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  • Governing Climate Change
  • Polycentricity in Action?
  • Online publication date: May 2018
  • pp 229-356
  • Publisher: Cambridge University Press


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Part IV Substantive Governance Challenges

13 Harnessing the Market Trading in Carbon Allowances

Katja Biedenkopf and Jørgen Wettestad *
13.1 Introduction

This chapter describes and evaluates the dynamically evolving web of carbon markets at various government levels around the globe – a web which can be conceived of as polycentric in nature. Individual but interdependent carbon markets have developed in many jurisdictions since the late 1990s. The Kyoto Protocol and the Paris Agreement provide an overarching umbrella for a wide range of designs, but international agreements are not the only factor contributing to the inception, design and diffusion of carbon markets. Individual countries, subnational entities and the European Union (EU) have taken initiatives in response to various domestic and international dynamics. No existing carbon market is an exact replica of another: each has been tailored to domestic preferences, contexts and politics.

A truly effective and ambitious global carbon market would arguably require strong harmonised rules and a central and independent authority to manage it (Green, 2017: 484). As this appears politically very difficult to achieve and is thus a rather unlikely scenario in the short term, a more feasible way for the various carbon markets to contribute to global mitigation efforts may be presented by the current polycentric approach. The interplay between local and international developments has led to the emergence of such a carbon market structure and continues to shape its further evolution. In this chapter, we discuss which opportunities and challenges will arise by approaching further development this way – with the challenges relating to fragmentation and political and economic uncertainties.

Carbon markets are systems within which carbon allowances and credits are traded. Carbon allowances are permits for emitting a certain amount of greenhouse gases (GHGs). Carbon credits are generally the output of an offset programme that reduces the emissions of actors outside the scope of an emissions trading system (ETS); participants can buy such credits and count them towards their overall obligation within an ETS. Emissions trading is a policy instrument that creates a carbon market in a specific jurisdiction. It sets a maximum emissions limit for a specified group of emitters; this may involve an absolute limit on GHG emissions (as in the EU), a carbon-intensity target (as in China) or a reduction target compared to a business-as-usual scenario (as in South Korea). This jurisdiction-wide limit, also called the cap, contrasts with a command-and-control approach of prescribing limits for each individual emitter (Dales, 1968).

Companies covered by an ETS can obtain emissions allowances for free, or purchase them in auctions or from other emitters. For predefined time periods, emitters must surrender to the authorities the number of allowances corresponding to their actual emissions during that time. Surplus allowances can usually be sold or ‘banked’ for future use. The price of a tonne of carbon is determined by the supply and demand of allowances. An ‘ambitious’ cap (one with a limit set significantly below expected demand) will create scarcity of carbon allowances, and is likely to result in a relatively high carbon price (Dales, 1968; Tietenberg, 2006; van Asselt, 2010).

Carbon markets have been hailed as a flexible and efficient means to curb GHG emissions and to incentivise the decarbonisation of the economy by putting a price on carbon, thereby making investment in low-carbon solutions more attractive. A fundamental reason for the growing interest in emissions trading by various governments, as well as industries and other stakeholders, is that it allows governments to control total emissions levels in the ETS sectors and the basic rules governing market transactions. Meanwhile, stakeholders remain free to determine how many emission permits they buy or sell. In theory, this instrument combines, in a unique way, relative predictability of emission reductions with flexibility to achieve compliance. However, creating a market for an artificial commodity like carbon is an extremely complex endeavour. Several problems have arisen, as described in this chapter.

The adoption and proliferation of ETSs is one of the illustrations of the emergence of polycentric structures used in Elinor Ostrom’s (2010) pioneering article on coping with collective action and global environmental change. Our chapter adds a more systematic discussion of the polycentric structure of carbon markets. Since the late 1990s, carbon markets have developed at many levels of governance, ranging from the municipal and subnational to the supranational and international. The geographical spread and variety of designs are vast. In 2017, the International Carbon Action Partnership counted 21 individual ETSs, implemented in a total of 35 countries (ICAP, 2017). A few carbon markets have been linked and mutually adjusted to each other – notably the ETSs adopted by the EU, Norway, Iceland and Liechtenstein, as well as the California and Québec systems.

The momentum and upward trend in the proliferation of ETSs makes harnessing the market in the name of climate mitigation an increasingly important element of global climate governance. Against this backdrop, our chapter begins by describing the origins of the current global landscape of carbon markets. Both local and international dynamics have contributed to the polycentric structure in evidence today. Second, we conceptualise the interaction and linkage among ETSs today. Various ties can be identified, from formal market linkages to informal exchanges of lessons learned. Third, we highlight key carbon market design challenges and opportunities, including those related to a polycentric architecture. Here we discuss the interaction with other climate policies and carbon price management. We conclude with some suggestions for future research on harnessing the market for climate policy purposes, including the role of polycentric governance.

13.2 Origins of the Polycentric Carbon Market Structure

A growing number of jurisdictions have adopted GHG ETSs since the turn of the millennium. None of these systems is an exact copy of another: each system has been tailored to its domestic socio-economic context and political preferences (Knox-Hayes, 2016; Wettestad and Gulbrandsen, 2017). Not only nation states but also subnational and supranational entities have adopted ETSs, as shown in Table 13.1. This section traces the evolution of GHG emissions trading, with an emphasis on the early phases. This brings out the conditions under which polycentric governance emerges.

Table 13.1 Key emissions trading systems at various levels of governance

Level of governanceCarbon markets*
InternationalClean Development Mechanism, Joint Implementation, REDD+, Carbon Offsetting and Reduction Scheme for International Aviation
Multinational/bilateralEuropean Union ETS, Japanese Joint Crediting Mechanism
NationalSouth Korea ETS, Chinese ETS, Kazakhstan ETS, New Zealand ETS, Switzerland ETS
SubnationalCalifornia ETS, Québec ETS, Ontario ETS, Regional Greenhouse Gas Initiative, Tokyo ETS, Saitama ETS, Tianjin ETS, Shenzhen ETS, Shanghai ETS, Hubei ETS, Guangdong ETS, Fujian ETS, Chongqing ETS, Beijing ETS
Voluntary/privateChicago Climate Exchange, BP internal trading programme

* This table does not offer an exhaustive list. More examples can be found, especially in the category of voluntary carbon markets.

The idea of harnessing markets for environmental policy was first developed by North American economists in the late 1960s (Coase, 1960; Crocker, 1966; Dales, 1968). It entered the climate policymaking realm in the 1980s, with ‘Project 88’ producing an important milestone report in the US context (for an overview of this early history, see Voss, 2007; Mehling, 2012; Calel, 2013; Paterson et al., 2014; see also Chapter 6). In Europe, the economist Michael Grubb presented a similar idea in the late 1980s (Grubb, 1989). The first major ETS was implemented by the US government in 1995; however, it addressed the air pollutants sulphur dioxide (SO2) and nitrogen oxide (NOX) that cause acid rain, rather than the GHGs that cause climate change (Baldwin, 2008: 262; O’Neill, 2017: 212). The idea of using a market logic found resonance in the US government’s ideology at the time.

Encouraged by its domestic implementation of SO2 and NOX emissions trading, the United States pushed the idea of carbon markets and flexible mechanisms in the negotiations on the 1992 United Nations Framework Convention on Climate Change (UNFCCC). Although the resulting convention text did not feature explicit carbon market provisions, the United States succeeded in getting three flexible mechanisms included in the 1997 Kyoto Protocol: the Clean Development Mechanism, directed at developing countries; Joint Implementation, targeting Eastern Europe and the countries comprising the former Soviet Union; and international emissions trading among the ‘Annex I’ (i.e. industrialised) countries. It was the initial experimentation and experiences of one influential country – the United States – with emissions trading that drove the uploading of the idea to the international level, much as polycentric theory predicts.

Spurred by the Kyoto Protocol and failure to adopt an internal carbon tax for dealing with climate change, the EU set about designing an ETS to govern large industrial installations. The EU ETS Directive, adopted in 2003, established the main rules for a pilot phase (2005–2007) and a second phase that coincided with the Kyoto commitment period (2008–2012). Many companies supported market-based strategies, on the assumption that climate policy was imminent and market-based approaches were less expensive than traditional regulation. In 2000, BP launched an internal experimental ETS, outpacing policy developments in the EU (Victor and House, 2006; Meckling, 2011).

Since the EU in the early 2000s was an international frontrunner (see also Chapter 8), and uncertainty was high among stakeholders, the initial design of its carbon market was generally decentralised, with considerable power over implementation of the system held by the EU member states. Allowances were handed out for free. Core target groups were the power sector and several energy-intensive industries. To provide additional flexibility, the 2004 Linking Directive allowed for the use of Clean Development Mechanism credits from the pilot phase, as well as Joint Implementation credits from 2008. In 2005, Norway launched a national ETS, aiming to link up to the EU ETS. Switzerland launched a voluntary ETS in 2008, which subsequently became mandatory for large, energy-intensive entities. Switzerland agreed in 2017 to link with the EU ETS. Based on its experiences and lessons learned during the first implementation phases, the EU significantly altered its ETS rules for the 2013–2020 phase, with more centralisation and greater auctioning of carbon allowances (Skjærseth and Wettestad, 2008, 2010).

In the United States, the voluntary Chicago Climate Exchange was established in 2003; and in 2005, seven governors (Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Vermont)1 signed a memorandum of understanding establishing the Regional Greenhouse Gas Initiative, covering only the power sector. Unlike the EU, this system includes a carbon price management mechanism in the form of a price floor and ceiling, and allowances were auctioned from its launch in 2008. On the US West Coast, the 2006 Global Warming Act required the California Air Resources Board to develop a scoping plan and to explore the possibility of an ETS. This was followed in 2007 by the launch of the Western Climate Initiative (including British Columbia, Manitoba, Ontario, Québec and California) (Biedenkopf, 2012).2 The California ETS was launched in 2012. Among its unique design features is a complex price floor system (Bang, Victor and Andresen, 2017). Former California governor Arnold Schwarzenegger was also central in launching the International Carbon Action Partnership in 2007 (Biedenkopf, 2017).

In the Asia-Pacific region, Tokyo launched a climate strategy in 2007 that included an ETS. In 2006, Australia started a climate-policy assessment process which included an ETS discussion; subsequently, a carbon pricing mechanism was introduced. However, Tony Abbott’s election to the prime ministership in 2013 abruptly halted this development in Australia (Müller and Slominski, 2017). In 2008, New Zealand launched an ETS, featuring a rather unique ‘trading without cap’ design and broad sectoral coverage (Inderberg, Harmer and Bailey, 2017).

As a potentially very important development in 2010, China’s National Development and Reform Commission designated 13 low-carbon zones and began contemplating GHG emissions trading. A milestone was reached in 2011 when the National Development and Reform Commission and the State Council announced ETS pilot projects in five Chinese cities and two provinces, eventually followed by a national carbon market, which was launched in 2017 but remains further to be elaborated and expanded (Stensdal, Heggelund and Maosheng, 2018). In 2013, Kazakhstan launched an ETS – which was put on hold in 2016 (Gulbrandsen, Sammut and Wettestad, 2018). In 2015, South Korea became the first East Asian country to start operating a national GHG ETS (Biedenkopf and Wettestad, 2018).

While additional ETSs were being developed or contemplated in several countries, the EU continued to adjust its carbon market rules drawing on its experiences. After mid-2011, the EU ETS carbon price dropped, provoking a crisis of confidence. In 2014, the EU adopted a temporary postponement of the auctioning of some 900 million allowances (‘backloading’). The European Commission also launched a proposal for a price-stabilising mechanism, the Market Stability Reserve, aimed at providing longer-term price stability. Adopted in 2015, it is due to start operating in 2019 (Wettestad and Jevnaker, 2016).

In addition, several jurisdictions, including Brazil, Mexico and Thailand, are considering (or in the process of) establishing national carbon markets (ICAP, 2017). About half of the intended nationally determined contributions submitted prior to the Paris climate summit in 2015 mentioned the use of carbon market mechanisms (EDF and IETA, 2016). This includes international mechanisms such as the REDD+3 mechanism (addressing emissions from deforestation) and other systems that might emerge from the UNFCCC process and the Paris Agreement. Symptomatic of the increasingly polycentric spread of carbon markets, the design of carbon markets and carbon price levels were discussed at the 2017 Davos economic summit (Carbon Pulse, 2017). Summit participants called for a carbon price of around $40–50 USD in 2020, a level that the Organisation for Economic Co-operation and Development (OECD) originally advocated in 2016 (OECD, 2016).

The Paris Agreement promises to complement the proliferation of subnational, national and regional ETSs with a global umbrella establishing rules for market mechanisms. Article 6 establishes that parties may cooperate to implement their nationally determined contributions under the Agreement through a global market mechanism. The Paris Agreement contains several elements encouraging the further development of markets locally. An important further process within the UNFCCC context is the improvement of carbon accounting rules (Jevnaker and Wettestad, 2016). Achieving a level playing field in terms of how emissions data are accounted for in different jurisdictions is of key importance for building trust and for the legitimacy of carbon markets.

The evolution of carbon markets has been a rollercoaster ride, with the rise of ambitious carbon markets but also the decline of some initiatives like the Australian ETS. GHG ETSs have evolved as independent experiments with unique innovative designs that reflect distinct domestic contexts and politics – in line with two of the core propositions of polycentric governance: local action and experimentation.

However, the development of the individual systems is linked to varying degrees, and through various types of interaction. The origins of ETS as an idea and its very first applications were local, but the early uploading to the international level has spurred the further development of the polycentric carbon market structure. Its emergence and evolution does not have one single cause: the origins can rather be found in the interplay among various political processes, individual entrepreneurs (see Chapter 7) and levels of governance. In the following section, we focus on the interactions that binds carbon markets together.

13.3 Lessons about Design, Interaction and Linkage

The various ETS policies constituting the polycentric carbon market system did not emerge completely independently of each other. ETSs are linked through several types of interaction, ranging from the direct linking of systems to the exchange of experiences and lessons. Policy diffusion mechanisms (see Chapter 9) can help account for interactions beyond the formal and direct linkage of individual ETSs (Wettestad and Gulbrandsen, 2018). Key features of polycentric systems are the enhancement of innovation, learning, adaptation and trust.

Three types of interaction stand out. First, the different variants of GHG ETSs have produced a set of lessons which reveal elements that may underpin success and some that lead to failure. There has been a certain degree of convergence amongst trading systems around the globe, for example on the inclusion of price management provisions. While not every lesson has found its way into the actual design of ETS policies, policymakers are usually aware of and seek to draw lessons from other systems (Wettestad and Gulbrandsen, 2018).

It is challenging to achieve a well-functioning ETS. Crafting a market for an artificial commodity such as carbon entails several uncertainties. Setting the fundamental level of the overall emissions limit is a matter under political control. In addition come two unpredictable factors that may have a sizable impact on the carbon price: economic development and technological innovation. As experienced in the EU, an economic slowdown and the availability of too many allowances can lead to a decrease in the demand for and the price of carbon allowances (Jevnaker and Wettestad, 2017). The availability and costs of low-carbon technologies can influence the threshold at which investing in innovation becomes economically more feasible than purchasing carbon allowances. Not least for these reasons, policymakers tend to examine existing systems before devising their own.

However, drawing lessons and understanding the pitfalls of an ETS does not necessarily mean that policymakers will act upon all advice received. The domestic context may necessitate certain adjustments or design deviations, or political considerations may lead to decisions aimed at appeasing certain stakeholders and at attracting a broad support base (Knox-Hayes, 2016). For example, the fact that electricity prices in South Korea and China are controlled by the government has required a creative approach to ETS design, since the mechanisms on which a market logic is based – influencing (consumer) decisions through price signals – cannot be applied. This explains why the South Korean and Chinese systems also cover ‘indirect emissions’ that occur through the consumption of electricity (Biedenkopf and Wettestad, 2018; Stensdal et al., 2018).

Key lessons include the risks of free allocation, the crucial importance of sound measurement, reporting and verification (MRV) systems and the need for price management provisions. Policymakers can allocate allowances to emitters free of charge to ease the compliance burden for covered companies, and to help garner political support for the gradual introduction of an ETS (Schmalensee and Stavins, 2015). On the other side of the coin, free allocation of allowances has led to ‘windfall profits’, which occur when power producers that are covered by a GHG ETS receive allowances for free and then make a profit by passing on the allowance price to their customers, charging higher electricity prices. Such windfall profits can be avoided by auctioning allowances (Brown, Hanafi and Petsonk, 2012: 19–23). During the first phase of the EU ETS, electricity utilities reaped large windfall profits, a matter addressed in subsequent phases (Convery, Ellerman and de Perthuis, 2008: 226). The EU experience contributed to state-level authorities on the US East and West Coasts designing their ETSs with greater auctioning of allowances (Biedenkopf, 2012; Bang et al., 2017; Lygre and Wettestad, 2017).

The availability of accurate and reliable data is a precondition for sound allowance allocation and setting the overall emissions limit. Both aspects are crucial for avoiding allowance over-allocation (Schmalensee and Stavins, 2015). A solid system for the MRV of GHG emissions from all sources covered by the system is central to a well-functioning GHG ETS – as the EU learned during its first ETS phase in 2005–2008, and likewise Kazakhstan, which established its ETS in a hurry, without a proper MRV system in place (Gulbrandsen et al., 2017). For this reason, building MRV capacity has constituted a major part of most externally funded ETS capacity-building projects (Wang, 2013: 8–12; Jotzo and Löschel, 2014: 7; Biedenkopf, van Eynde and Walker, 2017).

Carbon prices vary with demand and supply. Given the relative unpredictability of these two variables (demand in particular), several trading systems have experienced significant price fluctuations. The EU ETS has faced plummeting carbon prices since 2008 (Wettestad, 2014; World Bank, 2016: 36–38). The designers of the Regional Greenhouse Gas Initiative and the California ETS learned the lesson of the importance of carbon price management early in their initial policy design phase, thereby avoiding the need for later recalibration of the rules.

In 2016–2017, South Korean allowance prices rose to the highest of any existing ETS at the time (i.e. around €21). The resulting government decision to increase allowances on the market appears to have weakened the South Korean ETS, calling into question its ability to achieve national climate mitigation targets (Biedenkopf and Wettestad, 2018). These examples illustrate some of the lessons that have surfaced through experimentation in various contexts. They teach ETS designers that price management mechanisms may seem important, but that price response decisions must be weighed carefully.

Capacity building has become a tool for fostering the diffusion of GHG ETSs. Because establishing a carbon market requires significant financial, technical and knowledge resources, most countries realise they must expand capacity massively in order to construct an effective system, not least as regards emissions MRV. Capacity building can help a country to design and implement a well-functioning GHG ETS, and the close interaction among actors from different jurisdictions can generate trust. Capacity building is hence a crucial element and tool for carbon market diffusion and for linking individual policies in the polycentric system (Biedenkopf et al., 2017).

Formal linking of individual carbon markets is the type of interaction that truly binds a polycentric system together. Efficiency gains can be generated by making it possible for System A to use allowances from System B for complying with obligations in System A (and vice versa). Options for low-cost emissions reductions can be increased if cost levels and emission abatement options vary between the systems. Adding more actors can mean greater liquidity, curbing the influence of individual market players and price volatility. Joining carbon markets also helps to reduce the risk of emitters relocating to jurisdictions with lower carbon prices, as the price in linked markets tends to level out at comparable amounts.

However, this is also a highly challenging endeavour, as the linked markets must be compatible, and it makes the involved jurisdictions interdependent. Market rules and decisions like free allocation of allowances can have impacts not only on the carbon market to which they apply but also to any market linked to it (Görlach, Mehling and Roberts, 2015; Ranson and Stavins, 2016). As noted, few GHG ETSs have been linked thus far.

Despite the challenges and risks, actors like the EU have expressed their interest and ambition to develop further linkages, which would increase the degree of polycentricity of the overall global structure. For example, in 2009, the EU launched the (unattained) goal of an OECD-wide carbon market by 2015 and ‘even broader’ in 2020. And the EU also had envisioned a trans-Atlantic carbon market, when a legislative proposal for establishing a national US carbon market seemed likely to be adopted in 2009.

However, this US proposal (known as the Waxman-Markey Bill) was not put to a vote in the US Senate, meaning that the EU had to look elsewhere for linking partners. Contacts between Australia and the EU were stepped up from 2011, but the linking process was abandoned when Australia halted its ETS policies. The closest type of interaction that can bind individual carbon markets together seems also to be the most challenging one. More widespread forms of interaction involve capacity-building initiatives and learning processes amongst the various carbon markets, joining them into a polycentric system.

13.4 A More Polycentric Carbon Market Architecture: Challenges and Opportunities

In this section we ‘zoom out’, focusing on some challenges and opportunities of a more polycentric form of governance. The main challenges – which may also provide opportunities – concern the operation of interlinkages among ETSs, the interaction between ETSs and other climate policies, and diverging levels of carbon prices.

An increasing number of public and private actors – including consultants, ministries, development cooperation agencies, international organisations and universities – are engaging in GHG ETS interaction. They have the potential to act as managers of the polycentric system, and can contribute to aligning and linking individual ETSs more efficiently. However, this role can both further integrate the polycentric system and contribute to its fragmentation. Conflict and competition may cancel out the contributions of these actors, whereas coordination and cooperation can mutually enhance their impact (Biedenkopf et al., 2017).

The UNFCCC discharges several important functions fostering ETS interaction. For example, the growing emphasis on transparency and solid MRV systems as embedded in the Paris Agreement can enable the proliferation of ETSs and the creation of offset programmes, as solid data provide a foundation for reliable systems. Implementation of the Paris Agreement might lead to new carbon market structures that could create offset markets and joint implementation of climate mitigation commitments. The further elaboration of Article 6 of the Paris Agreement will lay the foundations for these processes and polycentric structures.

Another important driving force is the World Bank. Its Partnership for Market Readiness and Carbon Pricing Leadership Coalition (World Bank, 2017) aim at sharing and orchestrating carbon pricing experiences and building capacity (see Chapter 11). Other central actors include the International Carbon Action Partnership and the International Emissions Trading Association, both engaged in the dissemination of expertise and the fostering of ETS adoption in numerous places.

A first glance at the actors involved in facilitating carbon market interaction suggests a certain division of labour, with different actors engaging with different ETSs or ETS elements. However, deeper analysis of external capacity building supporting China’s ETS pilot projects and national policy process has shown that coordination can still be improved (Biedenkopf et al., 2017). There are many organisations, among them the World Bank, the International Carbon Action Partnership and the International Emissions Trading Association, and national governments engage in ETS awareness-raising – with the risk of overlap and possibly diverging advice.

Interlinkages within the polycentric carbon market system appear to work fairly well, with little outright conflict or destructive competition. However, their functioning could be improved by avoiding overlaps and by improving interaction management. The management of interactions in polycentric carbon market structures has not yet received much detailed academic attention. Table 13.2 lists some of the key actors and initiatives that foster interaction among, and promote the adoption of carbon markets.

Table 13.2 Selected major international initiatives to foster interaction and promote carbon markets

Actor typeCarbon market initiatives*
International organisationsUNFCCC/Paris Agreement; World Bank Partnership for Market Readiness; World Bank Carbon Pricing Leadership Coalition; Asian Development Bank
Governmental organisationsGerman Development Cooperation Agency; Norwegian Climate and Pollution Agency; UK Foreign and Commonwealth Office; California Environmental Protection Agency; International Carbon Action Partnership
Private organisationsInternational Emissions Trading Association; the Wake-Up Coalition (EU ETS); University of New South Wales (Australia); Environmental Defense Fund (US-based); the Energy Foundation

* Selected initiatives promoting carbon markets and their interaction; this is not an exhaustive list.

Emissions trading is not the only climate-policy instrument in use. Often it is a core element of a broader policy mix, where overall climate policy goals are broken down into sub-goals, such as improving energy efficiency, increasing the share of renewable energy and diffusing low-carbon technology. While an ETS can help in achieving these aims, it cannot determine how emitters choose to comply. Moreover, an ETS usually covers only some of the emitters within a given jurisdiction – private households, transportation and the land-use sector are excluded from most ETSs. Additional climate policies are usually adopted, to interact with ETS policies. This interaction can be mutually supportive, not least for the overall goal of reducing GHG emissions. However, successful non-ETS policies can contribute to lowering the allowance price, which weakens the incentive structure that an ETS strives to establish. From a polycentric perspective on carbon markets, this complicates linkages among the individual ETSs.

The differing designs and prices globally also pose challenges to the functioning of the system as a whole, as such differences lead to an uneven playing field and can create incentives for carbon leakage. Also, some ETSs (like that of the EU) have experienced significant price fluctuations over the course of time. The contribution of carbon prices to decarbonising the economy (see Chapter 14) depends on such prices reaching levels high enough for cleaner energy choices and technology development to become economically more attractive than purchasing carbon allowances (Bowen, 2011: 7).

However, price incentive effects and dynamics differ among industries and factories, making it extremely difficult to reach precise conclusions as to the carbon price necessary for achieving decarbonisation. Experimentation within a polycentric system can provide flexibility to find appropriate price levels. Low carbon prices may require complementary policy measures, in turn making the design of the policy mix a crucial factor.

While the carbon price has fluctuated drastically in the EU, with no price management mechanisms in operation so far, it has proven more stable in other systems. When the EU system was launched in 2005, the price climbed to around €30, fell to close to zero in 2007, climbed to above €30 again in 2008, before falling steadily to around €5 in 2017. California, with a complex price floor system, had a more stable allowance price ranging between about $10 USD to slightly above $13.5 between 2012 and 2017 (i.e. close to the price floor). In China’s pilot projects, allowance prices were generally low, between about $8 and $1 between mid-2014 and mid-2016. In the early phase of these projects, prices were somewhat higher, peaking at more than $18 in Shenzhen in 2013.

Although prices in the individual ETSs differ, all appear low compared to the carbon price that experts deem necessary to trigger decarbonisation. This raises doubts as to whether the polycentric carbon market system as it is today can deliver deep and fast decarbonisation. The emissions reduction goals set by the various governments are generally met – but broader effects on decarbonisation seem to be lacking (see Chapter 14). The low allowance prices can be attributed mainly to moderate caps in existing systems (Schjølset, 2017), but also other design features and flaws may make systems incapable of reacting to demand fluctuations resulting from other mitigation policies or external factors (weather, oil prices, etc.). Hence, price management mechanisms are important for moving prices closer to the estimated threshold at which low-carbon investments become economically viable. That also draws attention to the link between the polycentric market structure and national climate policies (see Chapter 3).

