A model of dynamic climate governance: dream big, win small
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- Urpelainen, J. Int Environ Agreements (2013) 13: 107. doi:10.1007/s10784-012-9174-1
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In this article, I develop and evaluate a model of dynamic climate governance. The model is based on the premise that global warming is such a complex problem that present political realities do not allow an immediate solution to it. I propose that current mitigation activities should focus on building technological and political transformation potential to enable more ambitious climate cooperation in the future. Successful international climate cooperation could comprise a series of politically feasible “small wins” guided by a “big dream” of a comprehensive future climate regime. The analysis contributes to the emerging literature on the dynamics of climate governance by showing how coherence between multiple independent climate policies can be achieved, both across policymakers and over time. To illustrate how the model can be used, I apply it to technology agreements and North–South climate finance.
KeywordsClimate policyDynamicsInternational cooperationGradualismPolitical economy
The Kyoto Protocol to the United Nations Framework Convention on Climate Change (UNFCCC) is an ineffective response to climate change. Of the major emitters, China has no obligations to reduce emissions under the Kyoto Protocol and the United States has not ratified it.1 The emissions targets for Kyoto signatories expire in the year 2012, but multilateral negotiations on a successor to the Kyoto Protocol have not produced a legally binding treaty with global participation.
Social scientists have proposed several solutions to the current impasse. These solutions can be classified under two broad categories. First, improved treaty design may help address the four problems identified in the previous paragraph (Barrett 2003; Frankel 2007; Sugiyama and Sinton 2005). Second, flexible bottom-up approaches perform better against the criteria of political feasibility and capacity for problem solving (Biermann et al. 2010; Rabe 2004; Victor et al. 2005). In this article, I criticize these arguments and evaluate the merits of an alternative approach. Both treaty designs and bottom-up approaches are based on the idea that global climate policy must be compatible with immutable political realities. Thus, they are unable to address the core question of how climate policy can alter these political realities and enable more ambitious international cooperation in the future through positive reinforcement.
The alternative approach of dynamic climate governance combines elements of treaty design and bottom-up climate policy. Progress can be made through a series of “small wins” guided by a unifying “big dream” of the elements that a comprehensive climate regime should comprise in the future (Weick 1984). The big dream tells us how the strategic game has to be changed to achieve ambitious climate cooperation, such as limiting the increase of global mean temperature to two degrees Celsius, and the small wins are politically feasible steps toward that goal, such as technology cooperation efforts or North–South climate finance initiatives.
The main criterion for admissible small wins is transformation potential. By transformation potential, I refer to dynamic policy effects that alter the payoffs of the international cooperation game, so that future mitigation is easier. Transformation potential has a technological dimension, as technological advances reduce the cost of mitigation policy (Barrett 2009; Fischer and Newell 2008). Transformation potential also has a political side, as present mitigation efforts create new constituencies who support even more ambitious mitigation efforts (Lipp 2007).
The analysis contributes to a growing literature that has begun to adopt a dynamic approach to climate governance. For example, Levin et al. (2010) examine climate change as a “super wicked” problem and argue that policy interventions should focus on creating path dependence. Another recent example is Hoffmann (2011) who analyzes “experimentation” in climate policy across the world. Focusing on states, Victor (2011) proposes a gradual strategy based on reciprocity. While these accounts are more nuanced than mine in many ways, as detailed below, my analysis shows how a big dream can achieve strategic coordination among multiple policy interventions.
The article is organized as follows. First, I situate my argument in the extant literature. Second, I present my dynamic model of climate governance. Third, I show how the model can used to evaluate the value of technology agreements and North–South climate finance. In the concluding section, I summarize and discuss the argument.
2 Climate change: problems and solutions
Climate change presents complex strategic problems. Here, I focus on three aspects of the problem that cast doubt on the utility of extant approaches to climate governance. These aspects are global collective action, distributional conflict, and deep uncertainty. The combination of these problems calls for new approaches, including dynamic climate governance. My critique of the conventional wisdom emphasizes the static nature of the existing arguments and proposals. While previous proposals recognize the three strategic problems discussed above, these proposals do not show how politically feasible mitigation policies can be harnessed to create a future strategic environment that allows meaningful cooperation to address all three strategic problems.
2.1 Three strategic problems
The problems of global collective action, distributional conflict, and deep uncertainty are intimately related. Climate change is a global phenomenon, and addressing it requires collective mitigation efforts over a long period of time. Given the heterogeneity of costs and benefits, mitigation efforts inevitably cause distributional conflict among states with different preferences. In conjunction with long time horizons, the complexity of the problem implies that deep uncertainty is difficult to avoid.
