outcomes, including CO2 levels. Thus this dissertation proffers that to hasten an ecological democracy a strong state is needed, but it cannot ignore the risk perceptions of economic and regime elites, and it cannot have closed policy networks consisting solely of representatives from major emitters and the state. This finding is similar to Vogel’s (2018) explanation of why California has consistently been a progressive green leader. He attributes the latter to citizen mobilization, business support and state capacity. My analytical framework suggests that civil society and the private sector have a key role to play in the ecological transformation of the state. In particular, the meaningful inclusion of civil society in the formal policymaking process can increase the legitimacy of climate policy and the state more generally. This inclusion also holds the potential for civil society to influence the development and implementation of climate policies that, in addition to being legitimate, are also more effective at reducing absolute emissions. Again, this structured involvement does not have to come at the expense of environmental deliberations in the public sphere, outside of formalized channels. The role of social movements in these communal spaces is key for changing norms, advancing new policy ideas, generating coalitions and building capacity. However, these formal networks are where much of the heavy lifting of policy development takes place. Re-balancing these networks can make a difference. If those voices that have the most to gain from implementing climate policy capable of decarbonizing the country are favoured, then transformative climate policy and emissions outcomes are arguably more likely. That is not to say, these transformations are inevitable. The entrenched interests of industrial emitters and a state dependent on revenue from emitters still exist at present. However, over time, as the state

294 gradually strengthens and the views of elites shift, partly in response to changing domestic politics, reforming these networks will be increasingly possible.

In sum, this dissertation provides valuable theoretical insights on the role of the state and non- state actors in climate policy development and implementation. It refines theories of the green state by reconciling the current economic growth imperative and the exigent need to reduce greenhouse gas emissions. And lastly, it also deepens the theoretical understandings of an inclusive and democratic green state.

7.3 Policy Implications and Recommendations

Refining theories of the green state is an undoubtedly useful academic outcome of this dissertation. However, given the limited time we have to solve or brace for the climate crisis, theory must be complemented with near-term action. A new approach to climate policy is needed. In many countries, the climate policy debate is all too frequently lost in the technical details. In Norway, but especially Canada and Australia, public deliberations over complex minutiae have failed to deliver climate policies that decarbonize. These sophisticated policies may reduce emissions intensity but they have not reduced absolute emissions. Without attending to the foundational political barriers to decarbonization, new climate policies will likely remain unsuccessful.

Consequently, this section will focus on practical interventions that can help a generate a broad range of climate policies that are likely to be more effective at reducing emissions than previous efforts. Beyond helping to explain climate policy development, the analytical framework employed here can be leveraged to provide insights on how to develop policies. As stated earlier, state strength, elite risk perceptions and policy networks are foundational political elements in building a durable, legitimate, and effective climate policy regime. This section is an analytical corollary to the comparative case study. It highlights a suite of potential policies that may not be directly related to climate policy but would serve, among other positive things, to help realize the shared commitment of advanced economies that are major fossil fuel exporters to reduce total

295 emissions.362 In short, these policies help to shift seemingly fixed economic interests and provide the political undergirding for the green state.

Rather than rely on exogenous forces to overcome carbon lock-in and hasten a zero-emission society (Unruh 2002), which leaves little agency for states or non-state actors, these recommendations are in the spirit of recent trends in policy studies to focus on process-oriented versions of policy design over a technocratic approach that assumes a tabula rasa political environment (Peters et al. 2018). As called for by Levin et al. (2012: 123), these recommendations aim to create path-dependent interventions that can “constrain our future collective selves” from avoiding transformative emission reductions. This applied forward reasoning must be enhanced if we are to develop and implement policies capable of decarbonization. To do this, we need to focus on strengthening the governance foundations.

7.3.1 Strengthening the Green State

The state is a key influencer of elite risk perceptions and shaper of policy networks. As such, it needs to be re-envisioned to more intentionally support national efforts to reduce emissions and position the domestic economy to thrive in a low-carbon world. Strategic interventions should take place to grow bureaucratic competence, leverage territorial reach, and increase autonomy from non-state actors.