Within a polycentric system, widely diverging carbon price levels create competitive inequalities among the entities covered by the various trading systems. Binding the polycentric system closer together through interaction mechanisms that lead to an approximation of carbon prices could level the playing field within the system. However, it would not change the competition with entities operating in jurisdictions outside the polycentric system. Companies covered by one of the ETSs within the polycentric system must compete on an uneven playing field with companies not covered by an ETS. This could have repercussions for the overall effectiveness of the polycentric carbon market system, with companies relocating to jurisdictions without carbon markets (Ostrom, 2010).

13.5 Conclusions

Over the past 20 years, the field of international carbon trading has grown, from a system initially dominated by the Kyoto Protocol’s country-to-country flexible mechanisms to something far more diffuse. As of 2017, there were 21 individual emissions trading systems in existence at global, regional, national and subnational levels. International and local factors have jointly influenced the diffusion of various ETSs across highly diverse jurisdictions. These ETSs interact in a range of ways – in particular, mutual learning, capacity building and formal market linking. They thereby form a system of polycentric governance, which faces some challenges while also creating some opportunities.

Because a harmonised global carbon market linking all existing systems is highly unlikely to develop, today’s flexibly developing system seems a workable alternative for contributing to global climate mitigation efforts. However, the polycentric nature of this system may lead to overlaps and conflicts, as well as synergistic interactions among the actors involved. Moreover, interaction with other policies may undermine the functioning of carbon markets by inducing drops in the price of allowances – but such policies can also be a necessary complement to emissions trading by more directly supporting low-carbon investments.

Finally, the overall price level across today’s carbon market system appears too low to provide forceful incentives for decarbonising the economy. Yet, the various ETSs that make up the system have succeeded in achieving their individual GHG emissions reduction goals. The mixed picture of achievements and remaining challenges provide ample scope for further research on the polycentric carbon market system – its separate parts, and its overall structure.

Few studies have focused on the role of orchestrators or network managers. A growing number of international organisations, national and subnational governments, ministries, and non-state actors like development cooperation agencies, foundations and companies, are getting involved in connecting ETS developments and encouraging their further diffusion. While the institutional carbon market landscape is becoming increasingly dense and polycentric, there has been scant academic attention to the interaction among the actors and their contribution to shaping the carbon market system.

Recent years have seen several informative studies of the adoption of ETSs and the main factors shaping them (e.g. Knox-Hayes, 2016; Wettestad and Gulbrandsen, 2018). There is a need for more in-depth research on the interaction between international processes and domestic politics in shaping ETS designs. A polycentric governance lens offers a useful tool for further conceptualising these processes.

Most trading systems are still rather young. As they mature, carbon price formation and overall functioning are bound to become key research issues, as effective functioning is crucial for systems to fulfil their potential as central drivers of the low-carbon transition. Research has identified the establishment of price-management mechanisms, price floors in particular, as central to effective functioning. However, price floors and management systems vary considerably, and much remains to be learned about their design and operation.

Finally, not least due to the current overall low ambitions and allowance prices in the carbon markets, low-carbon technology development seems so far to have been driven primarily by other economic logics and subsidy systems, rather than carbon markets. A key question then becomes if the polycentric carbon market system will pick up speed fast enough to become a forceful policy driver – or if this instrument will come ‘too late to the low-carbon party’.4


* We thank Harro van Asselt, Dave Huitema, Andy Jordan, Paula Castro and all participants in the INOGOV workshop on ‘Governing Climate Change: Polycentricity in Action’ (Heerlen, the Netherlands, March 2017), for comments on earlier drafts of this chapter. Thanks also to Susan Høivik for language polishing. The research was partly funded by the KU Leuven Research Fund (Bijzonder Onderzoeksfonds KU Leuven).

1. Later, Massachusetts, Rhode Island and Maryland joined the initiative. In 2011, New Jersey withdrew from the programme.

2. Initially, only California and Québec remained in the Western Climate Initiative and linked their carbon markets. Ontario joined in September 2017.

3. ‘REDD+’ stands for reducing emissions from deforestation and forest degradation, and for the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.

4. We thank Stig Schjølset for pointing this out.

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14 Decarbonisation The Politics of Transformation

Steven Bernstein and Matthew Hoffmann
14.1 Introduction

Decarbonisation is a different framing of and approach to the climate change problem than concentrating on emissions reductions. They are related, to be sure, but decarbonisation is the process of disrupting carbon lock-in (Unruh, 2000; Seto et al., 2016) and removing fossil fuels from our energy and economic systems. Decarbonisation thus implies attacking climate change at its fundamental core – global reliance on fossil energy – and it is a daunting task, as carbon lock-in arises from overlapping technical, political, social and economic dynamics that generate continuing and taken-for-granted use of fossil energy. While disrupting carbon lock-in and pursuing broad decarbonisation are immensely challenging, they are also necessary to avoid the worst consequences of climate change in the time frame suggested by climate change scientists (essentially by 2050; see Rockström et al., 2017).

A polycentric governance system would appear to be an ideal approach for decarbonisation (Ostrom, 2009; Cole, 2011). Carbon lock-in is not only a multidimensional but also a multilevel phenomenon, existing simultaneously locally and globally. Indeed, whereas the world runs on fossil fuels, the worldwide nature of carbon lock-in arises because multiple, interdependent systems are also locked into the use of carbon-based energy and resources. The response to climate change also appears ripe for a polycentric governance approach to decarbonisation. It is now fairly well established that the world has thus far not responded effectively to the climate change challenge in a coordinated global fashion, but instead through an emerging response that has the appearance of polycentricity – in the sense of possessing many diverse locations of authority arranged largely non-hierarchically. The global response to climate change encompasses both multilateral governance (see Chapter 2), itself decentralised since the 2015 Paris Agreement (Falkner, 2016), and a broad array of activity outside the international negotiations (Hoffmann, 2011; see also Chapter 4). The global response to climate change thus already includes diverse activities at multiple levels of politics, engaging a wide array of actors that are (ostensibly) seeking to disrupt1 carbon lock-in by: taking action in and among cities, subnational governments and individual countries; seeking to alter market systems and corporate behaviour; and changing the range of technologies available to individuals and societies. There are now truly multiple centres of authoritative climate action.

However, what we have now is, at best, a weak or nascent polycentric governance system for decarbonisation. A ‘truly polycentric system is one in which governmental units both compete and cooperate, interact and learn from one another, and responsibilities at different governmental levels are tailored to match the scale of the public services they provide’ (Cole, 2011: 405). Such coordination, interaction and interdependence of decarbonisation initiatives are not yet in evidence. In part, the lack of a polycentric governance system arises from a mismatch between the problem structure of decarbonisation and polycentric governance approaches. Polycentric governance theory was developed to help explain novel responses to collective action dilemmas, mainly relatively small-scale common pool resources problems (Ostrom, Tiebout and Warren, 1961; Cole, 2011). As it has evolved, proponents have prescribed polycentric approaches for solving diverse collective action dilemmas – even global collective action problems like climate change (Ostrom, 2009; Cole, 2011). However, current decarbonisation efforts are not solutions to collective action problems in the same way. Many decarbonisation initiatives have more circumscribed goals; they do not seek to provide global public goods. Instead, they seek to act in a specific place: to decarbonise a specific jurisdiction, set of practices or market activity.2

Collectively, it is possible that decarbonisation initiatives will eventually provide a global public good (stable climate), but they emerged in specific places with specific goals and do not necessarily have common purpose (like managing a common-pool resource). For Ostrom (2009) and Cole (2011), the goal is to build a polycentric governance system from the diverse, multilevel initiatives that have emerged in the past two decades. We contend that this project, and analysis of decarbonisation, must begin not with the collective goal, but with an understanding of the politics of individual decarbonisation initiatives and the way that they are linking and self-organising (nascently) to better understand the possibilities for and potential of polycentric governance of decarbonisation. Extant decarbonisation initiatives may be the constitutive elements of an emerging polycentric governance system. There is evidence that nascent polycentric dynamics are at play. As more and more initiatives emerge, their interdependence is recognised, and linkage/orchestration (see Chapters 10 and 11) become more prominent dynamics, the hallmarks of polycentric governance like development of trust, monitoring, learning and adaptation (see Chapter 1) may become more evident.

This chapter begins by introducing this different way of thinking about the challenge of decarbonisation and climate change – less as a collective action problem that requires solutions, whether in a monocentric or polycentric system, and more as a problem of catalysing action in a system likely to be polycentric in character, but which may or may not take on features of a polycentric governance system. We then discuss a framework for analysing the politics and trajectories of individual decarbonisation initiatives. This framework allows us to understand the potential for initiatives to disrupt carbon lock-in in particular places as they scale up and become entrenched. After briefly examining an example of this kind of analysis, we discuss the ways in which decarbonisation initiatives are self-organising and linked together, perhaps providing the foundations for the emergence of a polycentric governance system. We close with some thoughts on the normative implications and potential effectiveness of moving towards a more polycentric governance system.

14.2 The Challenge of Decarbonisation

Assessing the dynamics of decarbonisation must begin with an adequate understanding of the distinctive challenge that it poses. As asserted earlier, carbon lock-in is a multilevel phenomenon that operates simultaneously in multiple societal systems. Global energy, transportation and economic systems are locked into carbon because transportation, energy and economic systems at the municipal, subnational, state and regional levels are locked into carbon.

The challenge of decarbonisation lies in disrupting the interdependent, overlapping and reinforcing dynamics that lead to the continuing use of fossil fuels occurring across scales. Cities are locked into the use of fossil fuels because of (among other things) how they are physically planned, the expectations and practices of citizens around transportation and energy use, the political coalitions and institutional capacities that make cities run politically and the range of technological options that are available to city dwellers. The same could be said of nation states – they are locked into the use of fossil fuels because of similar (not the same) cultural, economic, political and technological dynamics on a larger scale (i.e. national energy and transportation policy, coalitions of interest groups, national culture, etc.). But it is more complicated than that, because the cities and nation states in this example are not independent. Carbon lock-in in cities reinforces the lock-in we find in nation states, just as nation state lock-in reinforces it at the municipal level.

This makes decarbonisation a very different kind of challenge than the standard global commons or common-pool resources problem usually addressed in the polycentricity literature (Ostrom, 2009, 2010a). The hallmark of a global commons problem is a group of actors sharing a resource. The traditional approach to climate change, which focuses on greenhouse gas (GHG) emissions, treats the problem in just this way. Nation states conceived of the problem as one of a shared atmospheric resource and negotiated over how far to reduce GHG emissions, how to distribute reduction commitments, how to achieve reductions and how to pay the costs of reductions (or adaptation when reductions fail to occur). Global commons is the wrong perspective for decarbonisation, however, as there is no global system to act upon or shared decarbonisation resource. The standard means of addressing global commons problems (such as large, centralised, multilateral treaty-making processes or global carbon pricing schemes) are unlikely to be achieved because of problems of political feasibility and, furthermore, they are of questionable utility in disrupting carbon lock-in and promoting decarbonisation because of the mismatch they represent with the underlying structure of the problem (Prins and Rayner, 2007). Instead, we need to think about how decentralised decarbonisation works and when it can produce transformative trajectories that could eventually cohere into a larger polycentric governance system. This entails, in part, examining the interaction between the local and international levels, but we must also recognise that decarbonisation initiatives consist of different locations of governance that are not necessarily nested or hierarchical, nor are they in a common system responding to a common-pool resource issue. Instead, they are weakly polycentric in the sense that there are multiple centres of governance working with a good deal of independence.

Ostrom herself recognised the limits of approaching the problem of climate change from a global collective action perspective in one of her last published articles (Ostrom, 2010a). However, even as she proposed a polycentric approach as an alternative for addressing climate change, she, along with many of the students and colleagues she influenced, continued to view polycentricity through the lens of a collective action approach (e.g. Cole, 2015a). As she put it, what was needed given the by then discredited view that ‘collective-action problems that have global effects must primarily be “solved” by legal actions of a global authority’ was to ‘update’ the theory of collective action. She and her colleagues ‘developed the concept of polycentric systems for the analysis of collective-action problems involved in the provision of diverse public goods and services’, which fit well with how she observed climate change governance evolving (Ostrom, 2010a: 551).

Their commitment to viewing the problem of governance through the lens of collective action problems, however, puts the cart before the horse. It assumes that even as a large-scale problem like climate change might be best governed through diverse authorities arranged non-hierarchically at multiple levels, the fundamental nature of the political problem remains one of collective action, and thus there is a need to foster a truly polycentric governance system (Ostrom, 2009; Cole, 2011). In so doing, however, they leave out an important first step – examining the functioning, trajectories and impacts of the multiple, diverse initiatives that might constitute a polycentric governance system. Polycentricity may be a possible governance response over the longer term. However, the problem that decarbonisation initiatives are tackling is one of multiple interlocking systems, not, at least initially, of collective action over a shared resource. The key analytic move, then, is to first analyse multiple and diverse actions individually to assess their trajectories and functioning. This is necessary before assessments can be made as to whether they will evolve into a polycentric governance system.

The raw materials for the emergence of a polycentric governance system for decarbonisation are available. The past two decades have seen the emergence of multiple governance interventions – intentional efforts to steer actors and/or change the trajectories of different actors and systems in an authoritative way (Hoffmann, 2011; Bulkeley et al., 2014). While the language of polycentric governance accurately describes the emergence of these multiple locations of authority designed to disrupt carbon lock-in, theories of polycentric governance cannot explain their emergence or trajectories, at least not initially, because their politics is not guided by the polycentric logic of collective action. Rather, they are widespread but discrete and multifaceted efforts to disrupt multiple systems’ trajectories and induce transformation towards decarbonisation. These interventions include: cities enacting carbon action plans and participating in transnational networks; states and provinces in North America developing linked emissions trading systems, carbon tax policies and renewable energy targets; corporations and non-governmental organisations joining forces to promote smart grids, carbon accounting and clean technology deployment across national borders; and nation states developing targets for carbon neutrality and renewable energy industries in decentralised pursuit of the overarching collective goals set out in the Paris Agreement.

Elinor Ostrom (2009: 38) envisioned a polycentric approach that brought these kinds of initiatives together in common purpose, but realised that ‘one cannot expect that an effective polycentric system will be constructed in the near future.’ Yet they may be the precursors or constitutive elements of such a polycentric system. Decarbonisation efforts are certainly interdependent, not least because carbon lock-in arises from dynamics in interdependent domains. In addition, individual interventions are often linked to other interventions in other systems either consciously or unconsciously (see Chapter 10). These characteristics imply the need to consider links between the specific/local and the general/global – how actions and outcomes in specific places can catalyse broader transformation (or stymie it) – to account for change and to show how changes at different scales do or do not catalyse broader changes (Geels, 2010).

Our analytic framework, to which we now turn, is designed to uncover and make sense of the political trajectories of individual and linked interventions as they seek to disrupt carbon lock-in and usher in decarbonisation in specific places. In so doing, we provide a window on the potential precursors to a truly polycentric governance system, whereby decarbonisation interventions come to be a collective, though still multifaceted, decarbonisation governance effort, whether consciously through orchestration (Chan et al., 2015; see Chapter 11) or through what Ostrom expected to be processes of self-organisation.

14.3 The Politics of Decarbonisation3

We focus on the political aspects of carbon lock-in and the decentralised efforts to disrupt it because no matter where one looks – markets, cities, subnational jurisdictions or nation states – there are institutional and normative processes and structures (political factors) contributing to carbon lock-in. The substance and functioning of the political factors differs across levels – municipal politics and national politics are not the same – but they similarly serve to reinforce carbon lock-in in all parts of the system.4

Our approach explores what political forces are unleashed once decarbonisation interventions are initiated in specific places and whether/how they disrupt carbon lock-in and generate pathways to decarbonisation. Once an intervention is initiated, the target of the intervention – be it a city, corporation, province, nation state or market practice – will move along one of three (ideal-type) trajectories: (1) continued reinforcement of carbon lock-in if the intervention has no effect or is counterproductive; (2) improvement in carbon lock-in if the intervention improves the efficiency of using carbon-based energy and reduces emissions but does not fundamentally challenge the central place of carbon-based energy; or (3) decarbonisation if the intervention spurs the target away from the use of carbon-based energy.

The impact of the intervention on the trajectory of the target is a matter of political dynamics that the intervention entails. We track three mechanisms to understand the politics of decarbonisation interventions: normalisation, capacity building and coalition building (discussed in more detail in what follows). These mechanisms help to determine if the changes the intervention promotes will scale up and become entrenched in the target, thus having an expanding and lasting impact on the target as well as more generally in the wider system through linkage and interdependence. Figure 14.1 provides a visual representation of this dynamic for a single target. Crucially, the potential for altering the system trajectory is found in the feedback between the intervention and the political mechanisms that it catalyses.

Figure 14.1 Decarbonisation pathway in a targeted part of the system.

14.3.1 Political Mechanisms

Normalisation as a mechanism is about shifting social expectations about appropriate behaviour (e.g. Finnemore and Sikkink, 1998); thus, ‘[i]f policy advocates succeed in generating a political and public expectation that [GHG] emissions should decline over time then policies and behaviours that further reduce GHGs may be judged “better” and more appropriate than those that engender increases’ (Selin and VanDeveer, 2005: 371–372). For example, the CDP (formerly, the Carbon Disclosure Project) advocates for companies to account for and disclose their carbon emissions and exposure to climate risk. In response, many large corporations – including General Electric, Google, Microsoft and even ExxonMobil – have changed their practices and now engage in shadow pricing: they assume there will be a carbon price in the future and include the cost of carbon in their business planning (CDP, 2013). The practice of treating carbon pricing as inevitable contributes to normalising potential moves towards decarbonisation in the corporate community and generates political support for public moves towards carbon pricing (Clark, 2015).

Capacity building alters the material, institutional and cognitive capacities to act on decarbonisation (e.g. Pierre and Peters, 2000; Selin and VanDeveer, 2005; Bernstein and Cashore, 2012; Weible and Sabatier, 2014). Direct means through which interventions can increase capacity include ‘direct funding, education, training, [technical] assistance, and … co-governance via partnerships between public and private actors and authorities’ (Bernstein and Cashore, 2012: 593). Similarly, capacity can be built via demonstration effects that act as policy learning vehicles (Selin and VanDeveer, 2005; Rabe, 2008). Interventions generate institutional capacity when they alter how governments make decisions and implement programmes.

Finally, coalition building is about how interventions can spur the emergence and strengthening of economic and political coalitions that back decarbonisation. They can catalyse these coalitions by identifying and linking ‘winners’ in the move towards decarbonisation and neutralising losers. This entails empowering actors who have an interest in climate change, building constituencies either through creating or altering incentives or by active social movement building and utilising larger market forces.

For example, efforts to promote renewable energy portfolio standards and feed-in tariffs are designed to create winners (renewable energy companies, consumers) that can become a political force for sustained and/or broadened action (though these coalitions often face counter coalitions) (Rabe, 2007; Aklin and Urpelainen, 2013; Stokes, 2013). Even more overtly, carbon pricing initiatives commonly build in revenue distribution or compensation to build support or fend off counter coalitions, as Australia did by including subsidies to impacted sectors and flexibility mechanisms in its 2008 carbon pricing scheme (Gordon, 2015).

14.3.2 System Effects

When interventions successfully contribute to normalisation, capacity building and/or coalition building, the policies and practices they support have the potential to scale up. Scaling can take multiple forms. Most basically, climate governance interventions may start small and then grow. Growth can be in terms of size and/or range of activities; interventions attract more members and resources, expand their geographic scope or begin to undertake different types of activities. For example, the C40 Cities Climate Leadership Group began as the C20, an ironic reference to the Group of 20 (G20). The C40 Cities Climate Leadership Group has grown not only larger but also stronger – learning and demonstration effects within the network have enabled C40 cities to take the lead on climate change in a number of ways (Gordon, 2013; see also Chapter 5). Interventions might also be copied consciously in other places. This modular scaling looks like some classic versions of diffusion (e.g. Busch and Jörgens, 2005; Graham, Shipan and Volden, 2012; see also Chapter 9), or what DiMaggio and Powell (1983) call ‘mimetic scaling’. A key example of this is the proliferation of similar forms of transnational city networks over the past two decades that bring municipalities together to work on climate change at the local level (Betsill and Bulkeley, 2004).

Processes of entrenchment, like scaling, can take multiple forms. While others have noted the disruptive potential of policy innovation and experimentation to policies that lock in carbon (Jordan, Wurzel and Zito, 2003), entrenchment is the mirror image of that dynamic – processes that make new initiatives and/or the policies or practices they promote ‘sticky’ or difficult to reverse (Levin et al., 2012; see also Mahoney, 2000; Hacker, 2002; Pierson, 2004; Thelen, 2004; Page, 2006). Lock-in can occur in various ways, but the key for entrenchment is that an intervention becomes increasingly difficult to undo because the costs and benefits associated with it engender a shift towards valuing the intervention over the status quo.

The political mechanisms and scaling/entrenchment combine to shape the trajectories of actors or processes that interventions target. The feedback between them over time, along with the substance of the intervention itself, helps to determine whether an intervention will disrupt carbon lock-in and generate pathways that are truly transformational.

14.3.3 Decarbonisation through Carbon Labelling?5

To demonstrate how this framework can be used to examine the trajectories of diverse decarbonisation initiatives and therefore provide insight into functioning of the elements of a potential polycentric governance system, this section briefly outlines the case of the Carbon Trust’s carbon labelling initiative. The United Kingdom’s Tony Blair government created the Carbon Trust in 2001 as an arms-length, not-for-profit organisation designed to support decarbonisation initiatives for businesses. Perhaps its most ambitious initiative was to create a standard for reporting the carbon footprint of products to facilitate carbon labelling and stimulate consumer demand for low-carbon products. The initiative aimed to alter market dynamics in the United Kingdom, its target jurisdiction (The Economist, 2011). In its theory of change, consumer demand for low-carbon products would lead companies to mitigate GHG emissions throughout their supply chains. This logic augurs towards a system-improving pathway because incentives for decarbonisation are indirect through the assumed economic advantages that would accrue to products with lower carbon footprints rather than directly addressing lock-in.

Our analysis begins with capacity building because this intervention’s theory of change first required companies to build the capacity to measure individual products’ footprints. In 2006, the Carbon Trust pioneered such a methodology and by 2008, in partnership with UK government agencies, developed Publicly Available Specification (PAS) 2050, a measurement method of product life cycle GHG emissions (Carbon Trust, 2008: 2). Accompanying PAS 2050, the Carbon Trust also developed a series of rules for communicating product carbon footprints and reductions and established a subsidiary (the Carbon Label Company) to help companies display their products’ carbon footprint consistently and credibly (Carbon Trust, 2008: 7).

The business community initially reacted favourably. The Carbon Trust recruited a number of high-profile corporate partners, including Cadbury, Coca-Cola and Coors, to pilot carbon labels. Supermarket chain Tesco was an early adopter and vowed to put carbon labels on every one of its 70,000 products (The Economist, 2011). However, enthusiasm for carbon labelling in the United Kingdom quickly waned. Participating companies complained about the cost of calculating a carbon footprint. In 2012, Tesco abandoned its pledge to label all products, citing insufficient take-up from other retailers and costs of life cycle analysis for each product (Vaughn, 2012). By 2012, scaling and entrenchment seemed unlikely because even if capacity was in place to produce carbon labels, the idea of product-level labelling failed to normalise among consumers and corporations.

Despite the failure to generate norms around labelling in the UK market, corporations were normalising carbon management of their supply chains because of the capacity enhancements Carbon Trust provided. It turned out that the Carbon Trust methodology helped companies identify the true drivers of GHG emissions (Carbon Trust, 2008: 20). Normalisation of managing carbon in supply chains and production also spread beyond the corporations that initially agreed to participate in labelling pilot projects. Tesco’s carbon labelling intervention led its suppliers to implement their own carbon reduction and energy efficiency programmes, as did other UK-based companies (Carbon Trust, 2008: 4). The Carbon Trust intervention thus did contribute to normalisation, but not as intended. Instead of normalising carbon-conscious consuming, its methodology helped normalise carbon-conscious production and supply chain management.

In our framework, political mechanisms can spur the system effects that drive trajectories. In this case, because of the failure to normalise the idea of carbon labelling in the United Kingdom, little simple scaling occurred. Indeed, initial uptake by retailers reversed when consumer behaviour failed to provide the expected economic incentive. However, capacity building for and normalisation of carbon management amongst corporations led to significant modular scaling of the intervention. Following the launch of the Carbon Trust’s standard in 2008, a range of carbon footprinting methodologies emerged in countries around the world (France, Japan, Korea, Québec, Thailand) that drew on PAS 2050 methodologies (Sharp and Terada, 2008; Vergez, 2011: 1; KEITI, n.d.). PAS 2050 also became the basis for a number of transnational carbon labelling standards like the World Business Council for Sustainable Development and the World Resources Institute’s Product Life Cycle standard. Further, ISO 14067, a newly developed international standard for the quantification and communication of the carbon footprint of products, draws heavily on PAS 2050, and the Carbon Trust participated actively in its development (Carbon Trust, 2008: 5). Although unintentionally, the labelling intervention, through capacity building, catalysed the emergence of multiple labelling interventions in other places that draw on the Carbon Trust methodology.

Similarly, while carbon labelling failed to entrench in the UK retail market, footprinting in supply chains shows evidence of durability, exhibiting self-reinforcing and increasing returns logics. Once companies saw benefits from supply chain management of carbon footprints, those changes, and the search for ongoing improvement, became self-reinforcing. For example, one UK-based manufacturer who participated in the Carbon Trust’s footprinting pilot began to hold ‘supplier summits’ to foster cooperation and drive innovation amongst suppliers (Carbon Trust, 2008: 4).

The substance of the Carbon Trust intervention suggested that it would catalyse a system-improving trajectory. The initial failure of the intervention to scale or become entrenched through its intended theory of change would lead to a revision of that initial hypothesis and consider a system reinforcing trajectory to be the likely outcome. However, running this case through our framework highlights the importance of recursive evaluation to see what pathway it is on (i.e. improving as opposed to reinforcing or transformative), consideration of multiple forms of scaling and entrenchment and the importance of unintended consequences. Specifically, the combination of capacity building and normalisation catalysed scaling and entrenchment, but in unintended ways. Evidence suggests that carbon labelling has changed how companies mitigate their carbon emissions and interact with suppliers, helping to build coalitions of support and collaboration with suppliers, but entrenchment appears to be of management practices that saved costs, not the goal of reducing carbon footprints. In this case moving towards system improvement rather than transformation.