To begin with, consider the fact that mitigating climate change requires global collective action. Regardless of their geographic origin, carbon dioxide emissions cause climate change around the world. A state’s efforts to reduce emissions also benefit other states, so each state has an incentive to free ride. If states cannot somehow reduce free riding and defections to an acceptable level, even the most ambitious treaty is irrelevant. Political leaders cannot agree on ambitious emissions reductions and then expect that a world government will police compliance with it. Moreover, even successful treaty enforcement may not prevent free riding (Barrett 1994). A sovereign country can stay outside a treaty, so as to avoid incurring the cost of treaty compliance, and thus free ride without violating international law. The problem is further complicated by the fact that most of the costs of mitigation are immediate, while the benefits are available only far to the future (Stern 2006). Large previous capital investments and the fossil-fuel lobby’s political clout increase the immediate cost of climate change mitigation. Large investments in energy technology are necessary to reduce carbon dioxide emissions, but they are not profitable unless investors expect mitigation policies to remain intact for years to come, and it is difficult for politicians to credibly commit to policy over long time horizons.
The second important problem is distributional conflict. Although rapid global warming is hardly in the interest of any state, the distribution of costs and benefits is asymmetric (Andresen and Agrawala 2002; Najam et al. 2003). Per capita emissions are highest in industrialized countries, especially North America, while the most vulnerable societies are developing countries, especially island states and African countries. Many countries, such as Saudi Arabia, depend on the extraction of fossil fuels for export revenue and thus impede cooperation. Finally, the growth of carbon dioxide emissions has been fast in large industrializing countries, especially China and India, which are neither willing nor able to sacrifice economic growth for environmental protection (Victor 2011). Distributional conflict complicates climate negotiations because states have strong incentives to hold out. Although a solution to climate change must be global, the distribution of costs and benefits is ultimately a question of political bargaining.
The third central problem is deep uncertainty (Lempert et al. 2003). Although an unassailable consensus prevails among climate scientists on the reality of anthropogenic global warming, the magnitude and societal implications of climate change remain highly uncertain (Heal and Kriström 2002). The complexity of the atmospheric system and the myriad interactions between natural and social systems ensure that it is impossible to predict exactly how climate will change, and how this will impinge on human societies. Deep uncertainty complicates efforts to solve global warming, because it is not clear what the optimal approach is (Aldy and Stavins 2007; Victor et al. 2005). Notwithstanding the basic question of how much pollution abatement is desirable, there is much disagreement on how to achieve any given mitigation target. Some policies appear optimal from the perspective of cost-effectiveness, but they may suffer from severe time inconsistencies or fail the test of political feasibility. Others may be politically feasible but ineffective.
2.2 Contemporary approaches: treaty design
The most common analytical approach to climate cooperation is treaty design (Aldy and Stavins 2007; Asheim et al. 2006; Barrett 2003; Barrett and Toman 2010). This research begins with a set of assumptions regarding the incentives and behavior of states, as well as other actors, and then examines the performance of various international treaty architectures against the criterion of achieving and sustaining cooperation in the relevant strategic environment. For example, Frankel (2007) examines whether quantitative formulas for emissions reductions should be used in an international climate treaty. He argues that an international climate treaty must overcome several impediments to cooperation, such as securing participation and compliance, as well as avoiding time inconsistencies and other political vulnerabilities in the long run. In the “orchestra of treaties” Sugiyama and Sinton (2005), the mitigation agreement is voluntary and merely integrates domestic systems for emissions control, such as permits trading. Similarly, the technology agreement of the orchestra would contain both binding and voluntary targets. A related proposal by Barrett and Toman (2010) features a “multitrack treaty system” that emphasizes international research and development for breakthrough technologies while also using climate finance to induce developing countries to participate.
Proposals for treaty architectures cannot address the three strategic problems discussed above. Given underlying distributional conflicts between major emitters, states have continuously failed to agree on even the most modest efforts to reduce emissions. Without profound changes in the underlying political realities, an effective global treaty seems a remote possibility. Moreover, the enforcement of such a treaty appears problematic (Barrett 2008; Victor 2011). Due to the enforcement problem, states cannot credibly commit to ambitious emissions reductions in the long run. Not only are politicians tempted to delay costly mitigation decisions, but a state’s emissions trajectory is also beyond the government’s direct control. Deep uncertainty causes additional complications because new information changes states’ incentives to reduce their emissions.
More generally, the problem with the static view is that if the political realities are grim at some time τ, treaty designs will at best demonstrate what little can be achieved at time τ through climate cooperation (Barrett 2003). Thus, a proposal for a treaty design at time τ may paint a misleading picture of what can be attained over time. Worse, focusing on the boundaries of the possible at time τ may even impede efforts to shape the strategic environment through a climate treaty, so as to create the preconditions for climate cooperation at time τ + 1 and beyond.