Growing Bureaucratic Capacity

For all countries examined here, but particularly Canada and Australia, bureaucratic capacity or competence can be increased. This could help to reduce both the likelihood of regulatory capture and information asymmetry between the state and major emitters. Three key actions can help accomplish this:

1) Hire and promote those from more diverse professional backgrounds

362 Some of these policies are implemented in one of case countries and can serve as a model for other countries.

296 This includes people with a broader range in formal training and job experience. In all three countries, economists have been at the forefront of leading climate policy discussions. These economists have approached and framed climate policy discussions in ways that ill-considered many fundamental social and political barriers to successful policy implementation. The skills and recommendations of economists are essential for good climate policymaking, but need to complemented by other bases of knowledge and skills training. By hiring more non-economists and promoting them to positions of climate policy influence, the state will be better equipped to consider the seemingly irrational reactions to econocratic approaches to climate policymaking and to balance economic interests with other interests (e.g., Self 1975).

2) Flexibility in hiring to attract and retain high-skilled employees

Outside of Norway, government officials noted the difficulty in enlisting the country’s top talent. Modest government salaries often cannot compete with the lucrative private sector. These specialized skills can sometimes only be accessed via private sector consultancies. This is not only expensive but also limits the ability for these skills to be retained within the bureaucracy. Instead, the government should improve its ability to hire people with valuable experience from the private sector, labour unions, environmental groups or indigenous organizations. Increasing public sector salaries could be one avenue. Promoting more mid and late-career hiring within the bureaucracy or allowing bureaucrats to leave for extended secondments could also help to increase bureaucratic capacity.

3) Strengthen government-based energy and climate policy analytics

Beyond reforming human resources practices, part of improving bureaucratic capacity is increasing the policy analytical capacity of governments (Howlett 2009). In Australia and Canada, it is not uncommon for the state to outsource analytical work to third-party consultants or have major emitters pay a significant portion. This enables industry to have a major influence over the analysis, which is then used to shape elite risk perceptions of climate policy.363 This was

363 Frederic Papon, Director of Climate Change and Sustainability Services at EY Australia (A25): “So, assisting this [EITE] sector, which is usually more an industry association - to put forward the case [for financial assistance] is one thing that required a lot of modeling, a lot of analysis, as well as making sure—so, there are some—it’s a complex thing because you need to disclose to the government enough

297 most clearly seen in Australia’s ABARE but is also present with the analysis of Canadian Energy Research Institute. The federated status of both of these countries and the division of responsibilities among levels of government make consistent data collection more challenging than in unitary Norway. Creating an equivalent of the United States’ Energy Information Administration would create a clearinghouse of reputable analysis for all parties that considers climate science and the country’s decarbonization imperative.364

Extending Territorial Reach

Federalism, especially in Canada, has been cited as a reason for ineffective climate policy. A constitutional division of power across different levels of government can facilitate venue shifting and divide and rule tactics. Thankfully, the solution need not be as drastic and difficult as constitutional reform. These four recommendations, directed at the relatively weaker national governments of Australia and Canada, work within the existing constitutions whilst serving to lengthen their respective reach.

1) Improving emissions oversight of a national power grid

For the two federations, development of electricity generation and power grids has traditionally been left to subnational governments. In Australia, the National Electricity Market brings together the grids of five subnational regions. The federal government enforces rules developed by state and territorial governments via the Australian Energy Regulator. These rules do not promote pollution reduction. In Canada, electricity markets are highly balkanized and have far greater grid interties with the United States than with adjacent provinces (Bakx 2016). Constitutionally, Ottawa and Canberra have the authority to manage interprovincial trade, including electricity, and to manage pollution that can cross provincial and national boundaries. Both federal governments could examine the emission reduction potential, as well as prospective cost and reliability efficiencies by having a national power grid managed by the federal

but not too much […] Because there are things that companies don’t want to disclose. So, it is a fine line exercise.” 364 Canada’s March 2019 federal budget committed funding to establish an energy information clearinghouse based at Statistics Canada (Government of Canada 2019). However, its implementation remains uncertain given the upcoming fall election.

298 government. These potential efficiencies could be sufficiently large to overcome the traditional resistance of subnational governments (Topp 2019).