14.4 Nascent Polycentricity

Examining an individual intervention through this framework provides a window on how diverse decarbonisation initiatives might function and catalyse change in specific places. This analysis is a necessary step in assessing prospects for a polycentric governance system to emerge. While decarbonisation interventions are mostly independent at this point, they are not operating in isolation – they cannot. Because of the interdependent nature of carbon lock-in, decarbonisation in specific places has the potential to catalyse broader moves to decarbonisation. If a city decarbonises, this must have an impact on the province that city is located within and other cities with which that city has economic relations. Beyond this natural interdependence, we also observe the emergence of linkages among interventions – conscious and direct as well as self-organised. The potential for a polycentric governance system is becoming evident.

14.4.1 Direct Linkages

Most directly, a decarbonisation intervention in one place can alter the politics in other places or domains – see Figure 14.2. This crossover impact emerges in two ways. First, an intervention in one place can catalyse the emergence of new interventions targeting other places – what Ostrom would regard as mutual adjustment. The C40 network emerged, in part, in response to what was seen as lacuna in the main existing transnational city network at the time (ICLEI’s Cities for Climate Protection). Second, an intervention in one place can contribute to the political mechanisms at play in other systems or domains that already have a decarbonisation initiative. For example, subnational emissions trading systems like California and Québec reinforced one another (by contributing to capacity building and normalisation across these interventions) and eventually became linked, and a new system in Ontario has joined them. It is just this kind of crossover impact that has the potential to generate the reciprocity, trust and self-organisation that are hallmarks of truly polycentric governance systems.

Figure 14.2 Decarbonisation pathways across subsystems.

14.4.2 Self-organisation6

Even without direct links, ecosystems of interventions can also emerge and expand because decarbonisation initiatives open up political and economic space for further activity. Intervention begets intervention in important ways. This kind of clustering effect facilitates self-organised scaling and has the potential to engender increasing returns to interventions – a dynamic whereby adding interventions reduces the barriers to further innovations and encourages the expansion of complementary activity. Clustering produces new niches that additional interventions can fill and opens up opportunities for cooperation and competition that produces more interventions (Hoffmann, 2011). The voluntary carbon market is a quintessential example. Once carbon offsets producers emerged, this opened up room for additional interventions to make the market work – offset and carbon credit registries, carbon standard-setters and carbon accounting (compare Chapter 6). The entire voluntary carbon market is an ecosystem of interventions; each of its functions is made relevant by the functioning of others.

14.4.3 Meta Initiatives and Orchestration

Finally, more self-conscious efforts to build what Ostrom would recognise as a polycentric governance system are beginning to occur, with the trust-building, experimentation and monitoring that goes with it. One example of this is something we call ‘meta-initiatives’ – decarbonisation initiatives that are designed from the outset to consist of multiple projects in different places. For instance, the Renewable Energy and Energy Efficiency Partnership, founded in 2002 at the World Summit on Sustainable Development, promotes clean energy by providing funding, mentorship and investor matchmaking services for projects in the global South (REEEP, 2016a). The Renewable Energy and Energy Efficiency Partnership is really a facilitator of multiple decarbonisation initiatives in multiple places, providing resources and parameters for projects to follow. It seeks to catalyse innovation and experimentation in the projects that it funds, as well as to monitor and evaluate the projects with an eye towards knowledge creation, sharing and collaboration across projects (REEEP, 2016b).

As discussed in Chapters 2 and 11, we are also seeing active orchestration of diverse climate and decarbonisation initiatives. At the multilateral level, there is the Non-state Actor Zone for Climate Action (NAZCA) platform being run by the UNFCCC secretariat that ‘aims to track the mobilization and action that are helping countries achieve and exceed their national commitments to address climate change’ (UNFCCC, n.d.). Transnationally, we have the Galvanizing the Groundswell of Climate Action project that consists of ‘open dialogues that aims to bring the groundswell of climate actions from cities, regions, companies, and other groups to a higher level of scale and ambition’ (Galvanizing the Groundswell, n.d.). These orchestration platforms (van der Ven, Bernstein and Hoffmann, 2017) are working out ways to assess and account for the climate activities going on outside the multilateral negotiations (Chan et al., 2015). They may produce a medium for the kind of trust building and mutual adjustment amongst decarbonisation initiatives that are necessary components of a fully polycentric governance system.

14.5 Conclusions

Decarbonisation governance can be described as polycentric; there are now multiple domains of authority governing decarbonisation attempts in specific places. One of the main messages of this chapter has been the importance of analysing this decentralised politics in a way that simultaneously takes seriously the fact of polycentric authority but remains open-minded as to whether that politics can yet be explained or analysed as a polycentric governance system. Observing the polycentric responses to climate change has generated many important insights touched upon in this chapter and covered extensively in the rest of this volume, including the benefits of experimentation, the importance of learning and diffusion and, specifically here, the focus on scaling and entrenchment. At the same time, the decarbonisation initiatives that are currently at work in the world do not follow a polycentric logic of collective action yet. The problem of carbon lock-in (and the goal of decarbonisation in response) rests at least initially on a very different problématique – one of interlocking social, economic, technological and political systems. Acting on the system of carbon lock-in requires multiple interventions, and the problem of collective action may or may not arise secondarily to this problématique. Our framework can be used to analyse the politics of these myriad interventions both individually and in their developing linkages as a precursor to the emergence of a polycentric governance system.

A challenge in studying decarbonisation is that it is necessarily analytically speculative. We do not have completed ‘cases’ of decarbonisation to study, because moves towards decarbonisation are nascent at best, even amongst the most aggressive actors on climate change. Therefore, we focus on the study of trajectories and the political mechanisms that may produce decarbonisation pathways. This also explains our caution in jumping from the politics of decarbonisation among and between the polycentric array of governance interventions and the particular prescriptions derived from a theory of polycentricity that seeks to foster polycentric collective action (e.g. Ostrom, 2010b; Cole, 2015b). The prior step is to understand the politics of scaling and entrenchment, which may tell us something about the possibilities of these initiatives emerging into a truly polycentric system that can begin to transform the existing system of carbon lock-in.

A next step could be to combine the insights generated from this kind of analysis with those generated by other chapters in this book. Such a combination at least has the potential to analyse ways in which emergent properties of polycentricity can be leveraged to support both the scaling and entrenchment of governance arrangements with transformative potential and linkages, learning, further diffusion and coordination within a system where these myriad initiatives collectively can better achieve their ultimate goals. Indeed, if Jordan et al. (2015) are correct, such a polycentric climate governance system is already emerging.

In tandem, these approaches may be useful not only for studying decarbonisation trajectories but also for developing and nurturing them – a more normative endeavour which Ostrom herself was keen to encourage (Ostrom, 2009). Although we have not addressed normative implications of this approach in this chapter (see Chapter 1), studying the politics of trajectories also opens up space to address crucial questions of contestation over the meaning and purpose of decarbonisation. In addition, it raises questions about the values that would permeate a polycentric governance system. Which kind of initiatives would be valued? How would linkages, mutual adjustment and monitoring be agreed to? Because both decarbonisation and polycentric governance are nascent, we have the opportunity to reflect now on the ways in which pursuing decarbonisation may empower certain groups over others, or even the possibility that decarbonisation might be forced in undemocratic ways, exacerbate inequalities or pre-existing power dynamics, or be applied inappropriately in particular development contexts (Scoones, Leach and Newell, 2015). Further decarbonisation research should thus concentrate on understanding and imagining pathways that avoid the worst impacts of climate change and that are compatible with other social, political and economic values.


1. Whether these activities are actually disruptive is an empirical question. We know from existing research that many of them are not, even though their stated purpose is to address climate change (Hoffmann, 2011).

2. Of course, there may be collective action problems in launching individual initiatives.

3. This section draws extensively from Bernstein and Hoffmann 2018.

4. This perspective can complement approaches to decarbonisation that focus more on the economic and technical aspects of disrupting carbon lock-in and pursuing a low-carbon future like the Deep Decarbonisation project (SDSN, 2014) and the sociotechnical transitions literature (e.g. Jordan, 2009; Geels, 2010, 2014; Meadowcroft, 2009, 2011).

5. This section draws from van der Ven, Bernstein and Hoffmann (2017).

6. This section draws from Bernstein and Hoffmann 2018.

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15 Transferring Technologies The Polycentric Governance of Clean Energy Technology

Liliana B. Andonova , Paula Castro and Kathryn Chelminski
15.1 Introduction

Clean energy technology transfer is an important precondition for climate change mitigation and the transition to a low-carbon global economy, because clean energy technologies are costly and face a number of barriers to adoption, particularly in developing countries. Technology transfer is defined by the Intergovernmental Panel on Climate Change (IPCC) as ‘a broad set of processes covering the flows of know-how, experience and equipment for mitigating and adapting to climate change amongst different stakeholders such as governments, private sector entities, financial institutions, non-governmental organizations and research/education institutions’ (IPCC, 2000: 3). International technology transfer can involve the transfer of technical knowledge, hardware, assets and manufacturing capability from firms in one country to firms in another country (Gallagher et al., 2012). Under the United Nations Framework Convention on Climate Change (UNFCCC), this transfer occurs from developed to developing countries, and involves technology information, learning, enabling environments, capacity building and mechanisms for transfer to occur (UNFCCC, 2017a).

This chapter focuses on the governance of transferring clean energy technologies to developing countries, covering the technologies, services and processes that reduce energy consumption and enable a transition to a low-carbon economy. The polycentric approach (Ostrom, Tiebout and Warren, 1961; Ostrom, 2010) informs our analysis. Since energy and technology transfer involve multiple governing authorities and scales, polycentricity is worth exploring. While the regime complex is a concept frequently used to characterise climate and energy governance (Colgan, Keohane and Van de Graaf, 2011; Keohane and Victor, 2011), it tends to provide a snapshot of different governance arrangements and their relations. The notion of regime complexity does not fully allow for the examination of what Andonova and Mitchell (2010) describe as the ‘rescaling’ of politics, which is generating multiple nodes of governance authority both horizontally (through the proliferation of international and transnational institutions) and vertically (across local, national and regional jurisdictions). Rescaling is producing a more polycentric system of climate governance (see Chapter 1). This chapter thus questions to what extent, why and with what outcomes this governance system has become increasingly polycentric over time.

Multiple barriers stand in the way of the cleaner energy transition in developing countries – from knowledge access limitations, to market and institutional failures, weak financing institutions and limited technological adaptability to the developing country’s absorptive capacity (Acemoglu et al., 2012; Dechezleprêtre, Glachant and Ménière, 2012). Additionally, developing countries face trade barriers, intellectual property rights issues and credit access constraints (Worrell et al., 2001; Keller, 2004). Specific mechanisms of technology transfer aimed to address these different barriers, such as financing through development aid or capacity building, are thus needed to achieve clean energy development (Popp, 2011).

The intergovernmental regime under the UNFCCC has included relatively limited provisions for clean technology transfer. As a result, the Kyoto Protocol’s market-based mechanisms, in particular the Clean Development Mechanism (CDM), became the de facto instruments for diffusing clean energy technologies to developing countries. Consequently, governance instruments and financing for clean energy have also emerged across other scales of governance, including traditional players such as international development banks, but also new ones such as development banks from the global South, new intergovernmental organisations like the International Renewable Energy Agency (IRENA) and transnational governance initiatives. This all suggests a shift in the balance of clean energy governance towards a more decentralised and complex polycentric system (Jordan et al., 2015).

This chapter examines what political processes shape the polycentric structure of clean technology transfer. It analyses the early role of the UNFCCC’s technology-related and market-based mechanisms in promoting technology transfer to developing countries. It then investigates the horizontal rescaling of international institutions through the rise of initiatives in the multilateral, transnational and bilateral spheres, and the implications for polycentric governance. Finally, this chapter investigates to what extent we can observe some of the anticipated effects of polycentricity in shaping clean energy technology pathways.

15.2 Clean Technology Transfer under the UNFCCC

The first international effort to set up a governance structure to address the international transfer of clean energy technologies was made through the UNFCCC. The 1992 Convention commits all parties to ‘promote and cooperate in the development, application and diffusion, including transfer’ of technologies related to climate change mitigation, and requires developed countries to ‘take all practicable steps to promote, facilitate and finance’ technology transfer to developing countries (UN, 1992: Articles 4.1[c] and 4.5). Technology transfer was one of the three main means – along with financial support and capacity building – in which the regime intended to support developing countries in addressing climate change. A technology transfer framework and an expert group on technology transfer were created under the Convention in 2001. The main achievement of this framework was the technology needs assessment process, under which more than 85 developing countries received support in identifying the key technologies needed in combating climate change (UNFCCC, 2016).

While the technology needs assessment process was instrumental in helping developing-country governments devise a climate ‘technology action plan’, providing capacity building and information, funding for the implementation of such plans is lacking (Pueyo et al., 2011). Nonetheless, the UNFCCC reports that since 1991, its financial mechanism – particularly through the Global Environment Facility (GEF) – has provided developing countries with more than $5 billion of funding for 800 projects with mitigation technology transfer objectives. Since 2009, an additional budget of $50 million for climate technology activities was launched under the Poznan strategic programme on technology transfer (UNFCCC, 2016).

In addition, a range of bilateral and multilateral initiatives were set up early in response to the UNFCCC’s technology transfer provisions. Among them were the Technology Cooperation Agreement Pilot Project set up by the United States in 1997, as well as the Climate Technology Initiative (CTI) established in 1995 by some European and Organisation for Economic Co-operation and Development (OECD) countries. Both the Technology Cooperation Agreement Pilot Project and the CTI worked to demonstrate how developed countries could fulfil their technology transfer obligations under the Convention, while the CTI, together with the United Nations (UN) Development Programme, also directly engaged in providing assistance to developing countries in producing their technology needs assessments (Kline, Vimmerstedt and Benioff, 2004). Thus, from an initially monocentric governance structure centred on the UNFCCC, bilateral and multilateral initiatives quickly started to emerge, though mainly as a way to implement the obligations that had been centrally established.

The UNFCCC’s engagement in technology transfer to developing countries goes well beyond those made through its technology framework and financial mechanism. Several studies have highlighted the important role that the 1997 Kyoto Protocol’s market-based mechanisms – particularly the CDM – have played in promoting the adoption of clean energy technologies in developing countries (e.g. Dechezleprêtre et al., 2008; Schneider, Holzer and Hoffmann, 2008; Seres, Haites and Murphy, 2010). The CDM financially supports greenhouse gas emission reduction (or sequestration) projects in developing countries by allowing such projects to generate emission reduction credits that can be used by developed countries to meet their emission reduction obligations under the Kyoto Protocol. In terms of size, the CDM was very successful, with more than 7,750 projects and 300 multi-project programmes registered in 99 countries. These are expected to deliver more than one trillion tonnes of carbon dioxide–equivalent emission reductions per year. About 83 per cent of these projects (entailing 73 per cent of total emission reductions) involve investments related to energy generation or consumption, and can thus be regarded as potentially involving energy technology transfer.1 Larger projects and projects developed with a foreign, industrialised country partner – or by a subsidiary of a foreign firm – are usually more strongly associated with technology transfer (Haites et al., 2006; Dechezleprêtre et al., 2008; Seres et al., 2010). In financial terms, at its peak, the CDM provided significantly more resources to developing countries than the GEF (about $23 billion during 2002–2008, representing about $106 billion in primarily clean energy investment if all proposed projects are implemented), but its investments are still smaller than private foreign direct investment flows (Kossoy and Ambrosi, 2010: 42; Popp, 2011).

In part because funding was insufficient to implement the technology needs assessments, and partly due to the CDM’s success, this mechanism eventually became the de facto UNFCCC channel to transfer new technologies to developing countries, even though this was beyond its actual remit. A 2010 UNFCCC Secretariat report on the CDM’s contribution to technology transfer concluded that at least 30 per cent of projects and 48 per cent of estimated emission reductions involve some technology transfer to developing countries (Seres et al., 2010).

Over time, technology transfer through CDM projects has become less frequent. This trend signals a weakening in the extent of clean technology promotion by the Kyoto mechanisms. However, it also reflects that technological learning takes place in the host developing countries so that ‘local sources of knowledge and equipment become more established’ (Seres et al., 2010: 11; see also Dechezleprêtre et al., 2008). This learning process has taken place particularly in the three largest CDM project hosts – China, India and Brazil – while technology transfer still seems to be substantial in all other host countries.

Crucially, the host country context affects the extent to which the CDM promotes technology transfer. International technology transfer has been substantially more prevalent in CDM projects in China and Brazil than in India, at least partly because India does not set a requirement for such transfers. Also, the broader policy contexts of a country – including tariffs and barriers to technological imports, protection of intellectual property rights and openness towards foreign investment – have affected whether the CDM contributes to technology transfer. More generally, the likelihood that CDM projects take place at all – particularly for those more innovative and costly technologies for which technology transfer is most needed – is related to the existence of domestic policies that either mandate or financially support those technologies (Castro, 2014). Policies such as feed-in tariffs or other subsidies for renewable electricity complement the CDM in making these technologies more affordable and thus creating a demand that can be supplied by technology transfer. Nevertheless, research does not support the idea that the CDM has meaningfully contributed to accelerating the diffusion of such supportive policies to developing countries (Stadelmann and Castro, 2014). Finally, the domestic private sector, including its business infrastructure and technical capacity, provides the market and technical opportunities to absorb new technologies (Dechezleprêtre et al., 2008; Seres et al., 2010, Schmid, 2012).

Because of both domestic contexts and investor interests, CDM projects have not been equitably distributed across developing countries, with only three of them (China, India and Brazil) hosting 74 per cent of registered projects. Such a skewed distribution clearly has an impact on the CDM’s ability to transfer clean technology to poorer developing countries. Scholars have further critiqued the CDM for the limited extent to which it contributes additional incentives for clean technology transfer (Haščič and Johnstone, 2011; Lema and Lema, 2013, 2016). They find that in China and India, for instance, the build-up of domestic technological capacity related to wind energy preceded the CDM, and that the technology transfer channels used by the CDM already existed. They concluded that at least in these core beneficiaries, the CDM was not a major factor in creating new technology transfer mechanisms. Domestic technological capacity, policies and innovation from local firms significantly shape the broadening international technology supply channels.

To enhance the relevance of technology transfer in the climate regime, UNFCCC parties agreed in 2010 to establish a new Technology Mechanism. This mechanism comprises the Technology Executive Committee (TEC) in charge of identifying policies to accelerate technology transfer, and the Climate Technology Centre and Network (CTCN) responsible for implementation, including the provision of information, knowledge and technical assistance, and the promotion of collaboration between countries seeking assistance and technology experts (UNFCCC, 2017b). As is elaborated in Section 15.3, this new governance structure relies much more strongly on partnerships with other technology-related organisations to deliver its services.

Overall, the UNFCCC initially provided a rather monocentric impulse for technology transfer, first through the technology transfer framework and later through the CDM (even though the CDM already had substantial tasks given to private hands; see Chapter 13). Nonetheless, these instruments already had to interact with bilateral and multilateral implementation-related initiatives, and more crucially with national-level policy systems and business environments, which shaped the way in which they were able to contribute to technology transfer. By contrast, the Technology Mechanism clearly reflected the evolving polycentric nature of technology governance by directly engaging with the relevant international and national-level partners.

15.3 Horizontal Rescaling of International Institutions

In parallel with the UNFCCC, the governance of technology transfer has undergone a horizontal rescaling, with a growing number of agencies taking on mandates or programmes for clean energy (Andonova and Mitchell, 2010; Andonova and Chelminski, 2016). This institutional development has created new nodes of governance at the international level, shaping a more polycentric system. Multiple factors have contributed to such developments, including the dissatisfaction of state actors with the existing UNFCCC mechanisms and the subsequent incentivisation for the proliferation of new institutions to address the limits on the renewable energy portfolio of the International Energy Agency (IEA), as well as innovative initiatives within developing agencies (Colgan et al., 2011; Van de Graaf, 2013; Andonova, 2017). In addition, bilateral aid and regional institutions have played an increasing role; countries interested in promoting clean energy technology use them as another means to exert political influence.

The major intergovernmental actors that have played historical roles in governing clean energy technology transfer include the IEA’s Renewable Energy Unit and the United Nations Environment Programme (UNEP), with the Group of 8 (G8) and the newly created IRENA emerging subsequently. Multilateral development banks such as the World Bank and the Asian Development Bank have similarly become key players in clean energy technology transfer, and bilateral development banks, such as KfW, the European Investment Bank and the China Development Bank, are playing an increasingly central role in financing technology transfer. Altogether, these are representative of major emerging and historical players in governing clean technology transfer, whose contributions include financial and technical assistance, policy advice, capacity building and knowledge sharing.

The first avenue through which an alternative platform for clean energy was created within the IEA was through the 2008 G8 Energy Ministerial in Aomori. The G8 and China, India, South Korea and the European Union decided to establish the International Partnership for Energy Efficiency Cooperation (IPEEC) to further promote energy efficiency policies and practices. IPEEC was created as a cooperation platform hosted by the IEA, to facilitate collaboration with emerging market economies that are not IEA members, which is envisioned as a way to integrate non-OECD members into the IEA for future energy cooperation (Lesage, Van de Graaf and Westphal, 2010). The IEA hosts IPEEC, but the partnership remains legally distinct from the IEA, with a separate legal agreement.

Donor countries such as Germany – and to a lesser extent Denmark and Spain – actively promoted the creation of an international organisation dedicated to renewable energy technology and technology transfer through international conferences and by political support. In response, many international organisations and transnational initiatives have mutually adjusted to the growing proliferation of institutions. In some cases, the horizontal rescaling has led to greater synergies as a type of mutual adjustment, where overlapping institutions form partnerships such as the creation of the CTCN, detailed further in what follows. In other cases, institutional overlap has created competition and turf wars, such as between the IEA and IRENA. While there was an admitted programming overlap, the initial contention between these two organisations eventually has led to synergies and partnerships on clean energy. Thus, the specific impetus towards greater polycentricity at the international level was political on the part of certain states and international organisations, as well as institutional. The processes of mutual adjustment among development banks and international organisations to respond to the changing incentives and political interests of donor countries thus developed a more polycentric organisational landscape (Andonova and Chelminski, 2016).

Since its creation in 2009, IRENA now has 154 member states and 26 states in accession (180 total), and a budget that rivals the IEA (IRENA, 2017). Unlike the IEA, which has OECD countries as its core members, IRENA is located in the United Arab Emirates, a developing country under the UNFCCC categorisation. Its location signals how governance authority needs to encompass a geographical shift to engage particularly emerging and developing markets. IRENA’s contribution to technology transfer lies in its capacity-building programmes, policy and technical expertise, training, knowledge sharing and financing for renewable energy pilot projects. The IRENA/Abu Dhabi Fund for Development Project Facility is a $350 million concessional loan to finance ‘innovative, replicable renewable energy projects in developing countries’, which embodies the aims of technology transfer. Since 2012, $144 million in loans (and $189 million leveraged through co-financing) have already been allocated to 19 renewable energy projects recommended by IRENA, including wind, solar, geothermal, hydro, biomass and bioenergy and hybrid technology. Questions remain as to whether IRENA will accomplish its goals to reduce information asymmetries, facilitate technology transfer in developing countries and build political consensus for renewable energy (Van de Graaf, 2013).

More than 10 years prior to IRENA’s creation, UNEP acted with considerable governance entrepreneurship in promoting renewable energy technology transfer through knowledge management, policy advising and partnerships. In 1997, UNEP’s technical Division of Technology, Industry and Economics created a new Energy Branch, which has since developed a substantial portfolio on renewable energy and energy efficiency, in anticipation of a growing interest among industry and policy circles in diverse mechanisms to support clean energy transfer after the adoption of the Kyoto Protocol (Andonova, 2017). UNEP was subsequently selected as the host of the CTCN, which was created under the UNFCCC. The networked structure of the CTCN – with authority under the UNFCCC, managed by UNEP, and including both intergovernmental and transnational organisations – represents a political recognition of the polycentric nature of clean energy governance and the need for greater coordination across its various horizontal nodes internationally, and vertically to domestic policies. The United Nations Industrial Development Organisation and 11 Centres of Excellence across developed and developing countries collaborate with UNEP to stimulate technology cooperation and enhance technology transfer through technical assistance, information and knowledge sharing and networks of collaboration (CTCN, 2017).

Development banks have similarly become important actors in clean energy transfer, creating another set of nodes in the horizontal rescaling of clean energy governance. UNEP and Bloomberg New Energy Finance found that financing from development banks was approximately $84 billion in 2014. The largest funders of clean energy were KfW ($28.3 billion), the European Investment Bank ($11.7 billion), the World Bank Group ($9.4 billion), Brazil’s Brazilian Development Bank ($6.3 billion) and the China Development Bank ($6 billion), in addition to funding from the Asian Development Bank, the European Bank for Reconstruction and Development, the African Development Bank, the Japan Bank for International Cooperation and the Export-Import Bank of China ranging from $1.6 billion to 3 billion (UNEP and BNEF, 2016; BNEF 2016).

The World Bank entered the business of climate financing shortly after the adoption of the Kyoto Protocol, largely on its own initiative and with the financial support of donors with proactive climate policies and of private actors (Andonova, 2010). By 2008, the expansion of climate finance and the greater consensus among all major donors of the Bank resulted in the creation of the Climate Investment Funds (CIFs), whose programmes were subsequently extended to the regional development banks (Andonova, 2017; Newell 2011). The CIFs play a significant role in technology transfer by financing mitigation and adaptation activities, including renewable energy development and forest management in developing countries. The major funds related to technology transfer include the Clean Technology Fund ($5.6 billion) and the Scaling Up Renewable Energy in Low Income Countries Programme ($780 million) fund (World Bank, 2017). The $8.3 billion in CIF pledges are expected to attract an additional $58 billion in co-financing for the more than 300 projects. Equally importantly, the CIFs are to work with developing country governments in developing strategies for low-carbon development and technology investment.