2.3 Contemporary approaches: bottom up
Another strand of literature has emphasized the virtues of decentralized or bottom-up climate cooperation (Biermann et al. 2010; Ostrom 2009; Rabe 2004; Victor et al. 2005). According to this line of inquiry, while the daunting challenge of global warming has paralyzed multilateral climate diplomacy, individual policymakers around the world have nonetheless made substantial progress toward climate governance. According to Victor et al. (2005, 1820), who introduce the concept of Madisonian climate policy, “[t]he strength of a bottom-up approach is its ability to tap stronger national and regional institutions for governance.” In a recent commentary, entitled the Hartwell Paper, Prins et al. (2009) also argue that the failure of the Copenhagen Conference in December 2009 to deliver a climate treaty indicates an urgent need for reorientation. They claim that politically feasible win-win policies, such as technology development and electricity provision for the poor in developing countries, offer a superior alternative to emissions reductions.
Although bottom-up approaches have their virtues, they cannot address the three strategic problems discussed above. Even if individual policymakers act, distributional conflict implies that other policymakers have incentives to continue doing little, if anything. Bottom-up approaches are, almost by definition, unable to improve the enforcement of global collective action: interested policymakers simply act on their own, without regard to other policymakers’ reciprocating. Under deep uncertainty, the collective effective of a myriad individual actions remains subject to doubt.
In a more analytical sense, the problem with these approaches is that they rarely offer a coherent vision of exactly how they would add up to a solution. Local and national actions, often tangentially related to climate change, have produced concrete gains in an innovative fashion. But it is unclear whether these gains actually help us achieve a sustainable carbon trajectory. The myriad policies and institutions that emerge may, or may not, prompt large decreases in carbon emissions.
2.4 Contemporary approaches: dynamics
In recent years, dynamic analyses of climate governance have begun to emerge. One such approach is entitled “playing it forward” (Levin et al. 2010). They argue that climate change is such a difficult problem that a strategy of “progressive incrementalism” is warranted. Seemingly minor policy interventions can create path dependence through such mechanisms as increasing returns to scale and positive reinforcement. In their view, scholars and practitioners should focus on finding opportunities that hold the promise of progressive incrementalism.
Hoffmann (2011) describes a variety of climate policy “experiments” that have emerged in recent years. He argues that such experimentation is a natural response to the difficulties of the multilateral treaty process, and he also notes these experiments can produce valuable insights under the complex conditions that characterize climate change. While he does not offer an explicit analysis of whether these experiments are succeeding or failing, he claims that they offer a viable alternative to global multilateralism.
Victor (2011) adopts a more traditional approach that focuses on states. He accepts the notion that energy policies are very difficult to change due to carbon lock-in. Based on this idea, he proposes that a gradual strategy based on contingent reciprocity could prove helpful. Interested actors, such as the European Union, should condition their actions on responses by other actors, such as China or India. The resulting carbon clubs could emphasize the ancillary benefits of climate mitigation, such as new technology development, to increase participation.
While these three approaches are quite different, they share a commitment to dynamic analysis. My argument builds on these insights, but I also offer a positive contribution by explaining how “big dreams” can help guide “small wins” and thus ensure the overall coherence of different climate policies in a dynamic setting. For example, my model could help coordinate different policy interventions (Levin et al. 2010) and experiments (Hoffmann 2011) to ensure that they are not at cross purposes. Similarly, the model could help interested countries evaluate the pros and cons of Victor’s (2011) contingent policies from a dynamic perspective.
3 A model of dynamic climate governance
The strategy that I examine combines elements of treaty design and bottom-up approaches. Politically feasible small wins can constitute building blocks for future climate stabilization, but only if they are guided by a vision of the broad contours of a functioning climate regime. While politically feasible climate actions at time τ will have an effect on emissions at that time τ, they can also change the global warming game from time τ + 1 on. Even if politically feasible climate actions have limited potential for emissions reductions at time τ, it does not follow that they cannot lay the foundation for more ambitious emissions reductions in the future.2
Since the argument hinges on the idea of using small wins to bridge the gap between present reality and big dreams, it would be futile to offer generic policy advice to the world without specifying exactly who is supposed to fight for the small wins. The model is aimed at government officials who are concerned about climate change but face political constraints at the domestic and international levels. I focus on national policy for concreteness because it remains a central element of climate governance and not because I discount the importance of other actors, such as cities (Betsill and Bulkeley 2004) and provinces (Rabe 2004; Urpelainen 2009). Throughout, I discuss non-state actors, though admittedly from a state’s perspective.
The model has the following structure. At any given time, a set of government officials decide on climate policies. These can contain international cooperation or be unilateral. Each government selects climate policies in view of immediate costs and benefits, as well as future strategic effects. Most importantly, the collection of policies at time τ can shape the strategic environment at time τ + 1.3 My analysis focuses on the possibility that individual policies at a given time or “small wins,” can produce useful changes in the strategic environment from time τ + 1 on. This requires, I will argue, a “big dream” that coordinates the small wins.