2) Redistribute more benefits directly to citizens

Allowing provinces to manage the lion’s share of climate policy is the traditional path of least resistance and also least emissions reductions. Subnational governments, especially those dependent on large industrial emitters, can seek to block the redistribution of benefits to low- emitting citizens while directing subsidies to large polluters. By having household-directed climate policies at the national level, the federal government can encourage citizens regardless of where they live, to reduce emissions. This was most recently seen by the Trudeau Government decision in November 2018 to provide a climate dividend to low and middle-income households to offset the costs of a federal carbon tax. Similar redistribution through federal electric vehicle incentives or energy efficiency programs would put the benefits directly in the hands of voters.365 It would also, ideally, grow the number of supporters for these policies so that they are less likely to be repealed. Of course, as Australia’s history suggests, federal climate policy can be repealed even with citizen-directed benefits. No singular recommendation in this final chapter is sufficient to realize domestic decarbonization, but they are all arguably necessary.

3) Manage the decline of the fossil fuel industry

A managed decline of the fossil fuel industry could entail phasing out subsidies and ratcheting down the supply of fossil fuels. Scaling back and eventually eliminating state support of the fossil fuel industry can be accomplished through ending fossil fuel production and consumption subsidies, ending industry access to export developments banks and federally-backed political risk insurance, and requiring industry to pay for reclamation costs as they occur. Albeit difficult, states should divest from all direct ownership of fossil fuel companies or related infrastructure. This will re-balance the risks away from the state and towards fossil fuel companies and their investors.

365 Canada’s 2019 federal budget also committed to municipality and household-directed energy efficiency grants and electric vehicle rebates (Government of Canada 2019). Details on implementation will only be revealed after the upcoming election.

299 As the state ceases to promote the fossil fuel industry, it can also deliberately wind down the use and export of fossil fuels. National governments have the right to issue import and export permits for fossil fuels. In some cases, the national government has the authority to reduce fossil fuel production. While this is ostensibly a strong departure from existing policies, it is not unheard of. As recently as 2018, Alberta used production quotas to limit the amount of oil on the market with the aim of lifting the market price through reduced supply. Using quotas would enable domestic fossil fuel producers to potentially receive a higher price but also accomplish the desired public goal of accelerating domestic decarbonization. Of course, state assistance would be needed for location-relevant worker training and economic diversification for communities dependent on fossil fuel extraction.

4) Increase state financial interest in low-carbon technologies

The same dynamic of path dependence that has made it difficult to transition away from fossil fuel use can be used to accelerate the transition. By leveraging the state’s risk-bearing capacity, the perennial need to sustain and grow fiscal revenue and promote regional economic development, national governments can make similar interventions with pollution-free industries as they have with pollution-generating industries. For example, this can be done through ownership in renewable energy companies or electric vehicle manufacturing facilities. Investments could be financed through expected tax revenue, in a similar way that municipalities can use tax increment financing to pay for infrastructure, through economic development projects, or through the central bank or government-controlled institutional investors.

Improving Autonomy from Non-State Actors

There are many ways to increase autonomy from non-state actors, particularly powerful interest groups. These four recommendations focus on daylighting current influence and creating a more level playing field among non-state actors.

1) Electoral Reform: Money and Votes

While this may seem unrelated to climate policy, removing the corporate and union money from election campaigns may reduce the overt influence that these actors have on the electoral platforms of political parties. While corporate and union donations are banned to varying degrees

300 in Norway and Canada, there is currently no limit in Australian politics. Further, proportional representation can be another way to more accurately reflect the views of citizens in a national parliament. In the case of Canada, the majority of its citizenry have voted for parties that are in favour of stronger climate policy. Yet under a first past the post voting system, a majority government can be elected with under 40 per cent of the popular vote. In contrast, Norway has long had proportional representation, which can partially explain why climate policy has long been a priority for governments, regardless of coalition composition.

2) Clear, Stable and Just Low-carbon Transition Plan

Developing a clear, stable and just plan for a decarbonized future is key to withstanding attempts to derail progress by major emitters and their allies. Clarity and stability enable a compass bearing to be set and increase the likelihood that milestones will be achieved. A procedurally and distributionally just plan makes it more likely that citizens, including those who are most vulnerable from climate change and from a transition away from fossil fuels, will have a fair say in the plan’s development and its distribution of benefits and burdens.