Studies of polycentric systems rarely ask how the layers of such systems became established, and instead focus on the functions and effects of polycentricity. Our discussion reveals how both political incentives and governance entrepreneurship can provide a strong impetus for the horizontal rescaling of authority 2010. The emergence of multiple institutional nodes working on clean technology transfer in the multilateral system was created by institutions reacting to donor countries incentivising new institutions and institutional expansion into the clean energy domain, coupled with organisational entrepreneurship of the creation of new programming or partnerships related to clean energy. Donor countries incentivised institutional change to promote their respective agendas related to energy governance, which in the case of Germany was to support multilateral solutions to technology transfer, and in the case of the United States was to pursue a unilateral agenda or club governance. Governance entrepreneurs within organisations such as UNEP or the World Bank similarly saw windows of opportunities to propose new financing mechanisms for climate and clean energy that supported their mandates and expanded their resources (Andonova, 2017). We observe mutual adjustment amongst governing units, but also competition and contention. The significant role of the World Bank and other development banks has raised concern about the role of the more broadly representative UNFCCC framework, creating in turn a stimulus to new institutional developments such as the CTCN and the Green Climate Fund (Nakhooda, 2011; Newell, 2011; Andonova, 2017). The polycentric landscape of clean technology governance is therefore best understood as an evolving one.

15.4 Transnational Governance and Clean Technology Transfer

Transnational initiatives for clean energy, which link subnational and non-state actors across borders for the purpose of advancing a set of common governance objectives, represent a third layer in the rescaling of clean technology governance towards greater polycentricity (Bulkeley et al., 2014; Andonova, Hale and Roger, 2017; see also Chapter 4). Several drivers have, in turn, contributed to the rise of such initiatives. First, several transnational climate governance initiatives that involve local actors such as cities or regions depend on the realisation of local and global co-benefits. An example is the optimisation of energy resource use or efficiency enhancement in buildings and transportation, which achieves global sustainability objectives of emissions reduction while serving the needs of local communities. A number of cities initiatives for climate change, such as ICLEI – Local Governments for Sustainability (originally called the International Council for Local Environmental Initiatives), Energy Cities and the Covenant of Mayors, have major energy optimisation components (Betsill and Bulkeley, 2004; Bulkeley et al., 2014; Dolšak and Prakash, 2017). Second, the emphasis on clean energy of many transnational initiatives has reflected the initially weak intergovernmental mechanisms for technology transfer beyond the project-based CDM. For example, the private Gold Standard for voluntary certification of project-based carbon offsets was created with the explicit purpose of rewarding projects that emphasise sustainable development co-benefits, such as investment in renewable energy technologies. For countries interested in advancing clean energy cooperation, transnational clean energy partnerships have provided informal but useful vehicles of influence. After the exit of the United States from the Kyoto Protocol in 2001 and the unsuccessful effort of European countries to promote an intergovernmental agreement in 2002 on clean energy sources due to limited interest by both developing and major industrialised countries, transnational initiatives such as REN21 and the Renewable Energy and Energy Efficiency Partnership created an alternative vehicle to promote collaborative effort by interested parties (Andonova, 2010; Pattberg et al., 2012). The peaks of transnational clean energy initiatives, first in 2001–2005 and subsequently in the 2006–2010 period, reflect these political drivers (Figure 15.1).

Figure 15.1 Emergence of the polycentric governance system for clean energy technology transfer.

Sources: Bulkeley et al. (2014) and Barnsley and Ahn (2014).

Unsurprisingly, many of the early transnational clean energy initiatives reflect specific interests pursued by their members. The United Kingdom initiated the Renewable Energy and Energy Efficiency Partnership in 2002 to advance investment in renewable energy by tackling (through capacity building and project-based investment) specific barriers to technology diffusion (Pattberg, 2010). The United States launched the (now-defunct) Asia-Pacific Partnership on Clean Development and Climate. It promoted a technology-oriented approach, albeit with a different conception of clean technology, which included clean coal. In the run-up to the 2015 Paris Agreement, India – together with France – initiated the International Solar Alliance (Government of India, 2017), a new transnational partnership reflecting the growing role of emerging markets and greater recognitions of the synergies between the UNFCCC and transnational governance (Hale, 2016; Andonova et al., 2017).

Public-private partnerships have thus tended to dominate transnational governance for clean energy since 2000 (Andonova and Chelminski, 2016). Very few transnational initiatives involve solely private or non-state actors. The influence of private actors on clean energy diffusion and transfer has materialised primarily through market mechanisms and foreign direct investment, encouraged importantly by the recent upsurge of national policies related to clean energy technologies in large emerging economies such as China and India (Lewis, 2007; Wang, Qin and Lewis, 2012).

The domain of transnational governance for clean technology transfer has thus created space for experimentation with innovative mechanisms of governance when intergovernmental cooperation stagnated (Hoffmann, 2011; see also Chapter 4). It also subsequently triggered linkages between local, national and transnational initiatives (Andonova et al., 2017). These initiatives have performed specific functions in the larger polycentric system. Figure 15.2 reflects our coding of transnational clean energy initiatives that advance instruments specifically for technology implementation and transfer, compared to those that focus largely on knowledge barriers and policy diffusion and do not incorporate instruments such as financing of technology investment or project-based mechanisms. The sample of 34 clean energy initiatives was derived by extracting from the database on transnational climate governance (Bulkeley et al., 2014) only those initiatives with an explicit focus on clean energy, complemented with transnational networks listed in the IEA survey on clean energy cooperation (Barnsley and Ahn, 2014). Since almost all initiatives tend to involve capacity-building components (Bulkeley et al., 2014), Figure 15.2 does not include separate coding for capacity support, but examines the extent to which transnational governance promotes more direct measures of technology transfer versus policy and knowledge diffusion.

Figure 15.2 Transnational initiatives: technology implementation and policy diffusion.

Figure 15.2 shows that about 38 per cent of the transnational governance initiatives have promoted direct mechanisms of technology transfer, typically through project-based financing and the diffusion of technologies. They have developed in parallel with the CDM to promote a set of technologies, often reflecting the specific agenda of funding and recipient countries (Pattberg, 2010; Taplin and McGee, 2010). The larger share of clean energy initiatives (62 per cent) has placed a strong focus on policy learning, diffusion and reducing knowledge barriers. The REN21 network, for instance, was created in 2002 to address multiple information gaps by providing a platform embedded in UNEP to involve both policymakers and non-state actors, such as renewable industry associations and NGOs. During the 2000s, REN21 became a premier source of information on renewable energy technology and public policies, coordinating with institutional players such as the IEA, IRENA, UNEP and the World Bank, as well as national administrations, NGOs and researchers. Transnational initiatives have provided an important vehicle to create linkages and foster a degree of mutual adjustment in the polycentric system that has emerged – vertically across subnational and international objectives, as well as horizontally across formal and informal international institutions. The creation of Sustainable Energy for All (SE4All) in 2012 and the adoption of Affordable and Clean Energy as one of the Sustainable Development Goals in 2015 have codified at the level of the UN General Assembly the relevance of polycentric governance for a clean energy transition, including – as anticipated by the work of Ostrom (2010) – the need to recognise the role of multiple authorities at different scales. SE4All became possible through the leadership of Ban Ki-moon, then the UN Secretary-General, supported by other international organisations, transnational initiatives and negotiations of UN member states for the adoption of the UN General Assembly Resolution 65/151 in 2011 declaring 2012 the International Year of SE4All (UN, 2011; SE4All, 2017). The network structure of these universal commitments on clean energy under UN frameworks creates a loosely coordinated system of the multiple levels and instruments of clean energy governance that have developed over the past two decades.

15.5 Polycentric Governance and Mechanisms of Technology Transfer

The governance of clean energy technology has evolved considerably towards a polycentric system since the adoption of the UNFCCC, as shown in Figure 15.1. Multiple governance structures operate at the international and transnational levels, connecting actors engaged in the diffusion and implementation of cleaner energy technologies. What instruments and mechanisms has established this polycentric system to advance the objective of clean technology transfer?

Project-based deployment of cleaner technology appears in our analysis as the dominant mechanism of technology transfer. Supported substantially by the flexibility mechanisms of the Kyoto Protocol, a large share of the resulting projects have stimulated the deployment of cleaner energy technologies. The verdict is still out, however, if the glass is half full or half empty. As we discussed earlier, about 80 per cent of all CDM projects have a strong clean energy component. However, less than half of all projects reported involve some technology transfer to developing countries, with the rate of technology transfer varying strongly across project types and host countries and decreasing over time. Nonetheless, the CDM has also had a catalytic effect (Hoffmann, 2011) in terms of stimulating private project-based schemes for carbon offsets, many of which target either forestry projects or the advancement of a higher share of clean energy technologies. Several transnational public-private partnerships and cities networks, such as the Renewable Energy and Energy Efficiency Partnership, the UN Fund for International Partnerships and ICLEI, facilitate project-based climate actions that include the advancement of renewable energy and energy efficiency technologies.

Financial support has become another important instrument to reduce some of the financial barriers and capital risks for the development of clean energy technology in developing countries. Unlike the original centralised design of the GEF as the first international funding mechanism for climate mitigation, finance for clean energy technology developed laterally through expanding programmes of international organisations and donor governments. The World Bank was first to experiment with climate funds to support the development of carbon offset projects in line with CDM requirements. After the G8 Gleneagles Summit of 2005, and the greater – albeit soft – agreement among major economies to encourage clean energy diffusion, there was a substantial increase in bilateral donor funding and the creation of a new financial facility, the CIFs. The proliferation of financial mechanisms and the engagement of development banks may have created overlaps and raised concerns about the role of the UNFCCC. The creation of climate funds and donor programmes to support technology transfer in developing contexts also fostered experimentation and demonstrated that multiple mechanisms can be used to generate financial support. There is still limited systematic assessment of the impact of these multiple streams of international and transnational finance on clean energy projects; recent studies suggest that international assistance has been a key driver of reducing financial barriers to investment in sectors such as geothermal development (Chelminski, 2017). However, the polycentric structuring of governance has frequently failed to overcome the limited coordination among institutions working on the ground in developing countries. Therefore, gaps often remain between developing country needs and limited domestic capacity for project implementation, despite continued flows of international finance.

The pooling of credible knowledge on renewable energy technologies and on policy instruments for clean technology and energy efficiency was initially the driving mechanism of clean technology governance. The comparative advantage of organisations such as the IEA and UNEP was precisely in developing programmes for technical support and information on specific sectors or areas of low-carbon technology development. UNEP developed sector-specific strategies with member states and non-state actors, focusing on energy and agriculture, efficient lighting, sustainable biofuels and efficiency in buildings (Andonova and Chelminski, 2016). The IEA has been the main source of credible information on technology trends, but also on country- and sector-specific technologies. Before the creation of IRENA, REN21 developed as a platform for knowledge-sharing across countries, industry and development organisations. It quickly became a premier source of up-to-date information on renewable technologies and policies, drawing on governmental sources as well as on credible non-governmental and academic information (Andonova, 2017).

The structure and functions of the polycentric system governing clean technology transfer reveals relatively limited emphasis on capacity building as a mechanism to unblock barriers to clean technology uptake and implementation. For instance, the early climate finance mechanisms of the World Bank were criticised for predominantly funding projects in large emerging markets and transition countries, a pattern that replicated rather than corrected the uneven distribution of CDM projects (Michaelowa and Michaelowa, 2011). Indeed, the capacity of states to attract project-based technology transfer and financing has been an important factor shaping these flows. At the same time, targeted capacity building under the CDM or climate finance instruments remained limited and unevenly applied. The IEA provides energy statistics training for non-IEA member states (aimed at developing countries) to build institutional capacity by developing tools for governments to maintain accurate energy datasets and national energy balances. Institutional capacity building to implement reforms and new policies is an important step in technology transfer, but it has represented only a fraction of overall finance, such as in geothermal development in Indonesia and the Philippines, for example, representing a major gap in technology transfer governance (Chelminski, 2017).

Regulatory mechanisms are almost entirely lacking in international and transnational governance initiatives, reflecting the unwillingness of states to organise clean energy technology cooperation around a specific binding agreement (see Chapter 14). Instead, since the creation of IRENA and the expansion of transnational and international programmes, several coordinating mechanisms were established across levels of polycentric governance. Importantly, these coordinating structures have been enabled by institutions with broad and quasi-universal membership, including the UN General Assembly, with the endorsement of SE4All and Sustainable Development Goal 17 and the UNFCCC. For instance, under the UNFCCC, the CTCN was established to facilitate technology transfer by providing technical assistance when this is requested by developing countries, improving access to information and knowledge on climate technologies and fostering collaboration among climate technology stakeholders (UNFCCC, 2017b).

Despite this lack of emphasis on regulation at the international and transnational level, domestic regulation still plays a crucial role in support of such technologies, either through ‘technology push’ mechanisms such as the promotion of research, development and deployment programmes, or through ‘demand pull’ mechanisms that financially support upscaled deployment. Particularly in the more advanced and technologically proficient developing countries, it has been shown that it is mostly appropriate domestic structures – including both regulation and an active private sector that sees the business opportunity in deploying new technologies – that are needed to achieve technology transfer and development. This point supports the need for increased institutional capacity building at the national and subnational levels of government to support technology transfer. More research is needed to find out whether the purported catalysing role of international and transnational initiatives is stronger in less developed countries. Given the importance of the private sector, it may well be that transnational initiatives, which more directly involve private actors including businesses, will further gain prominence in the future.

15.6 Conclusions

The governance of clean energy technology transfer has evolved towards a polycentric system due to diverging state interests, mutual adjustment and experimentation. As state actors – from both the global North and the global South – were dissatisfied with the existing regimes, their interests to pursue other forums through forum-shopping and institutional creation led to the development of a polycentric system. The rise in multiple nodes of authority – including the UNFCCC, UNEP, SE4All and IRENA – combined with the growing actors at multiple levels of governance – including the international, regional, bilateral, national, transnational and local levels – can be conceptualised as a form of polycentric governance. The polycentric system has become more authoritative and legitimate over time, with high-level recognition of its structure at the UN level. Nonetheless, there are still questions about the extent to which a polycentric system promotes international equity, particularly for the least developed countries. This chapter shows that countries with proactive policies and financial capacity have often driven institutional development towards a more flexible and innovative polycentric system. Large emerging countries and other developing countries with relatively strong domestic policies have been, at least initially, the main beneficiaries of its various components. The increasingly polycentric structure of the governance of clean technology opens new avenues for research on its effectiveness and equity implications across jurisdictions and evolution of the system over time.


1. Data provided by UNEP DTU Partnership (2017).

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16 Governing Experimental Responses Negative Emissions Technologies and Solar Climate Engineering

Jesse Reynolds
16.1 Introduction

Parties to the 2015 Paris Agreement strive to ‘hold … the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C’ (UNFCCC, 2015: Article 2.1[a]). In response to the growing realisation that atmospheric greenhouse gas (GHG) levels will likely exceed the concentrations associated with these goals, some scientists and others are researching responses that are novel, experimental and technological. They suggest the consideration of intentional, large-scale interventions in earth systems to reduce climate change. Since the mid-2000s, discussions of these ‘climate engineering’ or ‘geoengineering’ techniques have steadily moved from the fringes of climate change discourses towards the mainstream.

A seminal 2009 report on climate engineering by the United Kingdom’s Royal Society concluded, among other things, that ‘[t]he greatest challenges to the successful deployment of geoengineering may be the social, ethical, legal and political issues associated with governance, rather than scientific and technical issues’ (Shepherd et al., 2009: xiii). Given that some of these proposed techniques appear to have the potential to substantially reduce climate change, while posing risks of their own, climate engineering governance has emerged as a salient issue.

This chapter places the governance of climate engineering in a polycentric governance conceptual framework. Following an introduction to climate engineering proposals and their governance needs, I discuss existing climate engineering governance. The chapter then explores the extent to which climate engineering governance is polycentric, prospects for its future polycentricity and what – if anything – this implies for climate governance more generally.

16.2 Climate Engineering

Proposed climate engineering techniques are diverse with respect to their means of operation, current levels of development and readiness, capacities to reduce climate change, forecast costs, speeds, co-benefits, environmental and social risks and uncertainties. They also vary in their political aspects, including their incentive structures, likely roles of public and private actors, degrees of integration in climate policy discourses and governance needs.

Climate engineering would operate through one of two distinct primary means. The first would be to remove carbon dioxide from the atmosphere and sequester it for a long time (McNutt et al., 2015a). Generally, these ‘carbon dioxide removal’, ‘greenhouse gas removal’ or ‘negative emissions technologies’ (NETs) would – relative to the second primary means of climate engineering – be expensive, act slowly, pose low and local risks that differ among the specific proposed techniques, address climate change close to its cause and intervene less forcefully into natural systems.

Brief descriptions of some proposed NETs, their capacities to remove carbon dioxide and their risks can concretise the concept. First, machines could extract carbon dioxide from the air and then store or reuse it. This ‘direct air capture’ appears to have great sequestration capacity, poses little risk besides that of leakage (carbon dioxide is poisonous at high concentrations) and is presently being developed by a few private firms (Marshall, 2017). Second, plants could be grown – a process that captures atmospheric carbon dioxide – and then burnt to produce energy while the emitted carbon dioxide could be captured and stored. At large scales, this ‘bioenergy with carbon capture and storage’ would require large amounts of arable land, constraining its capacity, increasing food prices and threatening biodiversity. Bioenergy with carbon capture and storage would, like direct air capture, also have leakage risks. Third, the locally limiting nutrient could be added to marine waters, increasing the growth of plankton that indirectly incorporate atmospheric carbon dioxide. Such ‘ocean fertilisation’ would pose risks to marine ecosystems and would be difficult to verify. It was the subject of more than a dozen field trials in the 1990s and 2000s, but interest has since declined due to public controversy and disappointing and uncertain results. Finally, industrial processes could accelerate the natural weathering of minerals, through which carbon dioxide transforms into a dissolved salt. Some tests have been conducted, but scaling them up would be challenging. Although each NET could contribute to lower atmospheric GHG concentrations, none could resolve the problem singlehandedly.

NETs have become partially integrated into the climate policy mainstream. The more optimistic emissions scenarios include large amounts of NETs. Specifically, the Representative Concentration Pathways used by the Intergovernmental Panel on Climate Change (IPCC) that are expected to keep global warming below 2°C assume the implementation of bioenergy with carbon capture and storage at remarkable scales, on the order of 10 gigatons of carbon dioxide per year (van Vuuren et al., 2011; Fuss et al., 2014: 851). To give a sense of that magnitude, this would be more than double the mass of current annually global harvested crops, which is four gigatons per year (Alexander et al., 2017: 194). Many observers note that such assumptions might have problematic consequences: unrealistic expectations could be fuelled and emission abatement efforts could be undermined (Anderson and Peters, 2016). Since the mid-2000s, NETs have become the subject of dedicated but modest funding mechanisms, academic research, attention from advocacy organisations and limited private investment.

NETs would have governance needs akin to emissions abatement. This is because, for both practices, the actor implementing the NET would bear the costs and risks while the entire globe would share the benefits of lower GHG concentrations. NETs thus present a global collective action problem and the associated challenge of free-riders. To be effective, governance would need to: incentivise NETs’ research, development and implementation; monitor, report and verify their use; assure those who use them that others are not free-riding; minimise environmental and social risks; and compensate those who have been harmed. As with other climate-related technologies, governance should also facilitate knowledge transfer and learning, including internationally. Together, these needs imply that NETs governance could in principle consist of a mix of global, national, subnational and private governance instruments and institutions.

The second general means of climate engineering would be to block or reflect a small portion of the planet’s incoming solar radiation, which would counteract climatic change (McNutt et al., 2015b).1 Generally, these solar climate engineering (SCE) or ‘solar radiation management’ techniques would – relative to NETs – be inexpensive and rapidly effective, pose serious environmental and social risks, treat merely the symptoms of climate change and intervene forcefully into natural systems. At a gross level, SCE appears to be able to greatly reduce climate change and concomitant risks. Presently, SCE remains largely outside of mainstream climate policy discourses, although that appears to be slowly changing. Research funding has been ad hoc, advocacy organisations’ interest has been minimal and there are no SCE businesses. Dedicated, explicit outdoor experiments of SCE techniques are planned but have not yet been conducted (Keith, Duren and MacMartin, 2014; Gertner, 2017).

Two proposed SCE techniques hold particular potential. In the leading one, small aerosol particles would be injected into the stratosphere, blocking some incoming sunlight and cooling the planet, similar to how large volcanoes do. This ‘stratospheric aerosol injection’ appears to be technically feasible and has the capacity for nearly unlimited cooling. The second technique would involve spraying seawater upward as a fine mist. After evaporation, the remaining salt particles would act as cloud condensation nuclei and cause marine clouds to be brighter. Such ‘marine cloud brightening’ faces technical hurdles, but could, in theory, compensate for perhaps 1°C or 2°C warming.

As noted, SCE would pose environmental and social risks. First, it would unevenly compensate anthropogenic changes in temperature and precipitation, resulting in areas with residual climatic anomalies. Second, the leading candidate material for stratospheric aerosol injection – sulphur – could damage stratospheric ozone, although other materials are under consideration. Third, countries and other actors might disagree about the timing, form and intensity of SCE implementation, a possibility made more problematic by the apparent low direct financial costs and technical feasibility of SCE. Fourth, if SCE were to stop suddenly for some reason after a long implementation period at a strong intensity, the planet’s climate would rapidly experience the previously suppressed climate change. Finally, as with NETs, SCE’s development might undermine conventional emissions abatement efforts.

The primary governance needs of SCE are distinct from those of NETs and emissions abatement, for two reasons. First, not only SCE’s reduction of climate change but also its environmental risks would be global. This implies that governance of SCE implementation would ultimately need to likewise be global and – given the high stakes – likely state-centric. Second, SCE appears to have such low direct implementation costs and to be so effective at reducing climatic anomalies that it could – at least in principle – be in the self-interest of a single country to implement it unilaterally and bear all the financial costs. Thus, instead of the free-rider problems of emissions abatement and NETs, SCE would face a ‘free-driver’ problem, in which states would provide it excessively and prematurely (Weitzman, 2015). The primary governance challenge would thus be one of mutual restraint (Barrett, 2007). At the same time, SCE shares some other governance needs with NETs. For example, within countries, its research and development would still be a public good and thus need to be encouraged through, for example, grants. Internationally, research should be coordinated and collaboration facilitated. Governance should also reduce environmental and social risks as well as arrange compensation for any harmed groups. These secondary governance activities need not be centralised, but might benefit from it.

16.3 Current Governance
16.3.1 International Legal Instruments and Institutions

Given the transboundary and even global impacts of both climate change and climate engineering, as well as the low level of national and non-state climate engineering governance activity, existing international legal instruments and institutions offer a foundation for climate engineering governance (Reynolds, 2014). Their implications vary for the different climate engineering techniques, and especially between NETs and SCE. Furthermore, because existing international law was not developed with climate engineering in mind, interpretation is central. A central challenge here is that both climate engineering and the climate change that it would seek to reduce pose environmental risks. Indeed, both phenomena satisfy definitions of ‘pollution’, ‘adverse effects’ and ‘damage’ in various international environmental agreements.

International law presumptively permits countries to undertake and to allow actions conducted by legal persons under their control. Indeed, the sovereign right of states to exploit their natural resources as they see fit is a foundational principle of international law (UNGA, 1992: Annex I, Principle 2). At the same time, if their own activities or activities under their control pose risks of significant environmental harm that would cross borders or affect areas beyond national jurisdiction, countries have the obligation to prevent and reduce such transboundary harm by exercising due diligence pursuant to customary international law. This duty includes taking measures to prevent or reduce potential harm; review by national authorities; prior environmental impact assessment; notification of, consultation with and cooperation with the likely affected public and countries; emergency plans; and monitoring. Some climate engineering activities, particularly the large-scale field research and implementation of SCE and of ocean fertilisation, would pose transboundary risks, and – in those cases – countries would have these obligations. If a state’s actions that are contrary to international law were to have negative transboundary impacts, then the customary international law of state responsibility would be applicable. In that case, the state should: cease the activity; assure that it will not recur; provide reparations through restitution, compensation and satisfaction; and offer victims access to legal remedies.

Among treaties, the regime established by the United Nations Framework Convention on Climate Change (UNFCCC) appears to be a logical home for international climate engineering governance. Yet the climate agreements are, in some ways, ambiguous in this respect, which is largely understandable given that the first two of the three treaties of the regime were developed before climate engineering was subject to more than marginal consideration. The UNFCCC does not restrict how states may help stabilise GHG concentrations, and the Paris Agreement largely leaves it up to individual states how they will contribute to limiting global warming to its targets. Furthermore, the institutions related to the UNFCCC – such as its Conferences of Parties and its Subsidiary Body for Scientific and Technological Advice – have been noticeably silent on climate engineering.

Nevertheless, NETs do fall clearly within the purview of the UNFCCC. The objective of the UNFCCC is the rapid ‘stabilisation of atmospheric GHG concentrations at a level that would prevent dangerous anthropogenic interference with the climate system’, and the acceptable means of doing so explicitly include the enhancement of sinks and reservoirs of GHGs (UNFCCC, 1992: Articles 2 and 4.1[d]). Parties to its 1997 Kyoto Protocol agree to research and promote ‘carbon dioxide sequestration technologies’ (UNFCCC, 1997: Article 2.1[a][iv]). Furthermore, the Paris Agreement calls for limiting global warming by achieving ‘a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases’ (UNFCCC, 2015: Article 4.1). In order to integrate NETs into the climate regime, parties to these treaties should agree upon the extent to which they may rely upon NETs in their emissions reporting and trading systems. Parties to the UNFCCC have already adopted rules with respect to land use, land use changes and forestry – which resemble NETs – but this has been protracted and challenging. Such a process for the diverse proposed NETs would likely be as well.

How the climate regime might govern SCE is much less clear. The technologies have a less clear relationship with the objective of the UNFCCC. Specifically, SCE could decrease ‘anthropogenic interference with the climate system’ caused by GHGs, in turn allowing for greater atmospheric GHG concentrations. Regardless, SCE could contribute to the the objective of the Paris Agreement (UNFCCC, 2015: Article 2.1[a]). Both agreements are implicitly favourable to at least the research and development of SCE. The UNFCCC’s hortatory passages call for states to rapidly and inexpensively minimise the adverse effects of climate change ‘so as to ensure global benefits at the lowest possible cost’, for anthropocentric reasons and balanced with goals that include economic development and food production (UNFCCC, 1992: Articles 1.1, 2, 3.1 and 3.3). In addition, UNFCCC parties made multiple commitments to undertake research and to develop and diffuse new technologies (UNFCCC, 1992: Articles 4.1[g] and [h], 4.3, 4.7, 4.8, 4.9 and 11.1). SCE research, development and possible implementation could contribute to these goals.