The model allows incomplete information and complexity. I need not assume that policymakers understand exactly how their policies at time τ influence behavior beginning from time τ + 1. But following Levin et al. (2010), I do propose that different policies have observable characteristics that allow policymakers to evaluate their potential as “game changers.” I also allow learning through experimentation (Hoffmann 2011).
The key conceptual innovation that I offer is the notion of transformation potential. It includes both technological and political transformation potential. While some previous arguments refer to the importance of technological development (de Coninck et al. 2008; Fischer and Newell 2008), in my view, they have not developed this argument to the degree necessary. The idea of political transformation potential also remains absent from the debate.
I analyze three components of dynamic climate governance. First, I examine the role that “big dreams” of future treaty design can play in a world of unfavorable political realities. My core argument is that they are necessary to guide presently feasible actions and measures. Second, I investigate the role of “small wins” in dynamic climate governance. I pay particular attention to ensuring that the small wins actually contribute toward fulfilling the big dream of a grand design. Finally, I characterize the criteria for small wins that help bridge the gap between the prevailing political realities and the global regime that is ultimately needed to mitigate climate change.
3.1 Big dreams
The first central variable is a sufficiently coherent and clear big dream of an encompassing architecture for global climate governance. Why the need for such a big dream? It should achieve two goals. First, it tells individual actors what kind of changes they have to effect. By imagining an effective treaty design under changed political realities, the individual actors can see what the world should be to achieve those changes. Second, it ensures that politically feasible actions and measures will not contradict each other. Having a big dream means that small wins can be designed in light of what needs to be done.
To understand this logic, consider a policymaker’s decision at time τ. Without a big dream, her choice of climate policy is haphazard because it is not guided by an overall strategy. Without a big dream, the policymaker also cannot anticipate what other policymakers are doing and how they would react to her current policies in the future. A big dream increases the coherence of climate policies, both across policymakers and over time.
Given that the purpose of the big dream is to facilitate climate action, the most interested states should play a key role in formulating the big dream. They should arrive at a common understanding of what the ultimate goal of climate protection is, but this common understanding need not necessarily be formalized. Given that the big dream focuses on the future, it also cannot be regarded as a legally binding commitment. Instead, the big dream should be a relatively flexible understanding or consensus vision of what a solution to the climate problem could look like.
While the procedural details of choosing a big dream are beyond the scope of this article, it is useful to give some general guidelines. Most importantly, the big dream should be publicly announced and approved by major emitters. The negotiations on the big dream could be conducted under the United Nations framework, and they could even be explicitly based on the ideal of climate stabilization described in the UNFCCC. More important than the specific form, all major emitters should publicly acknowledge the desirability of the goal and recognize the importance of allowing this goal to guide their climate policies in the near term. For example, major emitters could reiterate their commitment to the UNFCCC stabilization target and note that in the future, their national climate policies will be designed to enable gradual progress toward the target. The commitment to the big dream need not be legally binding, because legally binding commitments are not politically feasible in the present strategic setting.
Non-state actors can play a useful role in negotiations on a big dream. For example, civil society organizations can enhance the legitimacy of the big dream by publicly supporting it. Similarly, subnational policymakers can help states mobilize domestic political support for the big dream. The private sector can propose concrete means to reduce emissions and increase the adoption rate of clean technologies. In sum, a “climate coalition of the willing” can be built around the big dream to amplify the effects of state leadership (Hale 2011).
What might be a useful big dream for dynamic climate governance? Although I cannot fully address this question here, one idea that appears to have been widely accepted is the goal of limiting the increase in global mean temperature to 2 °C. This stabilization target is somewhat arbitrary, but it has the advantage of being relatively established and providing several useful insights into what needs to be done. Most importantly, it underscores the importance of global climate cooperation and the need for new technologies that produce substantial reductions in the cost of climate mitigation.
To some extent, the big dream can, and may even have to, be flexible. As new information arrives, the big dream may have to be adjusted. For example, new scientific information concerning the adverse effects of climate change may warrant a more or less ambitious big dream. Such flexibility is essential given the deep uncertainties that surround climate change. However, flexibility is not a problem as long as states can agree on a transparent, formal procedure for revising the big dream. For example, states could agree that the big dream be revisited every ten years. During each ten-year period, states are expected to consider the current big dream as their yardstick for evaluating climate policies. This system provides states with the flexibility needed to address deep uncertainty, yet the system does not allow states to willfully manipulate the big dream according to their immediate political-economic preferences.