3) Isolate and Decarbonize Fossil Fuel Revenues

To wean the state of its dependence on sustained or growing fossil fuel-related revenues and reduce its risk exposure, states can gradually isolate the associated income from taxes, royalties, leases, or dividends, in a fund that does not invest in companies that are major fossil fuel extractors. A fixed portion of the revenues of this fund could be used by the state treasury but this portion would not be contingent upon the price or domestic extraction rate of fossil fuels.366

4) Empower Civil Society and Indigenous Peoples’ Organizations

Addressing the historical dominance of the private sector, particularly major industrial polluters, in climate policy deliberations by privileging civil society and Indigenous peoples’ organizations would likely result in more effective and ambitious climate policies. Of course, that is not saying

366 Norway has started on this path. In March 2019, the government divest is sovereign wealth fund of stocks of oil and gas companies purely involved in exploration and production (Norwegian Ministry of Finance 2019). This move follows previous actions to divest from major coal producers.

301 private sector voices are not valued. Rather, industry’s views need to be placed alongside many other voices that represent a broader and more enduring array of interests. These interests reflect more than a narrow conception of fiduciary obligation.

7.3.2 Reducing Elite Risk Perceptions

Strengthening the state could reduce the concerns of elites regarding the economic and political risks of climate policy. In particular, framing climate policy as certain and stable could allay elite concerns.

1) Promoting a zero-emission society as inevitable and beneficial

Beyond providing the obvious clear guidance on future changes to climate policy (e.g., a fixed, long-term schedule of carbon price increases or periodic policy reviews) and state ambition (e.g., a low-carbon transition plan), policy certainty can be fostered by state and non-state actors framing domestic decarbonization as inevitable. This can be done through increasing public awareness of existing and emerging best practices in reducing emissions, domestically and internationally. State and non-state actors both have a role to play. By increasing the frequency and the volume of the drumbeat that the world is moving towards a zero-emission future, climate action will become normalized and will likely be perceived by business and political elites as a less risky endeavour.

For nearly two decades, the dominant frame in climate policy debates was the steep cost of climate action. That started to change with the 2006 Stern Review which tallied the global cost of inaction. Now, as low carbon technologies mature and costs decrease, there is a more tangible evidence of the economic and social benefits of decarbonization, not simply the highly discounted and often diffuse environmental benefits. State and non-state actors should stress not only the inevitability of a low carbon future but also that it is a beneficial outcome that could be realized for the vast majority of society.

2) Striving for a broader consensus on climate policy

While a societal consensus on climate policy may seem increasingly out of reach in Canada and Australia, it remains a lynchpin for reducing elite risk perceptions. Socialized health care is not a

302 risky policy for elites in these countries because no major segment of society disagrees with its importance. While not always possible, striving for a consensus on climate policy among political parties, subnational governments, Indigenous organizations and civil society helps to avoid the climate policy retrenchment and polarization seen in Australia and Canada. Efforts in Canada such as the Pan-Canadian Framework on Clean Growth and Climate Change are potential harbingers of an emerging consensus. Electoral reform and the following policy network recommendations could also help grow a climate policy consensus.

7.3.3 Democratizing Policy Networks

The structure of policy networks is heavily influenced by elite risk perceptions but it can also be intentionally shaped by the state. Indeed, the state can aid in opening policy networks and encouraging member stability without constraining the views of network members. By formalizing and resourcing policy networks, the dominant views of major industrial emitters can be re-balanced towards the rest of society. In doing so, this reform can help democratize climate policymaking.

1) Create and maintain permanent and independent stakeholder bodies

Major emitters and other private sector actors often have the resources to fund a network of industry and business associations to collectively advance their interest. This is often not the case for environmental groups and other civil society actors, particularly in Australia and Canada. If these civil society umbrella organizations do exist they are often poorly resourced and appear only during certain policy windows. By facilitating the creation of permanent consultative bodies, resourcing these institutions and protecting their independence, the national government can stabilize policy networks, ensure these networks remain open to new members, and increase the likelihood that the government is receiving high quality and representative policy advice from a broader section of society.

2) Establish proportional caucuses within multistakeholder advisory bodies

As climate policy is developed and implemented, governments sometimes maintain multistakeholder advisory bodies. However, due to the great discrepancy in the financial resources between private and non-profit sector, it is not uncommon for industry representatives,

303 particularly from major emitters, to greatly outnumber representatives from other relevant groups, such as environmental groups or Indigenous organizations. Establishing a proportional caucus would help to keep the influence of major industrial emitters in check with the interests of civil society.