Among climate engineering techniques, ocean fertilisation is an exception in that international legal institutions have given it specific attention. In the late 2000s, two private firms announced their intentions to fertilise the ocean in order to sell carbon credits, despite the uncertainty regarding the effectiveness of the techniques, the possible environmental impacts and the marketability of the credits. The United Nations General Assembly and an ad hoc consultative group to the Intergovernmental Oceanographic Commission of the United Nations Educational, Scientific and Cultural Organisation (UNESCO) released statements that emphasised both the potential and the risks of ocean fertilisation (UNGA, 2007; IOC-UNESCO, 2008: 2–3). The parties to the London Convention and London Protocol, which regulate ocean dumping, established a working group and the Legal Intersessional Correspondence Group on ocean fertilisation, and agreed that ocean fertilisation should not be allowed except for legitimate scientific research (IMO, 2008). They later developed an assessment framework for determining whether a proposed activity qualifies as legitimate scientific research (IMO, 2010). In 2013, the London Protocol parties approved an amendment, not yet in force, to that agreement. This would apply a similar standard to the broader category of ‘marine geoengineering’, which could include some forms of both NETs and SCE undertaken in the marine environment (IMO, 2013). Furthermore, the Joint Group of Experts on the Scientific Aspects of Marine Environmental Protection of the International Maritime Organisation established a working group on marine geoengineering to, among other things, help operationalise this amendment (GESAMP, n.d.).

Meanwhile, the parties to the Convention on Biological Diversity (CBD) expressed their concern and requested that countries not allow ocean fertilisation, except for small-scale studies, until there is an adequate scientific basis, consideration of the risks and effective regulation (CBD COP, 2008: paragraph C.4). They went on to later broaden their statement to include all climate engineering activities that may affect biodiversity (CBD COP, 2010: Paragraph 8[w]). In 2016, they reaffirmed their previous statements while also noting that more research is needed (CBD COP, 2016). The CBD statements are the only outputs of an international legal institution with widespread participation that address climate engineering in its entirety.

The United Nations Convention of the Law of the Sea is another international legal agreement with broad participation that could contribute to international climate engineering governance. This could apply to a wide range of climate engineering techniques because its parties have committed to protect and preserve the marine environment, which is usually understood to include the marine atmosphere (UNCLOS, 1982: Article 192; Frank, 2007: 12). In this, they are to – among other things – ‘prevent, reduce and control pollution of the marine environment from any source’, including from land-based sources (UNCLOS, 1982: Article 194). Notably, the definition of pollution in the United Nations Convention of the Law of the Sea implicitly includes GHGs, global warming and – if it were likely to have deleterious effects on people and the marine environment – climate engineering (UNCLOS, 1982: Article 1.1[4]). Applying such provisions to climate engineering would require a difficult balancing of the impacts on the marine environment of climate change and climate engineering.

A handful of other international legal instruments could also play roles. First, many climate engineering techniques would satisfy the definition of ‘environmental modification’ under the Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques (UNGA, 1976: Article II). The parties to this agreement would be obligated to refrain from military and hostile uses of climate engineering that would have widespread, long-lasting or severe effects as their means of harm (UNGA, 1976: Article I.1). At the same time, the treaty calls for the peaceful development of environmental modification (UNGA, 1976: Preamble and Article III). Second, if stratospheric aerosol injection SCE were to contribute to the depletion of stratospheric ozone – as sulphur, the leading candidate substance, might – then the Vienna Convention for the Protection of the Ozone Layer and its Montreal Protocol could regulate the activity. Third, stratospheric aerosol injection SCE with sulphur could also fall within the purview of the Convention on Long-Range Transboundary Air Pollution and its protocols. Under this treaty, European and North American countries agreed to reduce acid rain precursors, including atmospheric sulphur. Finally, the Governing Council of the United Nations Environment Programme (UNEP) developed nonbinding Provisions for Co-operation between States in Weather Modification. As with the Environmental Modification Convention, many climate engineering methods – especially SCE – would satisfy this document’s definition of weather modification (UNEP, 1980: footnote). It is supportive of weather modification ‘dedicated to the benefit of mankind [sic] and the environment’, asks states not to use it to harm other states’ environments and areas beyond national jurisdiction and calls for international cooperation and communication (UNEP, 1980: paragraphs 1[a], 1[b], 1[f] and 1[h]).

Finally, some intergovernmental institutions have engaged with climate engineering. For example, the IPCC held an expert meeting on climate engineering and is expected to dedicate a chapter to the topic in its next Assessment Report (Edenhofer et al., 2012; Goldenberg, 2016). Meanwhile, the IPCC special report on the 1.5°C goal will, among other things, assess the ability of NETs to contribute to the goal (IPCC, 2016). UNESCO hosted an expert meeting, whose participants proposed an international climate engineering research programme sponsored by UNESCO’s Intergovernmental Oceanographic Commission, the International Council for Science and the World Meteorological Organization (UNESCO, 2010). That latter institution is developing a position statement on climate engineering (Bruintjes, 2015). In this process, it will reportedly cooperate with the World Climate Research Programme, the Intergovernmental Oceanographic Commission, the International Maritime Organization and other bodies.

16.3.2 Countries and the European Union

States either are involved in climate engineering governance only at the margin or are absent entirely. In addition to participating in the CBD and London Convention and London Protocol negotiations described earlier in this chapter, a few countries have taken specific actions in this area. The governments of both the United Kingdom and Germany have issued reports, offered dedicated funding for research and issued official statements that cautiously support the consideration of climate engineering (UK Department of Energy and Climate Change, 2010; Schütte, 2014). The governments of China, Finland, India, Japan and Norway have financially supported climate engineering research. The Russian government’s comments on an IPCC report encouraged continued research into climate engineering as a ‘possible solution’ (IPCC, 2014: 2). In the United States, a report issued during the last month of the Obama administration recommended federal funding of climate engineering research (US Global Change Research Program, 2017). By contrast, Bolivia’s leadership has opposed climate engineering (Estado Plurinacional de Bolivia, 2011). Finally, although the European Union (EU) is not a country, its leadership establishes the contours of the climate policies of its Member States in a quasi-federal manner. The EU has funded two international climate engineering research projects and its Commissioner for Climate Action and Energy implied that NETs might be part of the future climate policy mix of the EU (Neslen, 2015).

16.3.3 Non-state Actors

Some non-state actors have contributed in various ways to climate engineering governance (see also Zelli, Möller and van Asselt, 2017). This section reviews their activities in five categories, although the lines distinguishing them are not completely clear. First, several scientific and professional organisations have made assessments, offered recommendations and taken positions. The reports of the United Kingdom’s Royal Society and the US National Academies have been particularly influential (Shepherd et al., 2009; McNutt et al., 2015a, 2015b). Other organisations that have taken positions on climate engineering include the American Meteorological Society, the American Geophysical Union, the Institution of Mechanical Engineers and the International Commission on Clouds and Precipitation of the International Association of Meteorology and Atmospheric Sciences. In the case of ocean fertilisation, more than a dozen universities and other research institutions formed the In-Situ Iron Studies Consortium in order to promote research, including compliance with the standards of the London Convention and London Protocol. Each of these scientific and professional organisations called for further climate engineering research.

Policy-oriented and advocacy non-governmental organisations constitute another broad category of non-state actors. The Carnegie Climate Geoengineering Governance Initiative, led by a veteran international climate policy negotiator, facilitates the development of climate engineering governance in the global policy arena. The Solar Radiation Management Governance Initiative increases the involvement of developing countries and their residents in SCE discourses. In addition, a few environmental groups have taken a range of positions regarding climate engineering. Those whose platforms are more oriented towards the inherent value of nature and are more critical of existing social and institutional arrangements more frequently oppose climate engineering (e.g. Greenpeace International, 2010). By contrast, those that are more concerned with reducing demonstrable negative impacts on people, species and ecosystems and are less critical of existing arrangements are more likely to cautiously endorse climate engineering research (e.g. Environmental Defense Fund, 2015). Environmental groups are generally more strongly opposed to (or less supportive of) SCE than NETs (e.g. Friends of the Earth UK, 2009). Regardless, even these environmental organisations dedicate few resources to climate engineering, and many are reluctant to discuss it (Nicholson et al., 2013). Finally, from a different perspective, the conservative think tank American Enterprise Institute housed a small project on climate engineering for a few years.

Third, a handful of philanthropists and foundations have supported climate engineering research. For example, Bill Gates has done so via a special fund, and Richard Branson has offered a $25 million prize for a scalable and sustainable NET. Other sources include more established ones such as the Hewlett and Sloan foundations.

Businesses – primarily small ones – have invested in NETs but are absent from SCE. This is consistent with the prospect that the former, like mitigation, could be a profitable enterprise in the presence of a sufficiently large carbon price, whereas there will likely be little direct financial incentive for the latter. As noted earlier, the proposals of two now-defunct firms to commercialise ocean fertilisation catalysed its governance through international legal instruments and institutions, and a third company’s actions generated further controversy. One of these first two – Climos – developed a code of responsible conduct of ocean fertilisation (Climos, 2007). Other small businesses are developing direct air capture and enhanced weathering with an eye towards eventual profit. Among large firms, Shell issued a report on net zero emissions that includes NETs in several scenarios, but its chief climate change adviser is sceptical of SCE (Shell, 2016; Hone, 2017).

Scholars are the final category of non-state actors who have participated in climate engineering governance. Of course, many of them have written articles, chapters and books in the natural and social sciences that might satisfy the definition of governance. They have also contributed to the activities of scientific and professional organisations described earlier. Some have proactively helped build bridges from the present absence of dedicated legal instruments and institutions to a future of international governance. For example, the Forum for Climate Engineering Assessment at American University expands and strengthens the discussions of climate engineering and its governance. Other scholars have proposed general principles for climate engineering, emphasising transparency, public participation and independent assessment (MacCracken et al., 2010; Long et al., 2011: 13–14; Rayner et al., 2013). These principles are now being detailed as a proposed code of conduct for climate engineering research that is based upon international environmental law (Hubert, 2017).

16.4 Analysis

This volume describes and assesses polycentric theories of climate governance in which decision-making sites are plural, diverse and multilevel. In these, climate governance is not enacted monocentrically via national and international law, but instead through a dynamic and innovative transnational network of governing rules, institutions and actors who govern in divergent ways (see Chapter 1).

The present governance of climate engineering is consistent with a polycentric view, in that numerous varied governing units operate at multiple scales and relate to each other non-hierarchically while remaining fairly autonomous within their own domains. However, from a perspective that is somewhat sceptical of the polycentricity of SCE governance, climate engineering governance could be seen as polycentric merely by default. The technological proposals that constitute climate engineering arose in a context of existing governing instruments and institutions that had been developed for other purposes and that climate engineering and its constituent elements happen to transect. The fact that numerous international legal instruments and institutions with diverse objectives, scopes, degrees of legalisation and participation would govern climate engineering activities could be a haphazard outcome rather than a polycentric one. However, this interpretation of polycentric governance relies on a narrow, legal understanding of governance.

An alternate – and arguably more accurate – perspective rests on a broader understanding of governance. Seen through this lens, the previous section shows that heterogeneous intergovernmental, national and non-state actors have taken steps to intentionally direct their own and others’ behaviour so that climate engineering will be more likely to develop responsibly. They have sometimes done so in ways that are innovative, arguably due to climate engineering’s novel and dynamic character. For example, the UNFCCC and the IPCC are gradually incorporating NETs, while parties to the CBD voice concern regarding climate engineering more generally. Meanwhile, some countries, the EU and philanthropists are funding research, and various non-state actors help set the agenda, broker knowledge and suggest foundational norms from the bottom up. Ultimately, the resulting governance remains inchoate and inconsistent.

Climate engineering governance exhibits three specific characteristics that are at least indicative of polycentric governance. First, these instances of governance are, as Ostrom suggested, developing within an overarching set of rules, in this case international environmental law. When they have substantially diverged, it has often been due to differing interpretations of legal principles and instruments in a de novo situation. Second, governing actors have experimented under these dynamic and uncertain conditions. For example, the amendment to the London Protocol would expand the application of the treaty beyond marine dumping to all ‘marine geoengineering’. Third, these actors have responded to each other, via processes of mutual adjustment. The dynamic between the parties to the CBD and those to the London Convention and London Protocol, as they negotiated their regulatory boundaries with respect to marine geoengineering from 2007 to 2013, is illustrative of this.

On the other hand, upon closer investigation, the latter two of these three characteristics that indicate polycentricity are less convincing. Although governing actors have experimented, this has not been the ‘typical’ policy experimentation that Ostrom had in mind, in which roughly similar governing units independently try different approaches to a given problem, and subsequently mutually learn. And although they have adjusted to one another, instead of learning and collaboration that usually constitutes adjustment in theories of polycentric governance, this adjustment appears necessary under legal and scientific uncertainty.

We can expect climate engineering to change in the future, both technologically and socially. How might climate engineering governance respond? In the relatively short term, it appears likely to continue to be polycentric, if not increasingly so. The various proposed techniques pose multiple opportunities and challenges, and innovation’s dynamism calls for governance practices that can experiment and adapt. In fact, the speed of technological change often surpasses the ability of governance to adapt, presenting legal challenges and regulatory dilemmas (Collingridge, 1980; Brownsword, 2008). Not only are the usual sites of hierarchical and static governance (e.g. intergovernmental and national actors) poorly structured to govern in this way but their leaders also have little incentive to tread into this politically treacherous terrain (Horton and Reynolds, 2016). Instead, a wider array of non-state actors – including funders, research institutions, publishers, investors and entrepreneurs – could play substantial roles in coordinating climate engineering activities, fostering cooperation and ensuring responsible practices. As these activities expand, for-profit actors will likely assume a higher profile, particularly in relation to NETs (but see Reynolds, Contreras and Sarnoff, 2017). To some extent, national and subnational actors can manage some of climate engineering’s local environmental and social impacts. Furthermore, several international institutions have remits that touch upon climate engineering, and these bodies can be expected to compete and cooperate in contributing to governance. Even if these diverse governing actors did seek centralised and harmonised governance, reaching agreement in such an uncertain and contested terrain would be difficult. Heterogeneity is likely to persist.

The case of ocean fertilisation lends support to this expectation of continued or growing polycentricity. That technology was researched and debated, and its governance developed, earlier and to a greater extent than the other proposed climate engineering technologies. Notably, although it is an NET, its governance needs resemble those of SCE: it would pose environmental risks in areas beyond national jurisdiction and researchers once believed (but no longer do) that it could greatly reduce climate change at low financial costs (McNutt et al., 2015a: 47–53). Its governance is both more mature and noticeably more polycentric. Here, numerous and varied intergovernmental bodies, national governments, scientific and professional societies, environmental organisations, businesses and scientists have each exercised governance authority within their domains in ways that are alternately mutually reinforcing and partially conflictual.

16.5 Conclusions

In the longer term, there might be limits to this polycentricity. According to models, NETs should scale up dramatically in order to prevent dangerous climate change. Given the costs and local risks, states and other actors will be reluctant to provide such a public good without incentives to do so and assurances that others are likewise contributing. Although the bottom-up (but still centrally coordinated) Paris Agreement might offer a sufficient framework to facilitate NETs, more centralised mechanisms such as an international carbon price will be needed to grow if NETs are to scale up in practice. In the case of SCE, the long-term limits of polycentric governance are even clearer. On the scale of outdoor experiments that would have global effects, central coordination would be necessary to, at the very least, ensure that the tests do not interfere with one another. More importantly, activities that would affect the global climate would need some sort of international agreement in order to be perceived as legitimate. Because climate has impacts on core national interests, such as food production and extreme weather events, states – especially the powerful ones – will likely insist upon taking the lead in this process. Polycentric governance would be poorly suited to resolve possible strategic conflicts among states.

The implications of the governance of climate engineering for that of climate change more generally are uncertain, as the two phenomena have distinct histories and trajectories. The rise of concerns regarding anthropogenic climate change in the late 1980s quickly led to an international treaty that attracted universal participation. Subsequent governance was assumed – at least implicitly – to be global and hierarchical to some degree. Roughly 15 years later, both the uncertainty of the Kyoto Protocol’s actual impact as well as the need for adaptation, which is less amenable to international governance, became clear. Consequently, the assumptions regarding centralised climate governance began to yield insights regarding the reality and potential of polycentric governance (see e.g. Prins et al., 2010). By contrast, as described earlier, discussions of climate engineering arose within and across an already diverse governance landscape. However, in the long run, climate engineering – and especially SCE – appears likely to require a form of governance that is substantially more monocentric than is in existence in the world today. This need is more acute if we are to achieve the goals of the Paris Agreement.


1. Cirrus cloud removal is a third distinct means, but is less well developed than the first two and has governance needs much like those of SCE.

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17 Adaptation The Neglected Dimension of Polycentric Climate Governance?

Robbert Biesbroek and Alexandra Lesnikowski
17.1 Introduction

Adaptation and mitigation are two distinctive policy responses to anthropogenic climate change. In the past, the international climate change regime established by the United Nations Framework Convention on Climate Change (UNFCCC) emphasised the importance of reducing greenhouse gas emissions. International policy efforts, therefore, were orientated towards designing laws, policies and instruments to reduce emissions globally in an attempt to prevent anthropogenic climate change. Over the past two decades, the global climate regime has created a significant architecture to govern climate change mitigation globally by setting targets and identifying uniform instruments such as emissions trading systems to be implemented by member states. The effectiveness of this centralised climate governance architecture has been contested, however. The Paris Agreement presents a welcome paradigmatic shift in the international climate regime, as it no longer tries to achieve greenhouse gas emissions using a centralised mode of governance, but rather creates room for a more polycentric mode of governance (see Chapter 1).

Adaptation, on the other hand, was considered to be further down the political agenda – a distraction from the more urgent issue of avoiding the problem in the first place via taking mitigating actions (Biesbroek, Swart and van der Knaap, 2009; Lesnikowski et al., 2017). Nonetheless, adaptation is a long-standing component of the international climate policy agenda. Until recently, however, it was largely framed as an issue relevant mainly to low-income countries. This dominant discourse changed in the mid-2000s, when it was politically acknowledged that some degree of climate change was unavoidable as emissions were not reduced quickly enough and that adaptation would be necessary to manage these impacts across all regions, in spite of efforts directed at mitigation. International debates on adaptation in the global arena have mostly centred around the politically sensitive issue of climate adaptation finance: should industrialised countries be held responsible for current climate change (i.e. failure to mitigate sufficiently) and therefore pay the most vulnerable developing countries and societal groups? If so, how much money is needed? And how should this money be distributed? Irrespective of these interminable debates, the global arena has paid very limited political attention to adaptation, and very few specific institutions and legal mandates on adaptation exist even today.

The lack of focused political attention to adaptation at the international level has resulted in a number of institutional voids. As a result of the increasing recognition of the need for adaptation action to manage the unavailable climate impacts, state and non-state actors across the globe have started to implement adaptation in an autonomous, bottom-up and self-organising fashion (Berrang-Ford et al., 2011; Berrang-Ford et al., 2014), thus appearing to confirm the first and most important proposition in polycentric theory (‘local action’; see Chapter 1). In 2009, for example, 9 out of 28 European Union (EU) Member States had developed national adaptation strategies (Biesbroek et al., 2010). By 2013, this number had increased to 21 (EEA, 2014). With regard to concrete policy actions, longitudinal studies observe a stark increase in the past decade: Lesnikowski et al. (2016) observe an increase of 84 per cent of reported adaptation work among 41 Annex I (high-income) countries between 2010 and 2014. Many of these concrete adaptation initiatives, however, are not initiated as a result of monocentric steering; in many cases, there are no shared rules that set goals or standards for how to adapt, nor are there specific guidelines or enforcement mechanisms. In fact, very few countries have dedicated legal frameworks for adaptation, although the number is increasing (Lesnikowski et al., 2016). Instead, actors seem to be driven by, for example, experiences of local climate impacts, entrepreneurship, cooperative learning and policy diffusion – again exemplifying some of the core propositions of polycentric governance theory.

Consequently, the current adaptation landscape is still highly fragmented, characterised by unequal progress across contexts and unstable and ephemeral governance arrangements that suffer from high transaction costs. Some networks have self-organised to push for political commitments on adaptation, promote adaptation initiatives, share lessons learned and prevent negative trade-offs. New transnational institutional arrangements such as the EU Climate Change Adaptation strategy package, as well as non-governmental initiatives under the Covenant of Mayors and alliances such as the Africa Climate Change Resilience Alliance, are just a few examples of the soft and (in)formal networks designed to coordinate across scales and contexts. The Paris Agreement, where for the first time adaptation figures prominently alongside mitigation, aims to capitalise on this momentum and push for a stronger coordinated and globalised adaptation effort by setting a global goal on adaptation. Indeed, while mitigation has started from a centralised mode of governance and adaptation from bottom-up modes of governance, both seem to be gradually converging in a more polycentric model of climate governance. This is evident in the Paris Agreement’s emphasis on the social responsibility of multiple (non-)state actors across different scales to join forces, self-organise and implement mitigation and adaptation measures (Jordan et al., 2015; see also Chapter 2).

The aim of this chapter is to critically reflect on the notion of polycentric governance and whether there are signs that a polycentric adaptation governance landscape is emerging. We first discuss in greater detail the governance of adaptation, highlighting key differences relative to governing mitigation. We then examine to what extent the existing literature on adaptation has characterised polycentric governance and its features. Finally, we use the characteristics of polycentric governance as set out at the start of this volume to assess whether there are signs of an emerging polycentric adaptation governance landscape (see Chapter 1).

17.2 Governing Climate Change Adaptation

The study of climate change adaptation largely emerged as distinct from climate change policy for mitigation in the mid-2000s. Early writing on adaptation focused on understanding key concepts like vulnerability and adaptive capacity, and assessing how the climate is expected to change, how costs and benefits of these impacts will be distributed and how vulnerability can be reduced (Smit et al., 2000; Burton et al., 2002; Smit and Wandel, 2006). There are two main discourses on vulnerability that have determined how adaptation is framed and governed: social vulnerability and climate impacts vulnerability (O’Brien et al., 2007). The first discourse emphasises the global distribution of social vulnerability, highlighting societal groups and regions that will be unequally affected by climate impacts, particularly in low-income countries. The root cause of social vulnerability is not anthropogenic climate change, but rather a combination of complex social factors, including inequity and inequalities, poverty, poor education, high crime rates and limited access to healthcare. Climate change is expected to act as an amplifier of these pre-existing facets of social vulnerability. Adaptation is thus understood as the reduction of social vulnerability, which introduces a focus on intersections with development and development aid. A second discourse emphasises the additional impacts caused by anthropogenic climate change. Existing institutions, policies and practices were designed to deal with the natural variability of the climate system, but given the limitations of these systems to cope with projected climate change, additional policy efforts are needed to manage the increased climate risks (O’Brien et al., 2007). Adaptation in this discourse revolves mostly around explicitly formulated and highly intentional actions that target these additional climate change impacts (Dupuis and Biesbroek, 2013).

These different discourses characterise the different sociopolitical interests in adaptation and have greatly influenced the (inter)national negotiations on climate change adaptation. Indeed, the most recent definition used by the Intergovernmental Panel on Climate Change combines both discourses by stating that adaptation is ‘the process of adjustment to actual or expected climate and its effects. In human systems, adaptation seeks to moderate or avoid harm or exploit beneficial opportunities. In some natural systems, human intervention may facilitate adjustment to expected climate and its effects’ (IPCC, 2014: 118). Adaptation can be focused on maintaining the essence of the impacted system (incremental adaptation, or resilience), or changing fundamental attributes of the system to respond to the impacts of climate change or its effects (transformational adaptation). Furthermore, it can be the result of deliberate policy decisions and planning as to how to deal with climate change and its effects (planned adaptation), or the consequence of continuous independent changes of the system in response to various socio-ecological stimuli (autonomous adaptation). The literature on the governance of adaptation predominantly focuses on planned adaptation, which in itself has multiple dimensions.

Therefore, while mitigation and adaptation are both approaches to combating climate change, in its essence adaptation is fundamentally different from mitigation (Biesbroek et al., 2009). As Table 17.1 summarises, for mitigation, there is a clear global goal (i.e. limit warming to 2 or 1.5°C), with specific measurement units (i.e. parts per million of carbon dioxide concentrations in the atmosphere, or tonnes of carbon dioxide equivalent emissions) that can be measured more or less objectively. This is not the case for adaptation. Although a global goal on adaptation is included in the Paris Agreement (i.e. enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change), the goal is very broad and does not function as a collective target to achieve. After all, the impacts of climate change are predicted to vary greatly across regions and vulnerable groups, and the capacity to adapt is distributed unequally across the globe. Moreover, adaptation is a process – there is no clear end point or final state of ‘being adapted’, but rather a continuous process of adjustment and change. For adaptation, the aim is thus to mainstream appropriate responses into vulnerable sectors, regions and societal groups. For example, adaptation in the public health sector aims to adjust procedures and systems to better respond to a range of risks affected by changing global temperatures, including the spread of vector-borne diseases and increased frequency and intensity of heatwaves (Austin et al., 2016). Developing a quantifiable goal and universal measurement units that can be objectively applied is therefore highly problematic given the complexity of contexts in which adaptation is becoming relevant (Ford et al., 2015). Although some have argued for using reduced vulnerability or climate impacts averted as indicators for successful adaptation, these indicators – and how they are designed – are highly contested in the literature, making it extremely difficult to assess progress on adaptation globally, evaluate which governance interventions work (and which do not), and determine whether current investments in adaptation finance are sufficient. Finally, adaptation is often not very appealing for private-sector finance, as building seawalls, changing building codes and enhancing water retention projects are targeting public goods that tend to fall under the responsibility of state and local governments. Private-sector finance for public goods, as is the case in, for example, clean energy projects and technological development in mitigation, rarely happens in the context of climate change adaptation.

