Danny Cullenward - Making Climate Policy Work

Danny Cullenward David G. Victor

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Copyright Danny Cullenward and David G. Victor 2021

The right of Danny Cullenward and David G. Victor to be identified as Authors of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.

First published in 2020 by Polity Press

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ISBN-13: 978-1-5095-4179-9

ISBN-13: 978-1-5095-4180-5 (pb)

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We are two scholars who have spent nearly all of our professional lives intersecting with the problem of climate change. For Danny, that has meant a career at the nexus of law, economics, and engineering, looking at how energy systems might evolve in the future. For David, that has meant a career trained in political science and focused on how industrial transformations actually occur. When you spend this much time on one big issue that keeps getting worse, you live a life of constant reminder that the climate problem is really hard to solve.

Realism about the scale of the challenge is often discouraged in climate policy circles because it is easy to confuse with pessimism. Precisely because the climate problem has proven so stubborn, the whole ecosystem of climate activism and scholarship spends a lot of time painting stiff smiles on inconvenient facts. Yet any serious analysis must start by understanding climate solutions for what they are: requirements for profound industrial change that are difficult to initiate, sustain, and run to completion. The river of industrial investment and climate pollution runs deep and fast with powerful incumbents. Elements of change are becoming visible, but most to date are minnows swimming against that strong current.

This level of difficulty, we think, is a call not for pessimism but for realism about solutions. Because it is so hard to make deep cuts in global emissions deep decarbonization, as it is called effective solutions require clear thinking and strategy. Efforts spent tilting at ephemeral, magical policy solutions waste scarce resources that should instead be invested in things that work.

For the last decade, both of us have observed a rapidly growing disconnect between the solutions that are most popular among policy and academic elites and the facts on the ground. Conventional wisdom in elite circles holds that market-based solutions work best; decades of policy advocacy and design within this paradigm have produced a network of fledgling cap-and-trade systems that portend to lay foundations for solutions. In a few places, carbon taxes have emerged as well. These pockets of market-based action have been created, in part, with the belief that they will spread ultimately to global coverage and with big leverage on emissions. The realities are different, however. Those who are watching closely know those promises are largely failing and, we argue, will continue to fail.

What drew us together as collaborators is that while both of us are rooted in academia and thus steeped in debates around which policy instruments are best from the perspective of theory we spend much of our professional lives elsewhere. We work with governments, regulators, NGOs, firms, and investors institutions whose leaders are all grappling in practical terms with the challenges of deep decarbonization. Everyone is asking about the theory of change. What moves the needle? is a common refrain. Outside of the academy we see policymakers and CEOs talking a lot about market-based strategies to address climate change. Yet when they actually do something that moves the needle such as adopt a policy that makes a big dent in emissions, redirect investment toward low-carbon solutions, or craft a business strategy based on the reality that deep cuts in emissions are essential they make those choices without much attention to abstract market forces such as carbon pricing. Rather, they respond to policy and political pressures rooted in other concerns such as fear of losing access to vital markets, rising social opposition to their business models, or regulatory requirements and industrial policies that require big changes in behavior. From Davos to Washington DC, Sacramento, and Brussels, most elites who talk about the climate crisis from an altitude of 30,000 feet are talking about markets. Meanwhile, at sea level, pretty much all the serious work of deep decarbonization is being done by industrial policy and strategy.

This book is about that disconnect.

Our goal is to explain why market-oriented climate policies have fallen far short. This is not an accident, we argue, but a reflection of the political structure of the climate problem and the administrative tools that modern governments can apply in response. Reducing emissions in the world as it is requires understanding that world. It requires understanding why, after thirty years of diplomatic meetings most of them tilting at market-oriented policy we havent made more progress. That failure is rooted in the difficulty of the challenges of industrial transformation. It is also rooted partly in the fact that policy elites, business leaders, and even some environmental groups that want serious action have imagined they live in a world where the massive changes required for deep decarbonization will emerge with a technocratic nudge from the markets invisible hand.