3) Build mutual understanding within multistakeholder advisory bodies

Industry and government interviewees often noted the lack of technical expertise of environmental and Indigenous representatives in multistakeholder bodies. Re-envisioning these bodies as sites to build mutual understanding could make these bodies more useful to all parties. Non-industry members could improve their technical understanding and industry members could better appreciate the knowledge, values and insights of non-industry members. In so doing, a diversity of views on these advisory bodies would be promoted.

7.4 Avenues for Further Inquiry

There are several avenues of further inquiry given the findings of this dissertation. The generalizability and limitations of this study guide these future efforts. The analytical framework was generated abductively from pre-existing theoretical insights and subsequent fieldwork. As a result, to test the explanatory power of the framework, the framework needs to be applied to additional cases. While the universe of cases for advanced, liberal democracies with major fossil fuel exports is highly limited, unexplored cases still remain. These cases have varied antecedent conditions that can provide insights into the generalizability of my findings and the potential for other explanatory factors, thus reducing the likelihood of omitted variable bias. For instance, countries such as the Netherlands and Denmark, both of which have unitary governments, fossil fuel sectors, and considerably different climate policy regimes, may also provide insights on the role of a system of government in climate policy formation. Examining the climate policies of coal-rich Germany—a federal state but also a coordinated market economy—could shed more light on the role of different types of capitalism on climate policy formation.

It is uncertain if the framework could explain climate policy variation in fossil fuel-exporting countries of the Global South. While some theorizing of state strength had its roots in the nations of the Global South, it is unclear if the views of elites or the structure of policy networks matter

304 as much as they do in Australia, Canada and Norway. Application of this framework to countries like Nigeria could be another area of future research and potentially further increase the generalizability of these findings. However, as with the resource curse literature, the failure of these countries to decarbonize is arguably even more overdetermined than countries in the Global North. A rapidly growing population and economy, lack of access to energy, and limited institutional capacity all make climate policy development and emissions reductions even more difficult in these countries.

This dissertation examined a handful of causal mechanisms that link the causal chain. There are arguably other mechanisms at work that may carry causal force. For instance, layering, when policies are overlaid on existing policies and there is differential growth between these old and new policies, is another causal mechanism (Streeck and Thelen 2005). Power reproduction, where elites preserve power by promoting institutional change to augment their own power, by promoting like-minded successors, and defending against influence from outsiders, could yet be another causal mechanism to investigate (Gibson 2005).

Linking to the theoretical implications of this dissertation, future research could explore the tension between a strong state and a democratic state. Dryzek (2003) has noted that in Norway there has existed, at times, a tension between an inclusive strong state and the lack of a public sphere that could challenge the state. By exploring the role of cooptation, policy practitioners and civil society organizations can better understand the challenges to decarbonization and democracy that are posed by formally including NGOs into the decision making process.

In short, additional research is needed not only to test the framework advanced in this dissertation, but also to examine other causal explanations or tensions inherent in the framework.

7.5 Concluding Thoughts

Over the past three decades, unique climate policy trajectories have evolved in Norway, Canada, and Australia. Norway has managed to pull far ahead of its fossil fuel producing peers of the Global North and implement early, broad and durable climate policy. This study has found that the governance foundations quietly supporting the garrulous climate policymaking process are instrumental in shaping the resultant climate policy. Insights from these three countries suggest

305 that a strong state with assuaged elites and representative policy networks can enable countries to develop climate policy faster and with fewer reversals compared to those countries with weak states, fearful elites and unrepresentative policy networks.

Looking beyond climate policy to the ultimate effectiveness of these policies in reducing emissions, a more challenging path is illuminated. Regardless of the notable variation, climate policy in Australia, Canada and Norway is essentially status quo fossil fuel policy. The perceived benefits of having climate policy that does not jeopardize the economic benefits or production forecast from the fossil fuel industry outweighs nearly all attempts to significantly reduce absolute emissions. Rather than curtail overall carbon emissions, these countries pursued marginal efficiency gains while seeing fossil fuel production and absolute emissions from the industry increase and national emissions flatline or increase. Given the shared failure of all three countries to reduce absolute emissions, it is evident that even Norway’s governance foundations must be further braced if climate policy will begin to meaningfully reduce total emissions.