Table 17.1 Differences between mitigation and adaptation

DefinitionReducing the cause of anthropogenic climate changeAdjusting to the unavoidable impacts of anthropogenic and natural climate change
Scale of problemSolution to global problem, but requires implementation across all scalesSolutions to mostly local and regional problems but which can have global implications (e.g. food insecurity, climate migration)
Policy goalLimit to well below 2°C global average temperature increase since pre-industrial levels, preferably limiting to 1.5°CEnhance adaptive capacity, strengthening resilience and reducing vulnerability to climate change
Key indicators of successQuantifiable: e.g. reduced greenhouse gas emissionsDifficult to quantify: e.g. impacts averted, reduced vulnerability, resources dedicated to specific policies or projects
Role of politicsHighly politicised in most instancesDepoliticised and technocratic in most instances
Policy timescaleMedium to long termShort to medium term (and increasingly long term)
Sources: Biesbroek et al. (2009); Locatelli et al. (2015).
17.3 How to Govern Adaptation: Adaptive, Multilevel and Network Governance Theory

An examination of the adaptation governance literature indicates that polycentric governance is rarely used as an explicit concept or theory in the context of climate change adaptation. Instead, most studies on the governance of adaptation build on three different but related strands of theory in which most adaptation research has been conducted: adaptive governance, multilevel governance and network governance.

17.3.1 Adaptive Governance

Within adaptation scholarship, polycentric governance is largely approached as a mechanism or a pathway for adaptive governance. Some of the adaptation scholarship that borrows from adaptive governance theory assumes that the inherent uncertainties and dynamic complexities associated with adapting to climate change impacts require governance systems to be highly flexible, with embedded redundancies that increase resilience to system shocks (Djalante et al., 2013; Herrfahrdt-Pähle, 2013). Monocentric, state-based systems, on the other hand, are considered ill suited to dealing with rapid environmental change and delivering contextually sensitive solutions (Chaffin, Gosnell and Cosens, 2014), and system transformations are needed to enable more adaptive forms of governance to emerge. Pahl-Wostl et al. (2012) specify polycentricity as a structural feature of adaptive governance systems that distributes decision-making powers across the system and ensures coordination through an overarching system of norms and rules that defines the logic of interactions between actors. This literature also stresses the importance of the potential to encourage experimentation and bespoke solutions across scale, place and time (Becker, Huitema and Aerts, 2015), and to promote knowledge-pooling and learning opportunities (Djalante et al., 2013). Plummer et al.’s (2012) synthesis of the adaptive co-management literature concludes that issues of scale interplay and scale fit, adaptiveness, flexibility and learning, evaluation and knowledge are crucial components of governing complex socio-ecological systems.

From a normative standpoint, successful polycentric systems for adaptation therefore require feedback pathways through which new information about human–environment interactions, values and goals and uncertainty can be integrated into decision-making processes. Without ongoing scientific monitoring, governance systems are therefore unable to adjust in light of uncertainty and non-linear change (Chaffin et al., 2014). For example, Nelson, Howden and Smith (2008) argue that the risk of failure in policy experimentation is managed through redundancies built into the institutional structure of polycentric systems, whereas in systems with irreducible scales, governing by trial and error leaves systems vulnerable to failure. Other authors try to provide concrete tools and methods to support decision-makers in designing flexible policies that deal with the uncertainties and system dynamics, for example the work on dynamic adaptation pathways (Haasnoot et al., 2013). These authors argue that technocratic and linear models of decision-making no longer suffice as they oversimplify complex realities and cannot deal with the large uncertainties associated with climate change. Through continuous learning, experimentation and acquiring new knowledge of how the climate system changes, initial adaptation actions might need to change, thus requiring flexibility in the pathways to prevent lock-in and maladaptive decision-making.

Although a strong normative claim is made in favour of polycentric governance principles, very few studies empirically demonstrate the value of such approaches for climate change adaptation (e.g. Karpouzoglou, Dewulf and Clark, 2016). In one exception, however, Pahl-Wostl et al.’s (2012) comparative study of governance arrangements in water resource management indicates that regimes with multiple centres of decision-making and strong coordination mechanisms demonstrate better water management outcomes; as such, they argue that polycentric regimes may be an important pathway towards building adaptive capacity.

17.3.2 Multilevel Governance

The second strand in the literature focuses on the multilevel governance characteristics of the system, and the mismatch between the level(s) at which policy problems manifest and the level(s) at which they are managed. This literature responds to a strong emphasis on ‘localism’ that dominates much of the adaptation literature. In line with the polycentric governance literature, several scholars emphasise and advocate for decision-making empowerment at lower jurisdictional levels, particularly among local governments, while ascribing responsibility for oversight and knowledge diffusion to higher levels of government (Becker et al., 2015). Much of this literature has focused on the emergence of possible tensions and mismatches that follow from connecting across levels and scales. For example, the limited powers of local governments and discursive conflicts among networks of state and non-state actors over how to frame climate policy can challenge the ability of cities to take a leading role in climate change planning (Bulkeley and Betsill, 2005; see also Chapter 5). Keskitalo et al. (2016), for example, observe that in Nordic countries, limited leadership from national governments has partially contributed to a pattern of soft and voluntary adaptation policy approaches at the local level, and limited observable success in advancing adaptation implementation. The authors argue that this points to the need to integrate adaptation requirements into more traditional regulatory regimes and instruments that can be more directly enforced by the state. Similarly, Westerhoff, Keskitalo and Juhola (2011), examining adaptation in Finland, Italy and Sweden, find that where adaptation is not mandated from the central government, local climate change action tends to emerge without the financial and staff resources necessary for the long-term success of adaptation. This trend has significant distributional effects between local governments within a country, where those larger cities with stronger tax bases and networks of experts can better substitute this lack of support using local resources. Small and medium-sized municipalities, however, might suffer from a competitive disadvantage vis-à-vis these ‘early adapters’ who consume much of the issue attention and scarce resources.

Empirical studies on local adaptation identify a number of structural, procedural and contextual challenges for local government engagement with adaptation, including: (1) a lack of adequate climate information and future scenarios to guide local decision-making; (2) limited or no guidance from national- and state-level governments on adaptation priorities; (3) mismatches between existing statutory and revenue-generating powers and the major decisions required for effective adaptation at the local level; (4) scarce resources and competing policy priorities that local governments have to balance; (5) departmental fragmentation and competition for scarce resources; and (6) different problem framings that lead local governments to approach adaptation in divergent ways, sometimes leading to maladaptive practices (e.g. Mukheibir et al., 2013). Even in countries where adaptation emerged as a priority at the national level first, fragmentation of governance efforts across vulnerable regions is still observable. For example, Finland, an early adopter of national adaptation policy, has emphasised the mainstreaming of adaptation into national administrative sectors, while lower levels of government are pursuing separate and voluntary climate strategies, with limited input from senior government (Keskitalo, 2010). This adaptation scholarship thus recognises the fragmented adaptation landscape and, building on multilevel governance insights, stresses the need for a governance system that actively steers adaptation decision-making across levels, distributes tasks, responsibilities and resources equally and ensures cooperation and some level of conflict resolution between competing actions, referring frequently to forms of meta-governance.

17.3.3 Network Governance

The third strand of the adaptation literature that addresses polycentric characteristics is, as noted in Chapter 1, network governance. Much of this literature emphasises the relationship between public and private actors and seeks to address how different network configurations increase trust among different stakeholders. The literature investigates, for example, different types of governance arrangements that bring together different public and private stakeholders with vastly varying tasks and responsibilities (Tompkins and Eakin, 2012). These studies show that governments play an important role in creating and maintaining these networks in efforts to connect public and private actors. Mees (2017), for example, shows in her study of 20 governance arrangements in North American and European cities that local authorities are initiating most of these processes and are in the driver’s seat throughout, leaving limited room for private-sector and civil society initiatives for self-governing. Many network governance studies demonstrate potential for collaboration but also highlight potential weaknesses, including the need for trust, conflicting norms and values, blurring of responsibilities, the inability to actually influence decision-making and the ‘shadow of hierarchy’ that might still exist. Schmidt et al.’s (2013) study on collaborative governance finds issues such as repeated participation of network members, appropriate information and network management and inclusive and responsive network practices amongst the most important factors for successful network governance of climate change adaptation.

Some of this literature specifically stresses the importance of network structure and relationships between stakeholders to organise connectivity within those governance arrangements (Termeer et al., 2011). In the context of water governance, for example, Horning, Bauer and Cohen (2016) show the importance of the core-periphery network structure, and the consequence of asymmetry in power in terms of limited diversity of input and decision-making authority. They argue that the disconnect between core and periphery within these networks needs to be addressed through bridging and bonding efforts, i.e. by bringing in ‘bridging actors’ that have a high degree of contextual understanding, legitimacy and trust of the other network members. Such bridging to increase connectivity can take different forms, some of which are quite monocentric in nature.

17.4 Emergence of a Polycentric Adaptation Landscape?

The three strands of the climate change adaptation literature demonstrate that many of the studies on adaptation include key characteristics of a polycentric governance system. We bring these together here to critically reflect whether a polycentric adaptation landscape is indeed emerging using the propositions discussed in Chapter 1: local action, mutual adjustment, experimentation, trust and overarching rules.

17.4.1 Local Action

Polycentric governance emphasises the inadequacies of one-size-fits-all approaches to managing environmental issues, and instead points to small-scale, local solutions as the most effective entry point for collective action. The city of Rotterdam in the Netherlands, for example, self-organised its comprehensive adaptation programme to ensure timely adaptation (Biesbroek et al., 2014). There is widespread evidence in adaptation scholarship that many cities and local regions across the globe have already taken measures to adapt to climate change. Reckien et al.’s (2014) study of 200 large and medium-sized European cities sampled from 11 countries found that 28 per cent of cities had formal climate adaptation plans. Meanwhile, participation in climate policy networks seems to correlate with increased likelihood of local adaptation policies (Ryan, 2015). In a survey of 350 local governments participating in the ICLEI network, Aylett (2015), for example, finds that nearly three-quarters of respondent cities are engaging with adaptation planning in addition to mitigation.

However, much of the local-level adaptation literature is biased towards cities that have engaged with adaptation, but does not ask why many cities are not adapting (see also Chapter 5). Looking at more than 400 global cities of more than one million inhabitants, Araos et al. (2016) found that 81 per cent of the cities do not demonstrate any signs of developing and implementing climate change adaptation initiatives. Similarly, small and medium-sized towns and cities are reported to face considerable constraints when it comes to policy capacity to start adapting, particularly in low-income countries (Wisner et al., 2015). While some local governments act as key sites for adaptation planning, ongoing pressures around decentralisation and privatisation across countries frequently result in the downloading of adaptation responsibilities to regional or local governments without additional and sufficient resources or decision-making powers. Romero-Lankao (2012) argues that rather than encouraging local control of adaptation planning, this practice is in fact undermining local resilience and institutional capacity. Some scholars have argued that in the adaptation discourse, local action has become such a powerful heuristic that it is actually harming the intellectual debates and concrete policy advice on how to adapt to climate change by oversimplifying complex intersections between jurisdiction, authority and impact scales, particularly with regards to addressing underlying drivers of social vulnerability. Nalau, Preston and Maloney (2015), for example, convincingly argue that emphasis on local action is ignoring multiscale climate risks and interdependencies between different parts of the globe, and that many policy actions might need to be implemented at higher levels of government to ensure efficiency (e.g. building and maintaining national flood defence systems).

In conclusion, whilst adaptation is indeed emerging from myriad bottom-up initiatives, and many of the actions are local, there are many parts across the globe where intentional climate change adaptation is not taking place. Moreover, the ‘adaptation is local’ heuristic is highly problematic as it suggests that there are no trade-offs between different contexts and that higher (inter)national-level coordination is not necessary for climate action.

17.4.2 Mutual Adjustment

Polycentric theory assumes that independent governing units mutually adjust to allow for collaborations to address a particular issue. Examples from network governance literature demonstrate the emphasis on creating self-organising structures in climate change adaptation. For example, Fünfgeld (2015) discusses how transnational municipal networks have the potential to support local adaptation as they provide greater flexibility than government adaptation policy and encourage experimentation. Other networks and partnerships have emerged to share practices, exchange ideas and distribute knowledge and often take fluid forms; they exist for a short(er) period of time before being dismantled. Of particular interest in the context of mutual adjustment is the concept of synchronisation that some adaptation scholars have used. Synchronisation is linked to the argument of co-evolution, where different systems exert multiple influences on each other, therefore shaping the evolution of the governance system – for example parasitic, interferential and symbiotic co-evolution. It assumes that most organisations and sectors do not have the capacity to organise stable and durable connectivity between governing units and therefore require some collaboration to govern adaptation (van Buuren and Gerrits, 2011). Coherent chains of interactions of the various interconnected governing units are needed to manage decision-making. Hence, interaction and reflection among actors is necessary to make sense of one another’s actions and to allow for gradual (or abrupt) alignment. Organising synchronisation is to some extent dependent on the ability of actors to connect individuals and governance processes that all have their own development logic and self-organising dynamics. The emphasis is therefore on creating an enabling governance arena that allows for interactions. Verkerk, Teisman and van Buuren (2015), for example, show how the Dutch national government’s ‘Delta programme’ co-produced governance arrangements that allowed for synchronisation to occur between the different levels and actors involved in decision-making about long-term water safety in the Netherlands. Mutual adjustments are thus a potentially key part of the debates on adaptation, and empirical evidence suggests that mutual adjustments are increasingly advocated, providing room for governing units to connect and collaborate and create trusting relations.

17.4.3 Experimentation

The existing literature suggests that experimentation contributes to the governance of adaptation in various ways as it offers novel options in both processes and outputs of adaptation. Across the globe, mainly local experimentations have been conducted to better understand how adaptation works, and whether lessons learned can be upscaled to higher levels of governance and other contexts. In their comparative urban adaptation study, Castán Broto and Bulkeley (2013), for example, assessed adaptation experimentation and innovation in 100 cities and found that local governments still play a leadership role in initiating climate adaptation experiments but that the political space becomes increasingly blurry as public and private authorities are partnering to seek specific forms of interventions in cities. Various experiments can be found, ranging from technological and architectural projects to innovative forms of public service delivery and policy implementation. The Dutch ‘Building with Nature’ project is an example where technological and governance experimentations are implemented by both public and private actors to better understand how natural system dynamics can be used to build flood protection. Various experiments in hydrological labs as well as in pilot study sites have helped to gain a much more thorough understanding of what possibilities this type of ecosystem-based adaptation offers (van Slobbe et al., 2013). Another Dutch example is from the city of Rotterdam, where the city council heavily invested in creating a favourable political and institutional environment that allowed it to experiment with different types of adaptation measures, for example in experimenting with water plazas as temporary storage facilities for rainwater in public spaces during periods of heavy precipitation. The council considered the reward of investing in experimenting with various forms of adaptation worthwhile as it offered them a pioneering role as one of the global urban adaptation leaders (Biesbroek et al., 2014). Creating political and institutional space, taking some calculated risks and learning from failure are crucial ingredients of experimentation. When the time is ripe, such experiments may diffuse or upscale to national levels or other places (see Chapter 9), as has happened in both Dutch examples. Many other such examples of local experimentation are reported in the literature, but most of these initiatives are still biased towards leading (Western democratic) cities and local contexts.

17.4.4 Trust

Trust is considered a crucial condition for adaptation, but remains an understudied topic in most studies. Studies on social capital in low-income countries have particularly stressed the importance of trust and demonstrate how new and existing relationships facilitate cooperation and collective action through trust-building (Adger, 2003). However, other studies find that too much trust and interdependency amongst community members might hamper self-organisation and mobilisation, as Paul et al. (2016) found in Ethiopia. Increasing social capital (and trust) could be unhelpful to strengthen ambitions, but rather results in laissez-faire attitudes among actors. Increasing the number and diversifying the type of actors – core assumptions underlying polycentric governance theory – are not necessarily generating trust to engage collectively on climate change adaptation. Consequently, introducing new actors, public or private, might rapidly erode trust, which takes time to gradually (re)build. Moreover, vicious cycles of distrust have been shown to significantly impact how local farmers in South Asia, for example, have constrained their adaptive actions as they can no longer rely on each other for community-based adaptation owing to past conflicts. Given the scarce adaptation literature on trust, it is impossible to conclude on the role of trust in polycentric climate change adaptation governance.

17.4.5 Overarching Rules

Adaptation scholarship has recognised that overarching rules are necessary. Amundsen, Berglund and Westskog (2010), for example, demonstrate that local governments prefer to have some guidance (and resources) at national and regional levels to ensure that adaptation takes place in a coherent and consistent manner, but without a formal requirement to adapt. Most adaptation is thus guided by procedural rules – for example, the requirement to have a local adaptation strategy or specific considerations of adaptation in impact assessments – rather than substantive rules of specific goals and targets to be achieved. Most of the adaptation scholarship has called for specific rules and principles to overcome barriers to adaptation that are created and/or should be removed by local governments. Very few instances of rules for conflict resolution – as suggested by Ostrom (see Chapter 1) – have been propagated. This links closely to the debate about whether climate change adaptation requires establishing a new policy field with its own logics, rules and resources. Massey and Huitema (2013), for example, show how in England, efforts are being made to develop adaptation as a specific policy field with its own substantive authority, institutional order and substantive expertise. This would mean that overarching rules are developed. However, several scholars have called for integrating climate change adaptation into existing policy subsystems, and suggest that existing rules, norms and practices in each subsystem should be considered as a starting point for adaptation (Uittenbroek, Janssen-Jansen and Runhaar, 2012), including conflict resolution. Studies show that the number of laws, policies and guidance has increased rapidly over the past years, but are particularly in place for high-income countries. In the absence of these rules, adaptation progresses in a highly uneven manner across places, jurisdictions and vulnerable groups (Lesnikowski et al., 2016), even at local levels (Araos et al., 2016).

17.5 Conclusions

In this chapter, we have argued that mitigation and adaptation have followed different pathways; mitigation historically was mostly centrally governed, whereas adaptation has emerged bottom-up through processes of self-organising in the absence of strong overarching rules, principles and goals. We have demonstrated that whilst adaptation scholarship does not necessarily use polycentric governance theory, but rather adaptive governance, network governance and multilevel governance, the key characteristics of polycentric governance are nonetheless visible in the many cases from across the globe we discussed. Does this mean that adaptation mirrors the polycentric governance model that Ostrom proposed?

In several places across the globe – mostly high-income countries – early signs of the emergence of a polycentric adaptation landscape become visible. In many instances, adaptation is local, self-organising and increasingly connected, and efforts are made to create overarching sets of rules to govern adaptation. States are making efforts to seek the optimal mix between monocentric steering and polycentricity in order to reconcile some of the limitations of both modes of governance. There is ample evidence suggesting that this is proving a very successful model as early-adopting cities, regions and countries across the globe have made considerable progress.

However, these insights are biased towards high-income countries and leading cities and regions that have started to adapt. In future studies, we should be more conscious about places where adaptation is currently not taking place – or is at least not visible in current scholarship (Araos et al., 2017) – and start to raise questions around whether the polycentric model is feasible in these contexts. For example, what about developing countries that are dominated by monocentric governing systems and where we currently see very few examples of experimentation, overarching rules or mutual adjustments specifically for adaptation (in contrast to, for example, disaster risk reduction or development aid)? How do these propositions of polycentricity align (or clash) with the strong state and bureaucratic structures in these contexts? Investigating the optimal mix between what is or what should be the mix between monocentric and polycentric elements in various contexts across the globe will be an important next step to govern climate change adaptation.

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18 Equity and Justice in Polycentric Climate Governance

Chukwumerije Okereke
18.1 Introduction

Equity and justice considerations have always been central to understanding past and current forms of global climate governance as well as the motivations and goals of different actors. Climate justice scholarship has demonstrated that concerns about equity and fairness played a significant role in shaping the form, mandate, functions and development of the United Nations Framework Convention on Climate Change (UNFCCC) (Mintzer, 1994; Grubb, 1995; Paterson, 1996; Okereke, 2007, 2010). Analyses of international climate politics after the 2015 Paris Agreement suggest that equity concerns are likely to continue to occupy a vital place in future approaches through which societal transformations in the face of climate change might be managed (Okereke and Coventry, 2016; Rajamani, 2016).

It has long been observed that while the UNFCCC was the main structure and process for coordinating the international response to climate change, the governance of climate change has involved a multiplicity of actors exercising agency and authority in a non-hierarchical mode, (co-)creating norms across different scales (Okereke, Bulkeley and Schroeder, 2009). In a sense, therefore, climate governance has always exhibited some degree of polycentricity – that is, having ‘many centres of decision-making which are formally independent of each other’ (Ostrom, Tiebout and Warren, 1961: 831). As one might expect, contestations for justice have also been a key feature of the different arrangements for climate governance outside of the UNFCCC, even though these have received less attention compared to analyses of justice within the international climate regime. For example, Bulkeley et al. (2013) and Bulkeley, Edwards and Fuller (2014) have provided an important analysis of the contestations for climate justice in global cities. Justice concerns have also been analysed in the context of transnational climate networks (Lidskog and Elander, 2010), urban climate adaptation (Schlosberg, 2012; Shi et al., 2016), business and corporate actors (Verbruggen, 2008; Matt and Okereke, 2014) and in national climate and energy transition programmes (Newell and Phillips, 2016) – among several other issues, dimensions and scales.

In this chapter, I pursue two main objectives. First, I explore the influence of climate justice contestations on the emergence of polycentric governance. Second, I explore the implications of polycentric climate governance for climate justice as well as the potential role of equity in a more complex and fragmented global climate governance arrangement. With the entry into force of the Paris Agreement heralding a new, more voluntary approach to international climate cooperation (through nationally determined contributions), and with the increasing proliferation and diversity of actors in the climate governance space, it is fair to suggest that the global community has entered a new phase of more polycentric climate governance. It is therefore necessary to analyse, on the one hand, what this new era and architecture for climate governance means for climate justice and, on the other hand, how considerations of equity and fairness might impact the new polycentric climate governance arrangement.

This chapter starts with a brief discussion of the concept of climate justice, a mapping of the key dimensions of justice in climate policy and a review of some of the key themes and aspects of climate justice scholarship. Next, I consider the role of equity concerns in both facilitating and hindering polycentric climate governance, covering both the international and other levels of governance. I then discuss the implications of greater polycentricity for climate justice and equity, drawing attention to issues of effectiveness, transparency and accountability before ending with some concluding remarks.

18.2 Climate Justice and Equity

Broadly speaking, climate justice is concerned with the equitable distribution of rights, benefits, burdens and responsibilities associated with climate change, as well as the fair involvement of all stakeholders in the effort to address the challenge. Following Aristotle (1976), equity can be understood as decisions intended to prevent injustice arising from the rigid application of broad, just principles. Political justice and equity mostly sit on the same continuum and are here used interchangeably.

Reflecting its historical core framing as an international problem as well as the dominant role of the United Nations (UN) multilateral process in driving response options, the focus of the early climate justice literature was on the international level, especially on burden sharing between developed and developing countries (Agarwal and Narain, 1991; Shue, 1992, 1993; Grubb, 1995; Paterson, 1996a, 1996b, 2001; Shukla, 1999). The concern for justice in the international regime is rooted in three dimensions of asymmetries, related to contributions, impacts and participation (Okereke, 2010). The first is asymmetry in the contribution, which recognises massive differences in the historical and current contributions of different countries to climate change. For example, the 20 largest economies in the world together account for 82 per cent of total global carbon dioxide emissions (Raupach et al., 2014). The United States and the European Union (EU), which account for about 10 per cent of the global population, are responsible for 24 per cent of global carbon emissions, while the whole of Africa, home to about 20 per cent of the global population, accounts for just about 3 per cent of global emissions (IPCC, 2014; Wiedmann et al., 2015).

The second is asymmetry in impacts, which focuses on the fact that the negative impacts of climate change will not be borne proportionately by countries (Schaeffer et al., 2014). A key observation in the international climate justice literature and policy discourse is that the ‘unavoidability of justice’ (Shue, 1992: 373) resides in the fact that climate impacts will be disproportionately borne by the poorest nations that have contributed the least to the problem. This leads to the charge that climate change involves rich countries imposing significant risks on poorer countries (Agarwal and Narain, 1991; Okereke, 2011).

The third asymmetry relates to the ability of countries to participate in various international decision-making forums. Facing limited resources, developing countries are generally unable to attend and participate effectively in international climate meetings (Shue, 1992; Okereke, 2007; Okereke and Charlesworth, 2015). Besides being outnumbered, developing countries also very often lack the technical abilities and skills to prepare for and follow complex and lengthy negotiations (Okereke and Coventry, 2016). The lack of meaningful participation raises the possibility that climate policies may be designed in ways that fail to address the interests of the poorest countries and, in doing so, exacerbate global inequalities. Table 18.1 presents an overview of the number of delegates attending the annual UNFCCC meetings from selected developed and developing countries (based on comparable populations). It clearly demonstrates that developing countries are vastly outnumbered in the global conferences where important decisions are made.

Table 18.1 Inequity in North-South participation in UNFCCC meetings

Country (population in millions as at 2010)Chad (11.2)Germany (81.8)Ethiopia (82.1)United Kingdom (62.4)DR Congo (65.9)Brazil (190)Nigeria (160)Canada (34)Algeria (36)Japan (127)
Source: Head count by author based on UNFCCC lists of participants.

The early climate justice literature correctly observed that the three dimensions of asymmetry (contribution, impact and participation) that characterise climate diplomacy at the international level also apply to many other dimensions and scales, such as between present and future generations (Howarth, 1992; Page, 1999), between genders (Terry, 2009) and within countries (Adger, 2001; Baer et al., 2009). A running theme in the climate justice literature in the past two decades has been the focus on analysing climate equity outside the international regime. Let me briefly highlight some of the notable dimensions.

First, following the work of Paavola and Adger (2006), there has been a proliferation of literature on climate justice in the context of adaptation, reflecting the need to understand how issues of fairness are implicated at local scales of climate governance, with all the diversity and variations that characterise such geographies. More recently, there has been a growing literature on rights- and capability-based approaches to climate justice, which focus on the links between climate actions and individuals’ rights to life and well-being (Schlosberg, 2012; Shi et al., 2016). Somewhat related to adaptation is the issue of climate-induced loss and damage as well as migration, which has also begun to receive increasing attention in climate justice scholarship (Marino and Ribot, 2012; Cao, Wang and Cheng, 2016; Lees, 2017).