Given the problem of distributional conflict, the big dream should also address distributional issues. First, it must be acceptable for a large coalition of parties who are potentially interested in climate protection and could thus play a constructive role in dynamic climate governance. Second, it must be chosen so that it does not stand in the way of feasible and effective small wins. For both reasons, it is important that the distributional dimension of a big dream does not divert attention from concrete actions with transformation potential to bargaining over gains.
3.2 Small wins
If big dreams help various political actors with an interest in climate stabilization develop coherent and mutually reinforcing ideas for concrete actions and measures, small wins are what those actions and measures should be expected to achieve. By small wins, I refer to “concrete, complete outcomes of moderate importance” (Weick 1984, 40). They are the core of any gradualist strategy toward global climate governance. By framing the global warming challenge as one of achieving a series of small wins that shape the political realities so that the big dreams of a grand design no longer appear daunting, individual actors committed to climate protection can achieve sustained progress and see tangible results in the short term.
A strategy of small wins is preferable to the quest for a silver bullet because present political realities do not admit comprehensive climate stabilization. While negotiations on a global climate treaty may be futile right now, there are a number of less daunting actions that can help humanity begin the shift from our present carbon lock-in to sustainable climate governance through decarbonization. Thus, small wins are a useful strategy to address climate change.4
Although the concept of small wins is quite similar to many bottom-up approaches, a crucial difference exists: small wins must demonstrably contribute toward achieving the grand ambition of a big dream. It does not suffice that small wins are politically feasible, but it is also not enough that they reduce emissions or are otherwise normatively desirable. Instead, they must specifically change the payoffs of the global warming game in a way that facilitates more ambitious climate cooperation in the future. A small win must enable another win that is somewhat less small.
In the model, the policymaker’s focus on small wins is thus facilitated by the big dream. When the policymaker selects climate policies at time τ, the big dream sharpens her focus on that subset of politically feasible actions that would contribute to the big dream. This reduces the transaction cost of policy formation, increases the consistency of the resulting climate policies, and allows easier coordination with other actors. Non-government organizations can support the implementation of climate policies that are consistent with a gradual trajectory toward the big dream, and the private sector can accept the policymaker’s commitment as more credible because it is firmly anchored in the big dream. Therefore, the policymaker can use small wins anchored in the big dream to both build political support and enhance the credibility of national climate policies.
To see this difference, consider the various optimistic claims regarding state climate and energy policies in the United States. While Rabe (2004) and Victor et al. (2005) argue they have considerable potential for emissions reductions, Andonova et al. (2009) see them as an essential element of “transnational climate governance,” from the perspective of dynamic climate governance they have yet to deliver. Some of them may hold transformation potential, especially if they create economic interests that support the expansion of clean energy or improved environmental efficiency, but evaluating transformation potential requires a different yardstick than that of conventional cost-effectiveness.
3.3 Bridging the gap: transformation potential
Success requires a series of small wins constituting progress toward a big dream comprising a treaty design for global climate governance. Scholars proposing treaty designs have not recognized the importance of first changing political realities and then developing treaty designs. Proponents of bottom-up approaches have not demonstrated how they add up to a whole that will be more than the sum of its parts.
In dynamic climate governance, small wins anchored in a big dream allow states to gradually overcome the key strategic problems that impede climate cooperation. As discussed above, small wins can help states circumvent the problem of distributional conflict. They are specifically tailored to different states’ political-economic incentives, subject to being consistent with the big dream. This also facilitates enforcement because small wins are specifically tailored to build political support among key constituencies and maximize the provision of club goods. Structured and transparent adjustment of the big dream means that small wins contribute to dynamic climate governance even under deep uncertainty, as the orientation of the small wins can be adjusted periodically in the light of new information and changing circumstances.
To achieve this goal, I now discuss the key criterion of transformation potential in some detail. Recall that the small wins must be both politically feasible and constructive from the perspective of the big dream. To begin with, what is a feasible small win? It is a cooperative arrangement that can garner the support of influential domestic and international constituencies. It is an action or measure that directly benefits a sufficiently large coalition of actors without harming powerful opponents. Different government operate under various domestic political constraints, and these domestic political constraints must be respected. They will not go away simply because international negotiations produce a text that fails to recognize them.
Why would states and other actors aim for small wins? In addition to intrinsic willingness to promote dynamic climate governance, there are several directly benefits that can jointly offset the implementation costs. First, many climate policies carry considerable side benefits, such improved environmental quality or reduced energy consumption (Rabe 2004; Urpelainen 2009). Second, frontrunners could also gain a competitive edge in the commercialization of clean energy technology (Lewis and Wiser 2007). Finally, actions to promote dynamic climate governance carry considerable reputational and esteem benefits (Betsill and Bulkeley 2004). All these factors serve to create opportunities for feasible small wins.