Despite the lack of progress, remaining on a high-carbon development pathway is far from inevitable. As always, exogenous factors or events beyond the control of domestic political actors can push these three fossil fuel exporters onto a different track. Disruptive technology, severe weather events, shifting international capital and commodity markets are likely to be key drivers in domestic decarbonization. However, the climate policy fate of these three countries is not solely determined by these highly contingent forces. As revealed by this comparative case study, domestic political factors also play a key role in shaping responses to climate change. While still constrained, the state has more room to manoeuvre than interest-based accounts suggest. Strengthening the state opens up the possibility to both deepen democracy and bolster state legitimacy as the world prepares to ramp up global decarbonization.

306 List of Interviewees

The positions of interviewees are those at the time of the interview.

Norway

N01) Tore Killingland, Special Advisor, Climate and Energy Policy, Norsk ole & gass (Norwegian Oil and Gas Association), 27 January 2017

N02) Einar Lie, Professor of Economic History, University of Oslo, 3 February 2017

N03) Anonymous, Climate Advisor, anonymous oil and gas company, 9 February 2017

N04) Helge Ryggvik, Economic Historian, University of Oslo, 10 February 2017

N05) Anne-Beth Skrede, Advisor, Landsorganisasjonen i Norge (Norwegian Confederation of Trade Unions), 14 February 2017

N06) Silje Ask Lundberg, Director, Naturvernforbundet (Friends of the Earth Norway), 14 February 2017

N07) Hege Marie Norheim, Consultant, Spencer Stuart (former Senior Vice President, Statoil), 15 February 2017

N08) Anders Bjartnes, Editor, Energi og Klima (Energy and Climate), 16 February 2017

N09) Hans Olav Ibrekk, Policy Director, Section for Energy, Norwegian Ministry of Foreign Affairs, 16 February 2017

N10) Stein Paul Rosenberg, Senior Advisor, Norwegian Ministry of Foreign Affairs, 17 February 2017

N11) Kristin Halvorsen, Former Minister of Finance (Socialist Left Party), 20 February 2017

N12) Klaus Mohn, Professor, University of Stavanger Business School (former Chief Economist, Statoil), 21 February 2017

N13) Eirik Wærness, Senior Vice President and Chief Economist, Statoil, 21 February 2017

N14) Three anonymous employees of the Norwegian Petroleum Directorate, 22 February 2017

N15) Anonymous, former Senior Vice President, Statoil, 22 February 2017

N16) Kjetil Lund, former State Secretary, Ministry of Finance, 27 February 2017

N17) Anonymous, Senior Official, Ministry of Climate and Environment, 28 February 2017

N18) Kjetil Almstadheim, Political Editor, Dagens Næringsliv, 6 March 2017

307 N19) Ellen Viseth, Political Advisor, Bellona (environmental group), 6 March 2017

N20) Frode Alfheim, Vice President, IndustriEnergi union, 16 March 2017

N21) Petter Nore, Chief Energy Analyst, Ministry of Foreign Affairs, 16 March 2017

N22) Jeanette Moen, Head of Policy Department, and Jorgen Kaurin, Advisor, Fellesforbundet union, 20 March 2017

N23) Anonymous, former State Secretary, 20 March 2017

N24) Anonymous, government official, 20 March 2017

N25) Ola Storeng, Economic Affairs Editor, Aftenposten, 3 April 2017

N26) Anonymous, government official, Ministry of Climate and Environment, 4 April 2017

N27) Per Rune Henriksen, Labour MP, 29 May 2017

N28) Marius Holm, CEO, ZERO (environmental group), 29 May 2017

N29) Leiv Lunde, Director of Strategy, Ministry of Foreign Affairs, 31 May 2017

N30) Gunnar Steinsholt, Advisor, Fagforbundet union, 1 June 2017

N31) Erik Solheim, Executive Director, United Nations Environment Program (former Minister of Environment, Socialist Left Party), 3 June 2017

N32) Tord Lien, Former Minister of Petroleum and Energy (Progress Party), 6 June 2017

N33) Tina Bru, MP, and Tony Tiller, Advisor, Conservative Party, 7 June 2017

N34) Johan Nic Vold, former oil and gas senior executive, 9 June 2017

N35) Gunnar Berge, former Minister of Finance, former Director General of Norwegian Petroleum Directorate, 12 June 2017