Second, there has been an increasing body of literature on climate justice in the context of subnational actors, especially cities (Bulkeley et al., 2013; Bulkeley et al., 2014). At the same time, attention has focused on the equity implications of burgeoning transnational climate governance initiatives – such as the Renewable Energy and Energy Efficiency Partnership, the CDP (formerly, Carbon Disclosure Project) and the Carbon Pricing Leadership Coalition – which often perform important governance functions including agenda setting, norms diffusion, verification and standard-setting (Derman, 2014; Castro, 2016).

Third, more light has been shed on the role of businesses, especially global corporations, in causing climate change and the need to ensure that these entities are doing their fair share in tackling climate change in the context both of mitigation and of adaptation (Heede, 2014; Frumhoff, Heede and Oreskes, 2015). Related to this are the many different lawsuits that have been brought against corporations on climate change, particularly in the United States (see also Chapter 3), as well as analysis of the justice and equity implications of market-based mechanisms or policies for tackling climate change, which have also been on the increase (Peel and Osofsky, 2015).

Fourth, there has been increasing recognition that contestations of climate justice frequently express themselves in several other resource politics at regional, national and local levels. Newell and Mulvaney (2013), Baker, Newell and Phillips (2014) and Bratman (2015) have highlighted climate justice implications in national energy transition initiatives. Schlosberg’s (2013) account has focused on food justice, while Gupta (2014, 2015) has covered forest and water resources.

A fifth development, which is connected to many of the aforementioned dimensions, is the increasing attention paid to the need for procedural justice and participation, not with respect to states’ participation, but also with respect to broader public engagement of laypeople (Devine-Wright, 2017), citizens’ panels (Kahane and MacKinnon, 2015), indigenous people and local communities (Schroeder, 2010) and civil society groups in climate decision-making (Stevenson and Dryzek, 2014).

The proliferation and intensification of the climate justice literature focusing on other scales of governance in addition to the international regime is a clear indication of the appreciation of the independence, rule-making authorities and impact of these climate governance nodes, and also an implicit acknowledgement that climate governance is indeed multicentred and that justice is relevant to all nodes.

18.3 Climate Equity Impact on Polycentric Climate Governance

In this section, I advance the argument that concerns for climate justice are indeed a major factor that accounts for the development of climate governance in a more polycentric direction. First, I look at the role of justice concerns in the evolution of the international climate change regime. Next, I focus on the role of justice in facilitating the profile of adaptation and loss and damage. Then I examine the role of justice in creating global carbon markets, the involvement of cities and in the proliferation of transnational climate governance.

18.3.1 Evolution of the International Climate Regime

The first and arguably still the most significant impact of equity concerns with regard to pushing global climate governance in a more polycentric direction is the role of justice-based apprehensions in mobilising developing countries to insist that the global agreement must be negotiated under the UNFCCC. Early accounts of international climate diplomacy suggest that one of the first battles fought between developed and developing countries was over the nature of the international institution that would henceforth oversee global collaboration on climate action (Mintzer, 1994). In keeping with the view that climate change was essentially a technical problem requiring well-defined and limited collaboration over emission reduction technologies, developed countries very much favoured the formation of a narrow technical body (Bodansky, 1993). Developing countries, for their part, maintained that climate change was a developmental problem which not only implicates fundamental issues of equity but also offers the opportunity to address broader issues of economic inequality between developed and developing countries (Bodansky, 1993; Dasgupta, 1994). For these reasons, they insisted that the climate negotiations should be brought under the remit of the UN. They felt that only a UN-driven process could facilitate and oversee the large scale of structural changes needed to address the scale of climate injustices. The UN was also preferred because it would offer developing country parties the ability to express their voices more effectively. Two famous quotes from top developing country negotiators captured this sentiment.

The sharing of costs and benefits implied in the conventions could significantly alter the destinies of individual countries.

(Indian negotiator in Dasgupta,1994 : 131)

The UN system permits all sides to express their opinions from a position of sovereign equality and therefore to maintain self-respect. Countries acknowledged to have dominant economic, political and military power are forced to take into account the contrasting views of many other countries, however weak those countries may be. This balance promotes a more equitable dialogue.

(Pakistani negotiator in Hyder, 1994 : 203)

Once the developing countries had succeeded in bringing the climate negotiations under the UN’s ambit, they also pressed hard, on the basis of equity concerns, for the UNFCCC to have an expansive objective that accommodated the need for adaptation, food security and economic development alongside the stabilisation of greenhouse gas concentrations. Alongside other provisions on North-South technology transfer (see Chapter 15), financial assistance and capacity building, these provisions contributed to increasing the scope of the regime and creating the space for the involvement of a range of other actors in climate governance. It is conceivable that if climate negotiations had remained within the ambit of a narrow technical body as developed countries initially canvassed, much of global climate governance today would have probably consisted of a range of emission reduction technology agreements between countries, with little or no attention paid to matters such as adaptation and loss and damage (Wrathall et al., 2015).

At the same time, the replacement of the Kyoto Protocol with the Paris Agreement, with all its implications for polycentric climate governance (see Chapters 1 and 2), is also firmly rooted in concerns for justice – especially from the United States, which felt that an equitable climate agreement must create similar, if not the same, obligations for developed countries and the rest of the world, especially rapidly industrialising countries like China, India and Brazil (Okereke and Coventry, 2016; Rajamani, 2016). It is instructive that President Donald Trump cited equity and fairness concerns several times in his speech to announce the withdrawal of the United States from the Paris Agreement.

18.3.2 Adaptation and Loss and Damage

An equity-fuelled emphasis on adaptation is another distinctive way in which justice concerns have facilitated more polycentric climate governance. Although the UNFCCC has always included a mention of adaptation as a key aspect of international climate governance, much of the focus on early climate diplomacy focused on mitigation (see also Chapter 17). Following the signing of the Kyoto Protocol in 1997, developing countries consistently drew attention to the need to elevate climate adaptation as a key element of international climate governance. This insistence finally yielded tangible results in 2001, when the Marrakech Accords included a range of decisions on adaptation, including the undertaking to formulate the National Adaptation Programmes of Action to identify the urgent and immediate needs and priorities of the Least Developed Countries. Other landmark achievements included the establishment of the Special Climate Change Fund and the Least Developed Countries Fund, both of which were mostly targeted at funding adaptation activities in vulnerable developing countries. As of December 2016, 51 countries had submitted their National Adaptation Programme of Actions, and 46 of them have started implementing some of the National Adaptation Programme of Action activities through the funding from the Least Developed Countries Fund. Subsequently, the 2004 UNFCCC Conference of the Parties (COP) laid out the Buenos Aires Programme of Work on Adaptation and Response Measures, which led to the launch of the Nairobi Work Programme on impacts, vulnerability and adaptation to climate change at COP11 (2005). When parties adopted the Bali Action Plan at COP13 (2007), adaptation was placed alongside mitigation, technology transfer and finance as one of the four pillars of global climate policy.

The raised profile of adaptation has contributed significantly to increasing the multiplicity of climate governance nodes by widening the scope and range of climate governance activities and opening the space for a greater diversity of actors to play a part. Unlike climate mitigation, which focuses mainly on how we use energy, climate adaptation has covered an even wider range of activities, such as health management, rainwater harvesting, improving seed varieties, irrigation, desalination, tourism management, coastal zone management and land use planning, to mention a few (Burton et al., 2002; Paavola and Adger, 2006; see also Chapter 17). At the same time, while the bulk of climate mitigation activities could be managed at the national level, climate adaptation and vulnerability management require local-level activities (Eriksen, Nightingale and Eakin, 2015). Furthermore, adaptation concerns, especially in developing countries, are intricately bound up with poverty reduction and efforts at the local level. These factors have all combined to expand the climate governance landscape and to draw in a diverse range of actors, such the World Health Organization and the UN Food and Agricultural Organization, into climate governance. More recently, a growing emphasis on loss and damage is drawing in more actors (e.g. the International Red Cross) and leading to the creation of additional governance platforms (e.g. the Hyogo Framework for Action) to deal with disaster risk management and climate insurance (Simon and Leck, 2015).

18.3.3 Carbon Markets

The Clean Development Mechanism (CDM), a market-based mechanism for climate change mitigation created through the Kyoto Protocol, has played a significant role in widening the space for non-state actors to participate in climate governance (Green, 2013). In early international climate diplomacy, developing countries – motivated by equity concerns – demanded an international fund from which they could draw to assist them to take climate action (Dasgupta, 1994; Hyder, 1994). Following contentious negotiations, where the developed countries vehemently opposed the idea of a fund, a compromise was eventually reached to establish a mechanism – the CDM – that allowed developed country governments to invest in ‘clean development’ projects in poor countries in return for carbon credits. The carbon offsets purchased could then be used to achieve compliance for the developed countries’ Kyoto targets. The CDM was thus a product of equity-related contestation in the international regime, with developing countries seeking a fund to help address their developmental needs, and with developed countries preferring a market-based mechanism as a way of meeting this demand. One critical aspect of the CDM, which is in keeping with its market-oriented philosophy, was that it allowed for the participation of myriad companies and other entities to earn carbon credits by investing in emission reduction activities in developing countries. This provision is partly responsible for opening the climate governance space to a variety of public and private entities including firms, institutional investors and third-party validating agencies involved in the mechanism. It is evident, therefore, that the CDM has served to enhance the complexity of the climate regime (Green, 2013) and to increase the polycentric nature of global climate governance.

Alongside the larger CDM-based ‘compliance’ market, which yields units and credits that count towards developed countries’ emission reduction obligations in the UNFCCC, a voluntary carbon offset (VCO) market also emerged, which allowed individuals, companies and governments to purchase carbon offsets to mitigate their own greenhouse gas emissions. With the emergence of VCOs, myriad activities such as electricity use, holiday flights, hotel stays and car rentals were drawn in as legitimate climate actions, and alongside this arose initiatives such as the Voluntary Carbon Standard, the Climate Registry, the Chicago Climate Exchange and numerous other transnational labelling, certification, verification and trading entities that facilitate VCO transactions (Castro, 2016).

Several organisations selling VCOs argued that it offered opportunities for rich consumers to take action on climate change, while simultaneously supporting laudable development projects, such as installing solar panels and building schools in the poor South. Furthermore, by connecting rich, climate-aware and penitent polluters in the North with poor beneficiaries in the South, the voluntary offset programme was thought to play a useful role in the ‘co-creation of global environmental values’ (Gössling et al., 2009: 1). However, VCOs came under a barrage of criticism: they have been described as an emotional Band-Aid for the rich, a tool for carbon colonialism (Bachram, 2004) and a primitive accumulation strategy (Bumpus and Liverman, 2008) that allows the rich to exploit the poor. The point here is not to analyse the justice implications of the CDM and VCOs (as significant as they may be), but simply to assert that: (1) the creation of both the compliance and voluntary carbon markets have at least in part their rationale in equity concerns; and (2) these carbon markets have served to create self-organising, locally acting, independent actors in ways that have increased the complexity of the regime and restructured climate governance along more polycentric lines.

18.3.4 Cities

Cities have emerged as important actors on climate, and discussions about the polycentric nature of climate governance have often included reference to cities either in their individual capacities or in the form of global transnational networks (Betsill and Bulkeley, 2006; Andonova, Betsill and Bulkeley, 2009; Okereke et al., 2009; see also Chapter 5). Some of the notable examples of transnational city initiatives include ICLEI’s Cities for Climate Protection programme, the C40 Cities Climate Leadership Group, Climate Alliance and Energy Cities. Given that cities are homes to a significant percentage of the world population and most of the world’s high-polluting corporations, and considering that they are also centres of global innovation, it was unavoidable that cities would emerge as important arenas for climate governance. It is not surprising, therefore, that cities have recently been identified as a vital arena for justice contestations about both climate mitigation and adaptation activities (Bulkeley et al., 2013; Bulkeley et al., 2014).

Lucas (2006), Byrne et al. (2016) and many others have noted the role of green infrastructure such as cycle lanes, green spaces and trams in promoting climate justice in cities, while Wolch, Byrne and Newell (2014) and McKendry and Janos (2015), among others, have suggested that greening in cities could have the unintended consequence of promoting injustice and inequality through, for example, increasing housing cost and inducing gentrification. Dawson (2010) has noted the role of cities as hotbeds for climate justice activism, and Bulkeley et al. (2014: 31) have argued for an expansion of the concept of climate justice beyond fair procedure and equitable distribution of rights and responsibilities to encompass ‘“recognition” of existing forms of inequality and the ways in which climate change interventions might serve to either exacerbate or redress these underlying structural issues’. This suggests that questions of justice may manifest in unique ways and require specific contextualisation in different platforms of climate governance. Furthermore, the intense contestations for justice in cities indicate that regardless of the scale, initial rationale or origin of any given climate governance platform, it will only be a matter of time before significant and complex questions of justice arise in such arrangements. At the same time, some studies have found that despite growing visibility and claims, many cities are actually not doing much to reduce carbon emissions (Araos et al., 2016). This not only highlights the well-known analytical challenge of how to effectively determine the significance of many of these local level, non-traditional and ‘experimental’ climate governance initiatives, but it also raises the question of whether these initiatives actively distract attention from the pursuit of equity within the international regime.

18.4 Impact of Polycentricity on Equity

While global climate governance has always exhibited many of the characteristics associated with polycentric governance (see Chapter 1), the global community may have entered a new and distinctive era of even more polycentric climate governance. The question here is: what are the implications of this increasing polycentric climate governance on equity and vice versa? Here, at least three points can be made.

First, equity considerations remain important in the context of the Paris Agreement. The central concern here is whether a more polycentric governance structure has been secured at the expense of creating an effective regime. So far, it is known that the nationally determined contributions pledged by states, if fully implemented, fall far short of what is needed to keep the global mean temperature well below 2°C (du Pont et al., 2016). If parties fail to find a way of ratcheting up their commitments, the result will be more severe climate change impacts on the global poor, which have done the least to cause the problem. This would constitute a gross violation of the key tenet of climate justice. Furthermore, there are serious questions as to whether parties will abide by the pledges to which they have committed themselves. Evidence from the past as well as other areas of international cooperation (e.g. human rights and development assistance) suggests that states often renege on their commitments when confronted by domestic circumstances that are considered more pressing (e.g. elections, unemployment, etc.). Also, given the non-legally binding nature of the pledges, they may be easily ignored or rolled back, as is evidenced by the case of the Trump administration. In this sense, the new agreement creates challenges relating to transparency and accountability (see also Chapter 12). Some (e.g. van Asselt, 2016) argue that non-state actors can play strong roles in enhancing transparency and accountability under the regime through their roles in reviewing ambition, implementation and compliance. If such roles were to be fulfilled, this would further increase the diversity of actors and push the global governance architecture towards greater polycentricity. However, it is not immediately clear what impact that will have on the actual quality of action and on climate justice.

Second, there is an important ethical question regarding whether the new voluntary and arguably more polycentric climate governance arrangement with its pledge-and-review system downgrades the concept of common but differentiated responsibilities and respective capabilities, which has been the ethical cornerstone of global climate policy. Some have indeed suggested that the new agreement, by demanding pledges from all countries (both developed and developing countries), has managed to side-step contentious equity issues that have long dogged international climate policy (Falkner, 2016). It would seem that the new agreement indeed envisages a diminished role for the principle of common but differentiated responsibilities by skirting over the vexed issue of differentiation between states. However, given that commitments for capacity building – and for North–South financial and technology transfer – remain in the agreement, it can be argued that the principle continues to be an important aspect of the regime post-Paris. One key aspect going forward will be how far the developed countries go to meet their obligations for financial assistance to poor countries under the new agreement. Many of these points are expected to re-emerge strongly in the context of the global stocktake in 2023, which will take place ‘in the light of equity and the best available science’ (Article 14.1 of the Paris Agreement).

Third, and going beyond the regime, there are legitimate questions as highlighted in the preceding section – especially in relation to cities and offsets – as to the extent to which these multiple sites of governance are actually resulting in meaningful climate action and carbon emissions reduction. Related to this is whether their proliferation and activities may be helping to create the illusion that something is being done and diverting attention that might be better devoted to getting traditional state actors to take ownership for and tackle the problem. It has been observed that climate voluntarism (Okereke, 2007), regime complexity (Green, 2013), carbon markets (Paterson, 1996a) and transnational climate governance (Bulkeley et al., 2014; Castro, 2016) are all driven by a neoliberal agenda, the ethical basis of which is not compatible with more radical interpretations of climate justice. The more radical and direct charge is that these multiple climate governance sites are in fact creating spaces for resource-rich Northern actors – including non-governmental organisations and businesses – to further exploit the poor South under the guise of taking climate action (Bachram, 2004; Lohmann, 2011). Even when manipulation and exploitation are not the original intention, the fact that navigating multiple sites of governance is easier for developed countries (as well as non-state actors) with greater resources raises a distinctive prospect that greater regime complexity could inadvertently exacerbate existing inequalities (Benvenisti and Downs, 2007; Okereke, 2007). One might note, however, that equity concerns have become a stronger part of some of the transnational governance initiatives (e.g. with the Gold Standard including social impacts of offset projects). However, it is interesting that considerations of equity in these initiatives often leads to the creation of additional initiatives and standards which could in turn increase regime complexity and polycentricity.

18.5 Conclusions

This chapter has argued that equity concerns have played a major role in shaping the global climate governance architecture. More specifically, it has suggested that considerations of justice have served to push climate governance in a more polycentric direction. It was shown that the decision to negotiate the international climate agreement under the UN umbrella (rather than by a narrow technical body), the expansion of objective of the agreement signed in 1992 to include adaptation, food security and economic development, the CDM, North–South technology transfer, and capacity building among many other issues, are all rooted to more or less degrees in concerns and controversies around equity and justice. At the same time, the subsequent demise of the Kyoto Protocol model of governing and the emergence of the Paris Agreement are strongly linked to equity concerns.

Furthermore, equity considerations are also central to explaining the emergence of the voluntary carbon markets and several other subnational and transnational initiatives which legitimised the involvement of a wide diversity of actors in climate governance and in so doing rendered the global climate governance architecture more polycentric.

The relationship between equity and polycentricity is complex and even seemingly paradoxical. Equity considerations may be helping to create multiple sites of governance, which may be necessary to accommodate more actors, issues and interests. However, it is not clear that the existence of these multiple sites of governance is necessarily resulting in greater climate justice. In fact, there is a legitimate concern that some of these sites have been created or at least usurped by actors with greater resources for their own advantages and operate in ways that exacerbate existing inequalities. Climate injustices are both symptoms and magnifiers of broader structures of historical injustice and inequality that characterise the global system. Hence, unless these fundamental structural injustices are addressed, it is not clear that more or less fragmentation will address climate justice. Yet, insofar as equity concerns are inextricably tied to any climate governance arrangement, understanding the equitability of climate action (or inaction) at multiple levels, spaces and jurisdictions – and how these both link the international regime and contribute to ambitious climate governance (or a lack thereof) in the context of global sustainable development – will remain of great relevance both intellectually and in practice.

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19 Legitimacy and Accountability in Polycentric Climate Governance

Karin Bäckstrand , Fariborz Zelli and Philip Schleifer
19.1 Introduction

Polycentricity is characterised by institutional fragmentation as well as interdependence among actors. It is a situation wherein, for instance, non-state and state actors can be both regulators and regulated at the same time. Polycentricity raises a set of new questions for the core governance aspects of legitimacy and accountability: how can legitimacy and accountability be enhanced in the emergent polycentric system of climate governance where the state is not the only or even the primary source of authority? Is the democratisation of a system consisting of multiple and overlapping forms of authority feasible and even desirable? Who should be represented in the decision-making structures of the various units of the polycentric system, and to whom should such units be accountable? In addressing these questions, we analyse legitimacy and its challenges from multiple perspectives.

On the one hand, we consider their normative dimension. Normative legitimacy is grounded in democratic theory. Democratic theory defines normatively justified standards with which real-world institutions ought to comply. In this chapter, we focus on a set of core democratic values, and how they are institutionalised and can be enhanced in polycentric governance. Particular attention is given to the challenges that arise for establishing accountability in this context – i.e. the idea that those in positions of influence should be responsive to the interests of their constituencies. On the other hand, we analyse the state of sociological legitimacy in this field. Unlike normative legitimacy, sociological legitimacy is a matter of perception – i.e. whether actors accept an institution (or its decisions) as legitimate, regardless of the standards on which these judgements are based.

Not much scholarly attention has been directed towards these issues which lie at the nexus between polycentric governance, climate change, democracy, legitimacy and accountability. Much more ink has been spilt on describing the emergence of polycentric climate governance and weighing its implications for effectiveness. As a normative ideal, several virtues of polycentricity have been stressed, such as enhancing ‘innovation, learning, adaptation, trustworthiness, levels of cooperation of participants, and the achievement of more effective, equitable, and sustainable outcomes at multiple scales’ (Ostrom, 2010: 552; see also Chapter 1). To be fair, some of these virtues touch upon legitimacy concerns. Trust building, which is advanced as a core element in polycentric governance, resonates with sociological legitimacy (Dorsch and Flachsland, 2017). However, normative legitimacy – centred around criteria and values such as deliberation, accountability, participation and transparency – has featured less in the scholarship on polycentric governance, which has been preoccupied with spurring more effective collective action.

We pursue two main objectives in this chapter in order to stress the urgency of further advancing the nascent research interest in the legitimacy and accountability of polycentric climate governance. First, in Section 19.2, we make the case for a stronger research focus on the polycentricity-legitimacy-accountability nexus. We develop the argument that certain legitimacy and accountability challenges are inherent to polycentricity in general and that the policy field of climate change is no exception to this. In fact, polycentric climate governance is a prime example for such challenges given its relatively high degree of complexity – hence references in the existing literature to notions like regime complexes, networked and experimentalist governance (Bulkeley et al., 2014; Falkner, 2016a; Sabel and Victor, 2017). We therefore start by examining the overall conceptual challenges raised by legitimacy and accountability in polycentric (climate) governance, distinguishing between normative and sociological legitimacy and different forms of accountability (which we will label external, internal and networked accountability).

Second, in Section 19.3, we briefly illustrate a research agenda on accountability and legitimacy dynamics for two domains of polycentric climate governance, namely (1) corporate climate action, and (2) climate minilateralism. We select these two types of institutional arrangements, as they are currently the most important manifestations of the emerging system of polycentric climate governance. At the same time, they also vary in important respects and thus provide different insights, as they are driven by very different types of agents with varying legitimacy implications, namely non-state actors and governments.

Section 19.4 concludes with a short outlook on how to address legitimacy and accountability gaps in the light of the renewed role for the state and the United Nations Framework Convention on Climate Change (UNFCCC) in polycentric climate governance. In doing so, we acknowledge that there is no ‘one-size-fits-all’ approach to strengthening the legitimacy and accountability of polycentric governance.

19.2 Inherent Challenges: Polycentricity, Legitimacy and Accountability

The literature on polycentric climate governance has thus far focused on the origins, effectiveness and mitigation potential of multilayered governance arrangements. In fact, a polycentric approach has been hailed as the best option for climate stabilisation (Ostrom, 2010; Cole, 2015). Largely absent in the literature so far is a debate on the legitimacy challenges posed by the twin issues of representation and inclusion (who should be part of decision-making bodies in various networks?) and accountability (to whom should such bodies be accountable and how?). In line with several scholars (Black, 2008; MacDonald and MacDonald, 2017), we argue that new approaches are needed to grasp and assess the legitimacy and accountability of polycentric climate governance.

Such approaches should better reflect a polycentric governance system which encompasses a multitude of mechanisms, forums and actors, and a mix of public, private and hybrid authority engaged in governance functions such as agenda-setting, rule-making, implementation and monitoring. It echoes scholarly concerns about the general nexus of polycentricity and legitimacy ‘beyond the state’ and the consequences of the regulatory shift from state-centred to private and/or networked governance. Like these other forms of governance, polycentric climate governance is likely to be vulnerable to a ‘legitimacy deficit’ (Buchanan and Keohane, 2006).

In the following, we discuss several of these overarching and inherent challenges arising from the polycentricity-legitimacy nexus. With this, we make a case for more systematic analyses of legitimacy and accountability – and gaps thereof – in polycentric governance systems.

19.2.1 Multiple Authorities

Due to their functional and spatial differentiation, polycentric networks have a lower degree of jurisdictional integrity compared to state-centric governance. This dispersed and fragmented authority poses a challenge to democratic governance. If we take authority to mean the legitimate exercise of power (Bernstein, 2011), polycentric governance systems consist of many sites of political authority. ‘Liquid’ authority – meaning transnational, non-state, non-electoral authority – is replacing and/or supplementing traditional ‘solid’ sovereign authority (Krisch, 2017). Hickmann (2017) stresses that this does not necessarily mean a complete shift of authority away from the (inter)governmental level, but it implies a reconfiguration of the functions of central institutions in a changing authoritative landscape.

Polycentricity means the co-existence of multiple (and autonomous) territorial and non-territorial multiple centres of decision-making with different objectives, values and steering instruments – and ongoing shifts in the relationships and authority constellations among these different centres. Multiple authorities are often self-governing, and the principle of subsidiarity is central as local units set their own rules. However, polycentricity can be distinguished from fragmentation as it involves the existence of multiple centres of authority within an accepted set of overarching rules (Aligica and Tarko, 2012: 250).

Global climate governance is a prime example of a polycentric system. There are identifiable centres, notably the UNFCCC, which after the Paris Agreement has regained its role as the epicentre of climate governance. The UNFCCC provides an overarching set of norms and rules evident in the 2°C/1.5°C goals (see Chapter 2). Public and private authority are deeply intertwined in climate governance, as states have delegated authority to private actors, for instance through the Kyoto Protocol’s Clean Development Mechanism (Green, 2014). Private actors also generate their own norms, rules and standards. The expansion of carbon market governance was made possible through the enrolment of private firms as auditors and monitors of carbon offsets, and scientists as experts of carbon removal methodologies. The increasing interconnections and interplay between state and non-state actors, for instance in hybrid governance arrangements, is a challenge to accountability, as the latter concerns a relationship that exists between those who wield power and those whose lives are affected or constrained by the exercise of power.

As a consequence, polycentric climate governance has many participants and regulators at subnational, intergovernmental and transnational levels involved in processes such as goal formulation, decision-making, monitoring and review – with significant implications for accountability and legitimacy (Black, 2008). How, then, can we ensure that multiple regulators spanning the public–private divide remain accountable for their actions? Polycentricity is underpinned by a normative ideal: polycentric governance enhances legitimacy by providing an opportunity for enhanced participation, deliberation and experimentation, pluralism, diversity and trust building (Ostrom, 2010). A normative assumption is that trust is promoted, or alternatively framed, such that sociological legitimacy is more likely in polycentric governance. However, as Skelcher (2005: 89) argues, ‘the design of democratic governance is more problematic in a polycentric system … as political authority is dispersed across separately constituted bodies that do not stand in hierarchical relationship to another.’