In practice, small wins can be purely domestic actions, such as national technology programs or energy efficiency regulations. They can also be transnational activities among local policymakers, such as the Cities for Climate Protection Program (Betsill and Bulkeley 2004). Given my focus on states and the international nature of the global warming game, however, I emphasize international cooperation here. Admissible activities include technology cooperation, emissions trading, and North–South climate finance.
But if a project is successfully implemented, will it actually constitute progress toward the big dream? The first possible form of transformation potential is technological (Barrett 2009; Fischer and Newell 2008; Sandén and Azar 2005). Since the future political cost of mitigation policies depends on the availability of low-carbon technology and infrastructure, a small win should either contribute toward technological advancement or help create the societal infrastructure necessary for mitigation. Examples of the first include research and development, demonstration projects, deployment that allows learning by doing, and so on. Examples of the second include railway projects and grid improvements.
The importance of technological transformation potential is amplified by the path dependent nature of technological change (Grübler et al. 1999; Unruh 2000). Greenhouse gas emissions can potentially be reduced in variegated ways, ranging from fusion power to energy conservation and decentralized renewables production. The deployment of a given energy technology creates economies of scale and infrastructure that benefit similar energy technologies (Carrillo-Hermosilla 2006; Cowan 1990). Thus, “lock-in” is an integral element of technological transformation potential.
The second criterion is political transformation potential. A small win must help tilt the balance toward, and create new, constituencies who will mobilize in support of ever more ambitious mitigation policies. Thus, a small win must increase the profitability of mitigation policies for key segments of the society, such as businesses and labor unions. One promising way to realize political transformation potential is to offer public support to large capital investments that lock in low-carbon technology and infrastructure. Such public support creates influential economic interest groups, yet it does not immediately punish constituencies who are in a position to stall climate and energy policies. This reduces political opposition to climate policy and thus creates the domestic foundations for increasingly ambitious climate policy. Thus, it is an example of a feasible small win with political transformation potential. It is essential, though, that such capital investments be guided by a big dream. Otherwise they do not add up to a gradualist strategy.5
Technological and political transformations create the foundation for increasingly ambitious climate policy and, ultimately, international cooperation. In the model, policymakers’ incentives to enact climate policies are strengthened by reduced abatement costs and increased political support, as is already seen in such countries as Denmark and Germany (Lipp 2007; Vasi 2011). Although reduced abatement costs do not automatically induce cooperation (Barrett 1994), over time they shape the domestic politics of climate change. They allow clean technology diffusion, they empower environmentalist social movements, and they may even allow countries to reach a “tipping point” in sustainable energy transition (Unruh 2002).6
Small wins should not contradict each other. This requirement may be difficult to meet in a decentralized fashion, as the entire idea of organic growth theories was the lack of centralized coordination. But institutions may be created to help coordinate small wins. These institutions can exchange information, create transnational networks, and develop standards for good projects. Such coordination institutions need not enforce behavior or resolve distributional conflicts, so they should be feasible even under difficult political realities. While individual actors are ultimately responsible for small wins with transformation potential, an institutionalized decision support system can be helpful in choosing the appropriate small wins.
For example, states could agree to fund a global policy institute that develops methodologies for evaluating the technological and political transformation potential of various small wins. The institute would be authorized to develop guidelines for ensuring compatibility between small wins and the big dream. States could submit proposed small wins for review and reap reputational benefits from implementing certified small wins. For a specific type of small win, be it a policy to support renewables or an energy conservation program, the institute would evaluate the transformation potential of small win. First, does the small win contribute to new clean technologies that significantly reduce the cost of climate cooperation in the future? Second, does the small win create new constituencies with incentives to support climate cooperation in the future? According to Keohane and Victor’s (2011) analysis of the regime complex for climate change, even relatively fragmented regime complexes can be effective if rules are “determinate,” because determinacy both enables compliance and reduces uncertainty (Keohane and Victor 2011, 17). Similarly, Johnson and Urpelainen (2012) show formally that fragmented regimes can provide states with strong incentives to cooperate on their preferred projects, including small wins. An institute focusing on anchoring the small wins in the big dream could, in collaboration with national authorities and non-state actors, enhance the determinacy of the resulting system.
I apply the model to examine the promise of three possible solutions to the current crisis in climate governance. First, I examine the record of the multilateral UNFCCC negotiation process. This case shows that while the UNFCCC’s stabilization target provides a promising big dream, the multilateral negotiations have not paid sufficient attention to small wins. Second, I assess the political feasibility and transformation potential of technology agreements. Finally, I conduct a similar analysis of North–South climate finance. Throughout, I pay particular attention to concrete institutional questions.7
4.1 Multilateral climate negotiations
The ultimate objective of this Convention and any related legal instruments that the Conference of the Parties may adopt is to achieve, in accordance with the relevant provisions of the Convention, stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.