N36) Harald Norvik, former CEO, Statoil, 12 June 2017

N37) Julie Lødrup, former union secretary, Norsk Tjenestemannslag union, 13 June 2017

N38) Morten Wetland, former advisor to Prime Minister Gro Harlem Brundtland, 14 June 2017

N39) Frederic Hauge, Founder and President, Bellona (environmental group), 22 June 2017

Canada

C01) Stephen Hazell, Adjunct Professor, University of Ottawa Law School, (former head of several environmental groups), 12 April 2017

308 C02) Michael Martin, former Deputy Minister, Environment and Climate Change Canada, 12 April 2017

C03) Michael Horgan, Senior Advisor, Bennett Jones LLP, (former Deputy Minister, Finance Canada and Environment Canada), 13 April 2017

C04) Richard Dicerni, former senior civil servant, 17 April 2017

C05) Michael de Souza, journalist, National Observer, 17 April 2017

C06) David Runnalls, Senior Fellow, Smart Prosperity Institute, (former President, International Institute for Sustainable Development), 18 April, 2017

C07) Ian Shugart, Deputy Minister, Global Affairs Canada, (former Deputy Minister, Environment Canada), 18 April 2017

C08) Anonymous, Researcher, Canadian Labour Congress, 18 April 2017

C09) Clare Demerse, Federal Policy Advisor, Clean Energy Canada, 19 April 2017

C10) Anonymous, federal official, 19 April 2017

C11) Anonymous, official, Government of Canada, 20 April 2017

C12) Senator Grant Mitchell, former Vice Chair, Senate Energy and Environment Committee, Senate of Canada, 21 April 2017

C13) Anonymous, senior official, Government of Canada, 21 April 2017

C14) Anonymous, environmental non-governmental organization stakeholder, 24 April 2017

C15) Tim Weis, Ministerial Advisor on Climate Change, Alberta Environment and Parks, 24 April 2017

C16) Bob Weber, journalist, Canadian Press, 25 April 2017

C17) Andrew Leach, Associate Professor, Alberta School of Business, University of Alberta (former Chair, Notley Government Climate Leadership Panel), 25 April 2017

C18) Heather Eckert, Associate Professor, Department of Economics, University of Alberta, 25 April 2017

C19) Ricardo Acuña, Executive Director, Parkland Institute, 25 April 2017

C20) Anonymous, former senior official, Government of Alberta, 26 April 2017

C21) Jeremy van Loon, former Calgary Bureau Chief, Bloomberg News, 26 April 2017

C22) Kevin Taft, former Leader of the Alberta Liberal Party, 27 April 2017

309 C23) Graham Thomson, political columnist, Edmonton Journal, 27 April 2017

C24) Melville McMillan, Professor Emeritus, Department of Economics, University of Alberta, 28 April 2017

C25) Robert Skinner, Executive Fellow, School of Public Policy, University of Calgary (former oil and gas executive), 1 May 2017

C26) Colleen Volk, Deputy Minister, Alberta Energy, and Robert Savage, Assistant Deputy Minister, Intergovernmental Relations, Alberta Climate Change Office, Government of Alberta, 2 May 2018

C27) Charlie Fischer, former CEO, Nexen (oil and gas company), 2 May 2017

C28) Jon Mitchell, Vice President, Environment and Sustainability, Cenovus Energy, 3 May 2018

C29) Pierre Alvarez, former CEO, Canadian Association of Petroleum Producers, 3 May 2017

C30) Gaetan Caron, former Chair and CEO, National Energy Board, 4 May 2017

C31) Ed Whittingham, Executive Director, Pembina Institute (environmental group), 4 May 2017

C32) Anonymous, senior energy analyst, 4 May 2017

C33) Jim Ellis, President and CEO, Alberta Energy Regulator, 5 May 2017

C34) Anonymous, senior executive, electricity generation company, 14 June 2017

C35) Mike Beale, Assistant Deputy Minister, Environment and Climate Change Canada, 27 July 2017

C36) André Plourde, Professor of Economics, Carleton University, 29 August 2018

C37) Michael Cleland, former senior official, Natural Resource Canada (former President Canadian Electricity Association), 5 October 2018