Hence, the existence of multiple authorities does not automatically result in polycentric governance systems that stimulate participation, representation and inclusion by a multitude of actors. Achieving this remains a major challenge. As we illustrate in our brief empirical examples in Section 19.3, polycentric governance can equally be non-transparent and exclusive in providing closed venues for coalition building, trust and bargaining between powerful elites from government, market and civil society. This image is far from the normative ideal in polycentric theory: of multiple platforms and domains actively facilitating dialogue and deliberation between political decision-makers and affected stakeholders.

19.2.2 Normative and Sociological Legitimacy

Legitimacy is an essentially contested concept in social science and political philosophy, usually referring to the justification of authority. Two approaches can be discerned – normative or sociological legitimacy: ‘To say that an institution is legitimate in a normative sense is to say that it has a right to rule whereas an institution is legitimate in a sociological sense when it is widely believed to have a right to rule’ (Buchanan and Keohane, 2006: 405).

Normative legitimacy requires a normative theory of legitimate rule-making. Such a theory needs to specify and justify standards against which real-world arrangements can be assessed and evaluated, for instance in terms of their effectiveness or fairness. By contrast, sociological legitimacy means the acceptance of the rule-making authority among constituencies, regardless of the standards on which these judgements are based. They may be (but do not have to be) derived from norms, values and principles of liberal democracy, such as accountability, transparency, inclusion and deliberation.

Sociological legitimacy prevails when authority and rule-makers have the consent of those who are subject to it, while normative legitimacy can be established if the authority conforms to predefined standards. Compliance with rules and norms takes place if actors perceive the social and political order as acceptable (Buchanan and Keohane, 2006: 405; Bernstein and Cashore, 2007: 2). Sociological legitimacy is closely linked to the study of the legitimation (or delegitimation) of governance, entailing the justifications and claims to legitimate authority by global governance institutions (Bernstein, 2011).

Following a normative notion of legitimacy in the context of the European Union, Scharpf (1999) argues that legitimacy has two dimensions: input (or procedural) legitimacy and output (performance) legitimacy. Input legitimacy stems from procedural logic and asks: are policies and norms developed in a transparent, fair, inclusive and accountable manner? Output legitimacy is associated with a consequential logic, collective problem-solving and effectiveness and asks: do norms and institutions result in collective problem-solving and performance?

What does polycentricity imply for these two core dimensions of legitimacy? Following Scharpf’s (1999) conceptualisation, researching normative legitimacy in polycentric climate governance would identify the sources of legitimacy in various types of polycentric arrangements. Are they effective in targeting the problem of climate mitigation, or do they derive legitimacy from being inclusive, representative and accountable? In this fashion, the overall legitimacy of polycentric governance rests on combining effective problem-solving (i.e. ultimately avoiding dangerous climate change) with fair, accountable, inclusive and transparent procedures.

As previously discussed, a recurrent (and largely unsubstantiated) claim is that polycentric governance can better generate trust, support and collaboration (see Chapter 1), i.e. to fare better in terms of sociological legitimacy. Dimensions such as trust and collaboration are part of major definitions of polycentricity (Dorsch and Flachsland, 2017). Another recurrent claim is that polycentric governance can also enhance normative legitimacy, in terms of promoting fairness and participation and equitable outcomes (Ostrom, 2010). Finally, the scholarship on polycentricity and climate change more frequently asserts (rather than examines) the assumption that polycentric governance generates more effective and sustainable governance across multiple levels and sites.

However, the distinction between normative and sociological legitimacy is more of an analytical device, and most researchers usually think in terms of both. A normative approach to legitimacy can make political acceptance (sociological legitimacy) part of its evaluative criteria for legitimacy. As Buchanan and Keohane (2006: 406) argue: ‘[i]t is important not only that global governance institutions be legitimate but that they are perceived to be legitimate. The perception of legitimacy matters, because in a democratic era, multilateral institutions will only thrive if they are viewed as legitimate by democratic publics.’

As we illustrate in our empirical examples, both the normative and sociological dimension of legitimacy remain contested terrain in polycentric climate governance. The challenges are of a theoretical (e.g. which normative principles apply to private governance?) as well as an empirical nature (e.g. what are the legitimation dynamics surrounding polycentric climate governance?).

19.2.3 Accountability

Accountability concerns those who govern as well as those who are being governed. The idea is that those in positions of power should be responsive to the interests of their constituencies. Accountability is, hence, about the relationship between an agent and a principal. It ‘implies that some actors have the right to hold other actors accountable to a set of standards, to judge whether they have fulfilled their responsibilities in light of these standards, and to impose sanctions if they determine that these responsibilities have not been met’ (Grant and Keohane, 2005: 29). Accountability can only result in legitimacy if there are sanctions available (e.g. voting rulers out of power, or reputational sanctions such as naming and shaming) once actions or decisions are incompatible with the values and preferences of principals.

Accountability becomes more complex in polycentric governance with no single, coherent principal but rather a plethora of public and private actors that operate in various transnational networks. New forms of accountability, as well as an extension of the principal-agent model in representative democracy beyond the domestic context, are needed. The principals of accountability in a polycentric system are different from the standard principal-agent model (hierarchical, state-centred and electoral). This calls for less vertical forms of accountability, moving towards a more horizontal mode of operating that stresses mutual monitoring and review, peer accountability and transparency (see also Chapter 12). By the same token, we can distinguish between internal (delegated), external (societal) and networked accountability (Grant and Keohane, 2005; Bäckstrand, 2008). The latter three non-electoral forms of accountability are more applicable to polycentric governance.

The problem of accountability at the transnational level is amplified in polycentric climate governance, where actors are both regulators and regulated, be it cities, intergovernmental agencies, carbon market actors or standard-setting organisations (Bäckstrand, 2008). The range of accountability and legitimacy challenges is so varied in polycentric climate governance that the key task becomes one of analysing the dynamics and logics of legitimacy and accountability in each. Polycentricity includes governance arrangements requiring top-down, hierarchical accountability as well as horizontal, non-hierarchical (market, peer and reputational accountability). The former, which is aligned with hierarchical forms of governance, has clear principal–agent relationships. For example, governments that are involved in different climate clubs (Falkner, 2016a) are accountable to their citizens, and international bureaucracies such as the UNFCCC Secretariat are accountable to their member states.

19.3 Legitimacy and Accountability Deficits in Polycentric Climate Governance: Two Examples

In the following, we use two major subsets of polycentric climate governance as examples to empirically illustrate the aforementioned challenges. Given space constraints, we can only provide brief and non-exhaustive explorations, for which we chose two core institutional developments. While the lines between private and public governance are often blurred in polycentric systems, our first example – transnational private governance – focuses on the former, whereas the second example – climate minilateralism – emphasises the latter. We do not claim that these cases are representative for polycentric climate governance as a whole, which has many more facets and dimensions. However, they provide important insights into the most salient issues at hand.

19.3.1 Transnational Private Governance

The Paris Agreement institutionalised ‘hybrid multilateralism’ (Bäckstrand et al., 2017), denoting an intensified interplay between multilateral and transnational climate action, with the UNFCCC Secretariat taking a role as facilitator or orchestrator of transnational climate action (Hale, 2016; see also Chapter 11). The Lima-Paris Action Agenda (which later morphed into the Marrakech Partnership for Global Climate Action) and the Non-state Actor Zone for Climate Action (NAZCA) were launched to galvanize the groundswell of actions on climate change mitigation and adaptation from cities, regions, businesses and civil society organizations (Chan et al., 2018). This development is part and parcel of a wider shift towards more private forms of governance in global environmental politics. Abbott, Green and Keohane (2016) observe that while the growth of formal international organisations has stalled, the population of private governance organisations has increased exponentially in recent years.

One important manifestation of this trend is non-state market-driven governance (Cashore, Auld and Newsom, 2004). Prominent examples include the Forest Stewardship Council, the Roundtable on Sustainable Palm Oil and Fairtrade International. Created by firms and civil society actors, these programmes set standards for transnational production and often operate certification programmes. The International Trade Centre, a specialised agency of the United Nations, now counts more than 230 non-state market-driven programmes in a wide range of industry sectors (ITC, 2017). While most of these initiatives are not formally integrated in NAZCA, many of them address climate change–related problems such as deforestation, land-use change, biodiversity loss and renewable energy. There are also a large number of programmes that are directly involved in climate governance, as they interact with intergovernmental, national and subnational frameworks in various ways. One example is the Rainforest Alliance’s participation in the UN-REDD programme. Another example is Fairtrade International’s newly created Climate Standard, aiming to enable smallholders and rural communities to better adapt to climate change.

The proliferation of non-state actors in this governance domain has led to multiple, often overlapping, authorities (Abbott, 2012). The example of renewable energy governance in the EU illustrates the issue well. To implement its policy targets (10 per cent of renewable energy in the transport sector by 2020), the European Commission closely engages with non-state market-driven governance in this area. Acting as an orchestrator, it developed a meta-standard approach and recognises compliant private governance programmes as equivalent (see also Chapter 11). These measures have created a regime of hybrid biofuel governance, in which public and private authority are closely intertwined. But this approach has not been without challenges. Most importantly, scholars are concerned about a ‘race to the bottom’ among private regulators. They describe how the EU’s meta-standard approach has set a very low bar for formal recognition. Among other things, it includes no requirements for stakeholder inclusion or transparency. This has resulted in a situation in which a large number of industry-dominated programmes have outcompeted more inclusive governance arrangements, such as the Roundtable on Sustainable Biomaterials (Schleifer, 2013).

However, there are also reasons for optimism. Studying the related field of transnational forestry governance, Overdevest and Zeitlin (2014) describe how the EU assembled an experimentalist regime, which successfully combines public regulatory oversight with peer review and multi-stakeholder participation at the transnational and local levels. Non-state market-driven programmes like the Forest Stewardship Council are closely integrated in this regime, and there is evidence for the occurrence of meaningful deliberation and experimentation. Overall, the examples illustrate some of the challenges but also opportunities posed by multiple authorities. On the one hand, it can lead to regulatory conflict and competition, in which democratic principles are undermined. On the other hand, there is a possibility of assembling these multiple authorities into highly inclusive institutions that cross governance levels and geographical regions. Either way, public actors appear to retain a crucial capacity in shaping these outcomes.

Closely connected to the issue of multiple authorities, accountability and legitimacy issues continue to loom large in the private governance literature. Particularly, establishing accountability remains a major challenge. In the transnational realm, private governors are typically self-selected, and there is no demos available to hold them to account. For these reasons, principal-agent accountability – the main mechanism in liberal democracies – does not work in this context (Dingwerth, 2007). Transparency is often suggested as an alternative. Hale (2008) identifies three ways through which transparency can breed accountability in transnational governance: market pressures, public discourse and self-reflection. For example, market pressures can trigger a ‘transparency action cycle’ in which information disclosure triggers constructive behavioural change (Fung, Graham and Weil, 2008). Sceptics, however, question transparency’s ability to truly empower accounting actors in global environmental governance (Buchanan and Keohane, 2006; Gupta and Mason, 2014). They believe that ‘[w]ithout standards and sanctions … accountability that is both effective and widely viewed as legitimate will remain elusive’ (Grant and Keohane, 2005). Hence, there is no agreement amongst scholars on the relationship between transparency and accountability.

Existing empirical studies also paint a mixed picture (Auld and Gulbrandsen, 2010). In a recent quantitative analysis, Schleifer, Fiorini and Auld (2017) find that most non-state market-driven programmes do not disclose information in areas of ‘deep transparency’ – i.e. information about actual processes instead of information about paper procedures. They argue that transparency levels are often insufficient to promote accountability as hypothesised by Hale (2008) and others. A glance at the wider literature on accountability in global environmental governance reveals further complexities and contradictions (Gulbrandsen and Auld, 2016; Kramarz and Park, 2016). In this regard, Kramarz and Park (2016) observe how the rapid proliferation of accountability mechanisms in this domain has done little to stop the environment from deteriorating. This perceived lack of effectiveness could further exacerbate the legitimacy challenges faced by private governance institutions, damaging their output legitimacy.

In general, the legitimacy of private governance remains contested terrain. With regard to the normative dimension, multi-stakeholder participation was long hailed as the ‘gold standard’ of legitimate private rule-making. These ideas have their origin in deliberative democratic theory, with its focus on stakeholder participation and unconstrained dialogue (Dingwerth, 2007; Stevenson and Dryzek, 2014). However, more empirically oriented scholars increasingly question the validity of this ‘inclusiveness paradigm’. This research points to the limited deliberative capacity of private multi-stakeholder governance (Schouten, Glasbergen and Leroy, 2012). Dominated by international actors and rational scientific understandings of sustainability, initiatives like the Roundtable on Sustainable Palm Oil would often exclude local discourses and critical voices. At the same time, the sociological legitimacy of private environmental governance remains fragile and in flux (Bernstein and Cashore, 2007; Bernstein, 2011). Internal challenges arise as industry and civil society actors struggle over influence and policy outcomes, sometimes destabilising multi-stakeholder processes from within (Boström and Hallström, 2012; Schleifer, 2016). External challenges include the legitimation politics surrounding the creation of industry-sponsored competitor programmes (Fransen, 2012; Ponte, 2014). A new trend is the rise of ‘home-grown’ initiatives in the global South, such as the Indonesian Sustainable Palm Oil Standard (Hospes, 2014; Schouten and Bitzer, 2015). Backed by state and industry actors in developing countries, they increasingly contest the authority of transnational rule-making organizations like the Roundtable on Sustainable Palm Oil.

19.3.2 Climate Minilateralism

While transnational climate action is one of the major institutional and procedural developments driven by non-state actors, climate minilateralism is arguably the most prolific state-driven institutional development in polycentric climate governance. Minilateral climate coalitions or clubs, that is initiatives predominantly governed by a limited number of governments, have multiplied since the mid-2000s. Established by elected state governments on the one hand, but excluding a large group of countries on the other, they have distinctive legitimacy and accountability implications that we briefly explore in this section.

One can distinguish three different types of clubs. First, there are climate-related initiatives that have arisen from clubs with cross-cutting policy agendas that are not restricted to climate change. A prominent example is the Gleneagles Process of what was then the Group of 8 (G8, today G7), initiated by the United Kingdom in 2005 to bolster the chances of securing a strong climate agreement in Copenhagen. In 2007, the G8 also established a mainly informal dialogue with five other countries – China, India, Brazil, Mexico and South Africa – known as the G8+5, which also featured energy on its agenda.

Second, and parallel to the growing climate agendas of overarching clubs, a first rush of climate-specific minilateral arrangements emerged from the early 2000s onwards. Several new technology arrangements, all of them oriented towards mitigation, brought together member states and corporate actors, such as the Carbon Sequestration Leadership Forum and the Global Methane Initiative (see Chapter 16). Further initiatives arose after the Kyoto Protocol’s entry into force, such as the (now-defunct) Asia-Pacific Partnership on Clean Development and Climate in 2006 and the Major Economies Process on Energy Security and Climate Change in 2007 (McGee and Taplin, 2009; Zelli, 2011).

After the Copenhagen climate conference, a third wave of minilateral initiatives emerged. Some of these covered new topics, for instance the Climate and Clean Air Coalition, which addresses the issue of short-lived climate pollutants. Others were directly affiliated with the United Nations and existing international organisations, such as the Carbon Pricing Leadership Coalition, convened by the World Bank and launched at the UN climate conference in Paris in 2015. Moreover, this third wave includes coalitions initiated by developing countries. As van Asselt and Bößner (2016: 54) hold, ‘it is likely that climate coalitions will continue to emerge and co-exist with the UNFCCC.’ This is also because, in addition to the more deeply institutionalised, implementation-oriented clubs, dialogue forums and political ad hoc coalitions come and go.

What does the trend towards greater minilateralism imply in terms of different dimensions of legitimacy and accountability? Arguably, the main focus of the literature has been directed towards normative legitimacy, and particularly input legitimacy. There was a considerable lack of inclusiveness of the first two waves sketched earlier. Poorer countries, such as small island states or least-developed countries, were excluded not only from overarching clubs like the G7/8 or the Group of 20 (G20) but also from technology-specific partnerships, which showed no interest in a more balanced composition in terms of economic strength or vulnerability to climate change (van Asselt, 2007). This selectivity has triggered fierce criticism from various scholars. For Eckersley (2012: 33), ‘it offends the basic principles of communicative justice to restrict the negotiations of any anti-pollution treaty to the biggest polluters and to exclude victims of pollution simply because their pollution contribution is negligible.’

This picture has changed with the third wave of minilateralism that brought not only new clubs particularly targeted to developing countries but also a certain opening of some of the existing minilateral arrangements. A recent systematic comparison by Brandi and Bauer (2017) of a sample of 38 clubs shows that 33 of them have an open and inclusive approach and explicitly invite new partners to join. The ‘by-invitation-only’ exceptions are mostly clubs in the first and/or second waves. As a result, more than 120 countries are members of climate clubs today.

Recent minilateralism has also exhibited a growing and more diverse non-state membership. More than two-thirds of the clubs analysed by Brandi and Bauer (2017) include non-state actors. While corporate actors were often the only non-state partners in older technology clubs, the new initiatives also feature an increasing number of cities, civil society and international organisations among their members. Yet, notwithstanding a formally equal status in about half the clubs, they have a relatively low influence on decision-making and other key functions.

An even more difficult question to assess regards normative output legitimacy, i.e. how effective are climate clubs in targeting their key objective, which for most of them is mitigating climate change? Initial comparative studies by Andresen (2014) and Weischer, Morgan and Patel (2012) concluded that climate minilateralism has achieved very little in terms of carbon emissions reductions and that the clubs mostly serve as dialogue forums. Hovi et al. (2016: 7) caution, however, that ‘scholars are still relatively early in the process of trying to understand the potential of climate clubs for being instrumental in mitigating climate change.’ Their findings suggest that a combination of conditional commitments and access to a club good can be highly conducive ways to foster effective climate clubs.

While the long-term problem-solving effectiveness of climate minilateralism remains low or even uncertain, some clubs yield palpable consequences for other, more immediate aspects of output legitimacy. As Falkner (2016b: 87) stresses, one of the core ideas behind such coalitions is ‘more effective bargaining’, i.e. reaching an agreement much more quickly than in multilateral negotiation settings, due to a smaller number of like-minded countries and the prospect of the provision of club goods (cf. Kahler, 1992). Indeed, Brandi and Bauer (2017) find that 90 per cent of the climate clubs in their sample managed to set rules, principles or norms with relevance for their objectives or functions. This included some sort of quantified and thus measurable target for 12 of the 38 analysed clubs. However, comprehensive measurement, reporting and verification systems are still absent from most minilateral efforts to address climate change (Falkner, 2016b: 93).

Another aspect of output legitimacy that merits more scholarly attention is the (de)legitimating impact of climate minilateralism on multilateralism. This relates to a core argument in polycentric theory, namely that governing units ‘are capable of making mutual adjustments’ to develop collaborations and produce trusting interrelationships over time (Ostrom, 1999: 57). Indeed, as the comparative studies by Andresen (2014), Weischer et al. (2012) and Brandi and Bauer (2017) show, most climate clubs provide new venues for great powers to enhance and reinvigorate their bargaining power in UN climate negotiations. The most recent example is the G20 summit in Hamburg in July 2017. The meeting’s agenda brought climate change into the debates among the world’s leading economies, which in the end reaffirmed the support of 19 members for the Paris Agreement in spite of Washington’s withdrawal. Furthermore, it was especially the third wave of climate minilateralism that induced a shift in narrative ‘towards ways in which climate coalitions could complement the multilateral climate regime’ (van Asselt and Bößner, 2016: 54).

The United States and Australia were the main drivers behind the second wave of climate minilateralism and designed some of the technology partnerships as alternative models or rival forums to the UNFCCC. This goes in particular for the Asia-Pacific Partnership (cf. van Asselt, 2007). Today, with the Partnership disbanded and especially the newer partnerships more strongly linked to the UNFCCC, most of this initial inter-club rivalry has vanished. It is too early to assume this is an irreversible trend, but if it continues it would confirm Ostrom’s hypothesis on mutual adjustments in polycentric governance, for example through supporting similar goals and measures (cf. Gehring and Faude, 2014).

This prospect notwithstanding, the sociological legitimacy of climate minilateralism remains rather low. Gampfer (2016) analysed the connection between certain design features of climate clubs and their support rates. He used conjoint experiments embedded in nationally representative surveys in the United States and India and found that ‘climate club approaches suffer from low public support’ (Gampfer, 2016: 81). Some aspects may slightly enhance support rates though, including a higher share of carbon emissions regulated by the club, all member countries having to commit to emission reductions, the availability of club goods and disadvantages for non-members. While more research is needed on a larger sample of countries, Gampfer’s results resonate with other observations on specific minilateral arrangements. The Asia-Pacific Partnership, for instance, ‘was widely perceived to be a laggards’ club (Falkner, 2016b: 92), with key countries (the United States, Australia and Canada) led by governments that were sceptical of the need for urgent climate action. More striking still, while G7/G8 or G20 meetings regularly draw major media attention and civil society protests on site, most citizens do not know about climate-specific clubs. This creates a ‘shadow of legitimacy’, which may put an additional burden on the UN climate regime as the one climate governance institution that is known to these audiences. Thus, while the new role of the UNFCCC as an orchestrator of different climate actions raises some legitimacy concerns, it may also have a (re-)legitimating effect by directing public attention towards the polycentric character of climate governance today (see Chapter 12).

This shadow of legitimacy also implies challenges to the accountability of climate clubs – but arguably to a lesser extent than for transnational and private climate actions. At least this may be the case for vertical or hierarchical accountability. The majority of citizens might not be aware of most climate clubs in which their respective governments participate, but they can still hold them accountable for associated climate policies (cf. Falkner, 2016a). That said, the aforementioned lack of measurement, reporting and review systems in most climate clubs (cf. Brandi and Bauer, 2017) sets certain practical limits to this form of accountability. This may be partly compensated through horizontal types of accountability. Importantly for both peer and reputational accountability, the NAZCA platform includes several minilateral arrangements. This platform gives the clubs an opportunity to showcase their commitments and achievements, and at the same time provides the UNFCCC Secretariat with the possibility to keep track of them. There is room for improvement of course: only a minority of climate clubs are registered on NAZCA and minilateral coalitions hardly report themselves but leave this to the parties involved in them (van Asselt and Bößner, 2016: 59–60). Still, the ongoing mutual adjustment between multilateral and minilateral governance arrangements also implies a rise in peer accountability as governance becomes more polycentric.

19.4 Conclusions

We argue that a normative legitimacy approach focusing on democratic values is both novel and useful to understanding polycentric climate governance. It seeks to reduce the democratic deficit by enhancing democratic values – participation, transparency, deliberation and accountability – in polycentric governance (Dingwerth, 2007; Bäckstrand and Kuyper, 2017). The democratisation of polycentric climate governance can be seen as a set of values that are met to different degrees.

As Ostrom would have argued, a key challenge is that there is no ‘one-size-fits-all’ approach to assessing the legitimacy of polycentric climate governance due to the diverse legitimating audiences with different preferences and priorities with regard to mitigation and adaptation. Given the structural diversity of polycentric climate governance, the task should be to identify the varied accountability and legitimacy logics that are operating. Scholars have proposed alternative models of accountability, representation or localised deliberation and direct participation that better accommodate shifting and overlapping authority, structures and corresponding target audiences and publics (Black, 2008; MacDonald and MacDonald, 2017). The normative grounds for assessing the legitimacy of authoritative polycentric institutional arrangements vary: ‘transnational legitimization can best be accomplished, for now, through more piecemeal assemblages of mechanisms that contribute only partially, and in differing degrees, to authorities’ political legitimacy’ (MacDonald and MacDonald, 2017: 334). Their legitimacy rests on whether polycentric authorities are successful institutions for collective action and for addressing different audiences’ concerns. Skelcher (2005: 90) discusses the challenges to democratic governance at the systems level of polycentric governance given that the different units often have their own legitimacy dynamics and realms for accountability. Frequently, polycentric networks are loosely coupled to institutions of representative democracy and have weak ‘democratic anchorage’ (Sörensen and Torfing, 2004).

Polycentric theory has been relatively silent on the role of the state as a facilitator of effective and legitimate climate governance. However, numerous scholars argue that the rise of polycentric and networked governance by no means implies the demise of the state. Mansbridge (2014) even calls for a strengthened role of the state in polycentric climate governance. Along similar lines, Sabel and Victor (2017) suggest that the UNFCCC could serve as a focal point for integrating and facilitating the expanding universe of transnational and intergovernmental climate governance. Polycentric governance operates in the ‘shadow of hierarchy’ as states and intergovernmental organisations act as orchestrators of climate governance. Oberthür (2016: 91) argues that the Paris Agreement recalibrated the role of the UNFCCC to provide direction and orchestrate the emerging polycentric governance landscape of mitigation and adaptation actions undertaken by states and non-state actors alike. As transnational and intergovernmental realms of climate action are more closely aligned in the post-Paris era, more attention should be paid to strengthening legitimacy and accountability in orchestration (Bäckstrand and Kuyper, 2017).

The Paris Agreement also reinforced a domestic logic to global climate politics, with nationally determined contributions as its core element (Falkner, 2016a). Recent work highlighting the role of the domestic context in promoting transnational governance initiatives confirms the return of the state (Roger, Hale and Andonova, 2017). An important normative implication is that both states and international organisations such as the UNFCCC should provide the ‘democratic anchorage’ (Sörensen and Torfing, 2004) for polycentric climate governance through their roles as facilitators and orchestrators.

Sociological and normative legitimacy are linked. Perceptions of the UNFCCC as a legitimate orchestrator of polycentric climate governance depend on whether it is transparent, inclusive, accountable and effective. The legitimacy crisis the UNFCCC suffered at the 2009 Copenhagen summit was related to the failure to agree to a new global climate treaty. Conversely, the success of the Paris Agreement meant that the UNFCCC regained its legitimacy among state and non-state actors. The credibility of the UNFCCC as a legitimate orchestrator or facilitator of transnational climate action will hinge on how far it can garner support among state and non-state actors alike (see also Chapter 12).

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