This passage is worth quoting in full because it holds considerable promise as a big dream. It is sufficiently flexible to allow future adjustments based on new information, yet it explicitly requires climate stabilization and notes the importance of allowing ecosystems to adapt to climate change. In subsequent negotiations, states have promoted the 2C target as a specific manifestation of the general UNFCCC principle. In doing so, states have made the big dream increasingly precise to allow it to guide climate policies.
Despite some achievements, the multilateral climate negotiations suffer from a problem: they have not resulted in small wins that contain technological and political transformation potential. On the one hand, the institutional achievements have no direct effects on the payoffs of the global warming game. They may reduce the transaction costs of a future global deal, but they do little to induce countries to negotiate such a global deal. In the absence of substantial changes in the concrete payoffs that states acquire from climate cooperation, the institutional and legal foundation for a global climate treaty will probably remain unused.
Even the Kyoto Protocol performs relatively poorly in view of technological and political transformation potential. While the emissions commitments of Kyoto signatories do add up to a modest price on carbon, most of them can be found in Europe (Hovi et al. 2003). The European Union itself began to implement emissions reductions well before the Kyoto Protocol entered into force (Schreurs and Tiberghien 2007), and it has already committed to a much more ambitious goal than that enshrined in the Kyoto Protocol.
The Kyoto Protocol also contains some potentially counterproductive elements. The clean development mechanism (CDM) allows European countries to avoid emissions reductions by purchasing inexpensive carbon credits from developing countries. The data indicate that many of these CDM credits come from destruction of the industrial gas trifluoromethane (HFC-23), a practice that does little to promote clean technology or create new constituencies for ambitious emissions reductions (Wara 2007, 595). Thus, the CDM also prevents the Kyoto Protocol from promoting technological and political transformations in industrialized countries while achieving few such effects in developing countries (Keohane and Raustiala 2008; Wara and Victor 2008).
4.2 Technology agreements
Technology agreements are formal treaties that provide for international cooperation among the parties to develop and deploy new mitigation technologies (de Coninck et al. 2008; Sugiyama and Sinton 2005). Technology agreements hold promise because the cost of mitigating global warming depends, first and foremost, on the availability of technologies for energy conversation and clean energy production. If guided by a big dream, a technology agreement can be a useful small win that allows the diffusion of clean technology and creates new constituencies for climate protection. This requires an overhaul of the criteria used to evaluate technology agreements.
It is essential to first address the question of agency. In regard to research and development, industrialized countries have the most incentives to engage in technology cooperation. While rapidly industrializing developing countries, such as China and India, are beginning to engage in energy technology innovation, the data clearly indicate that most clean technology innovation remains within industrialized countries (Johnstone et al. 2010; Victor 2011). As to technology commercialization, in contrast, rapidly industrializing developing countries should have a key role to play. Energy demand is growing the most rapidly in these countries, so the potential for commercialization is large.
Although technology cooperation is a relatively new phenomenon, a number of initiatives are already in operation (de Coninck et al. 2008, 341). Some of them, such as the Asia–Pacific Partnership on Clean Development and Climate, focus on information sharing and coordination. Others, such as cost sharing in the Implementation Agreements of the International Energy Agency, promote collaborative research and development by the member states. The proposals for a new technology agreement are, unsurprisingly, much more ambitious than the existing initiatives. Barrett (2003) proposes a technology agreement that combines research and development with technological standards, with the intention of increasing participation by sovereign states. Sugiyama and Sinton (2005) argue that a future climate regime should include a Zero-Emission Technology Treaty as a key element.
Why do technology agreements hold promise as small wins? From the perspective of political feasibility, technology agreements have many advantages. While emissions reductions are generally perceived as requiring costly actions and measures, technology agreements produce many side benefits that “might help promote greater participation and stringency in an international climate agreement” (de Coninck et al. 2008, 336). As Keohane and Victor (2011, 18–19) write, a technology club can be particularly effective “when low-cost technologies blunt the incentives to defect and when new technologies offer many local benefits.” These benefits, including improved economic efficiency and commercialization opportunities, are the reason why technology agreements hold promise as politically feasible small wins. A technology agreement can garner the support of various societal actors, from green parties to manufacturers. It also provokes less political opposition because it does not impose direct costs on influential constituencies.
For dynamic climate governance, it is important to examine how big dreams could guide technology agreements. Unfortunately, the criteria applied in the literature are not appropriate. In de Coninck et al. (2008, 340), the following list is given based on an exhaustive literature review: environmental effectiveness, technological effectiveness, economic efficiency and cost-effectiveness, incentives for participation and compliance, and administrative feasibility. Only technological effectiveness is directly related to the core notion of transformation potential, and even it ignores the political dimension.