Australia

A01) Tom Arup, Media Manager, Australian Conservation Foundation, (former environment reporter and editor at The Age), 28 September 2017

A02) Graeme Pearman, Director, G.P. Consulting, (former Head of Atmospheric Science, Commonwealth Scientific and Industrial Research Organization), 28 September 2017

A03) Anonymous, former senior federal official, 2 October 2017

310 A04) Victoria McKenzie-McHarg, environmental campaigner, Climate Action Network Australia, 4 October 2017

A05) Adam Fennessy, Partner, EY Australia, (former Secretary of Environment, Victorian Government), 4 October 2017

A06) Anonymous, former senior federal official, 5 October 2017

A07) Tristan Edis, clean energy researcher, (formerly with Australian Greenhouse Office, Grattan Institute, Clean Energy Council), 9 October 2017

A08) Peter Colley, National Research Director, Construction, Forestry, Mining and Energy Union, 10 October 2017

A09) Kelvin Thomson, former federal Labor Party MP and former Shadow Environment Minister, 10 October 2017

A10) David Kemp, former Minister of Environment, Liberal Party, 10 October 2017

A11) John Thwaites, Professor, Chair of Monash Sustainable Development Institute, Monash University, (former Victoria Deputy Premier and Minister of Environment), 11 October 2017

A12) Alan Oxley, trade expert, ITS Global, 17 October 2017

A13) Peter Cosier, former Environmental Policy Advisor to Environment Minister Robert Hill, 17 October 2017

A14) Tony Wood, Director, Energy Program, Grattan Institute (former energy industry executive), 20 October 2017

A15) Ken McAlpine, former Chief of Staff to the Energy Minister of Victoria, 20 October 2017

A16) Anonymous, industry association official, 23 October 2017

A17) Oliver Woldring, former Advisor, Australian Greens, 23 October 2017

A18) Miles Prosser, Executive Director, Australian Aluminium Council, 24 October 2017

A19) Alex Gosman, former CEO, Australia Industry Greenhouse Network, 24 October 2017

A20) Allan Behm, former Chief of Staff, Minister of Environment, Labor Party, 25 October 2017

A21) Anna Reynolds, former Executive Director, Climate Action Network, 27 October 2017

A22) Adam Morton, former Environment Editor, The Age, 27 October 2017

A23) Christine Milne, Senator and former Leader, Australian Greens, 30 October 2017

311 A24) Erwin Jackson, Strategy Advisor, Energy Transitions Hub (former Deputy CEO, Climate Institute), 31 October 2017

A25) Frederic Papon, Director, Climate Change and Sustainability Services, EY Australia, 31 October 2017

A26) Greg Bourne, former CEO of WWF Australian and BP Australia, 3 November 2017

A27) Anonymous, former senior federal official, 6 November 2017

A28) Ross Garnaut, Professor of Economics, University of Melbourne, 6 November 2017

A29) Peter Castellas, CEO, Carbon Markets Institute, 8 November 2017

A30) Robert Hill, former Minister of Environment, Liberal Party, 10 November 2017

A31) Hugh Saddler, Honorary Associate Professor, Crawford School, The Australian National University, 13 November 2017

A32) Andrew Leigh, MP, Labor Party, 14 November 2017

A33) Clive Hamilton, Professor of Public Ethics, Charles Sturt University, 15 November 2017

A34) Anna Skarbek, CEO, ClimateWorks Australia, 16 November 2017

A35) Mitch Hooke, former CEO, Minerals Council of Australia, 17 November 2017

A36) Frank Muller, Climate Policy Advisor, New South Wales Government, 24 November 2017

A37) Howard Bamsey, former senior official, Department of Foreign Affairs and Trade, 24 November 2017

A38) Brad Page, CEO, Global Carbon Capture and Storage Institute, 27 November 2017

A39) Lance McCallum, National Campaign Coordinator, Australian Confederation of Trade Unions, 28 November 2017

A40) Anonymous, campaigner, Australian union, 28 November 2017

A41) Rowan Foley, General Manager, Aboriginal Carbon Fund, 4 December 2017

A42) Tim Flannery, Chief Councillor, Australian Climate Council, 6 December 2017

A43) David Karoly, Professor of Atmospheric Science, University of Melbourne, 8 December 2017

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