Instead, I emphasize two criteria for successful technology cooperation. First, technology agreements should focus on maximizing their technological transformation potential. While this observation may appear banal, it has important implications for the design and choice of technology agreements. Specifically, technology agreements must reduce the cost of aggressive global warming mitigation in the future. Whether they have any direct effects on emissions in the next few years is, somewhat counterintuitively, a tangential issue. Similarly, the effect of a technology agreement on the marginal cost of limited emissions reductions is rather irrelevant. What counts is whether the technology agreement induces research and development, as well as deployment and demonstration for learning by doing, which contribute to significant cost reductions under the assumption that serious measures are adopted. These contributions should be accompanied by ancillary benefits that support the continuation of technology cooperation.
Second, technology agreements should create green constituencies for political transformation potential. They must be designed so that they produce concrete benefits for influential and organized interest groups in key countries. This calls for deep cooperation with businesses and labor unions, but in ways that are so flexible that each country can give the benefits to the constituencies they prefer. Instead of maximizing cost-effectiveness, technology agreements should exercise distributive politics to ensure that they will remain in effect in the future. This approach has the dual benefit of producing valuable ancillary benefits while maximizing political transformation potential.
While extant technology agreements have yet to realize this transformation potential, domestic policies for renewable energy illustrate the potential. According to Lipp (2007, 5486), as a result of Danish public policy, “an advocacy coalition that initially started with a few wind enthusiasts was able to grow into a veritable influence, continually pushing its collective agenda”. For instance, local ownership schemes for wind energy “helped create support\(\ldots\) because benefits were distributed across a wide group of people.” Similarly, Jacobsson and Lauber (2006, 272) write that in the case of Germany, “[a] first feed-back loop from the investments in the formative phase to an emerging advocacy coalition capable of influencing the institutional framework can here be discerned.”
The institutional design of an international technology treaty should recognize the importance of incentivizing private companies to share new clean energy technologies. Given that technology innovation is costly, holders of advanced technology may have incentives not to share new technologies, especially when intellectual property rights are poorly enforced (Ockwell et al. 2008). Thus, it is important to exploit the extensive previous experience with efficacious governance arrangements for technology cooperation between businesses.
To ensure consistency between technology agreements and the big dream, the international institutions tasked with evaluating and coordinating small wins should pay particular attention to preventing deviations from trajectories that promise technological and political transformation potential. As to technological transformation potential, a technology agreement does not count as a small win if it continues to support moribund technologies that carry high costs while promising little mitigation potential. This problem is closely related to political transformation potential. While the creation of constituencies for clean technologies is essential, these constituencies must support broader climate mitigation efforts instead of narrowly focusing on rents, such as subsidies. Therefore, the performance of technology agreements must be frequently evaluated against the yardstick of supporting promising technologies and creating constituencies who are interested in climate policy writ large.
4.3 North–South climate finance
Since the cost of mitigation activities is often quite low in poor developing countries, wealthy industrialized countries might benefit from funding some mitigation projects in the global South (Stewart et al. 2009). This idea holds promise for small wins toward big dreams, because securing the participation of rapidly industrializing countries is a key challenge for dynamic climate governance. A combination of political feasibility, transformation potential, and a guiding big dream is needed to realize this potential.
Some climate finance has been available to developing countries ever since the entry into force of the UNFCCC (Atteridge et al. 2009; Nakhooda 2010). Paragraph 3 of Article IV of the treaty states that developed countries should provide financial assistance to developing countries in view of implementing the convention. In regards to bilateral finance, Paragraph 5 of Article XI says that “developed countries\(\ldots\) may also provide financial resources related to the implementation of the convention through bilateral, regional, and other multilateral channels.” For example, the GEF has provided more than one billion dollars in climate finance since 1997 (UNFCCC 2007, 79). Recently, the World Bank has also established several Climate Investment Funds that are expected to channel billions of dollars of climate finance to the global South.
The political feasibility of climate finance remains an open question. While developing countries obviously have an incentive to obtain funding from industrialized countries, they have shown little willingness to accept stringent conditionalities or interference with national sovereignty (Najam et al. 2003). Industrialized countries could potentially benefit from mitigation activities in developing countries, but the fiscal and political cost of additional foreign aid remains high (Werksman 2009). Indeed, developing countries have accused industrialized countries of failing to fulfill their promises of climate finance.9
These problems are alarming because, regardless of the transformation potential contained in climate finance, political feasibility is needed. In countries with an interest in climate protection, dynamic climate governance could help. If climate finance were approached as a small win guided by a big dream, it would garner more support from advocates of climate policy while also doing away with the negative images that “wasteful” foreign aid raises. In possible recipient countries, political feasibility is probably easier to achieve because the recipients benefit from additional funds.
A volume edited by Stewart et al. (2009) offers several criteria for successful climate finance. In addition to incentivizing donors and recipients to participate, they emphasize the inclusion of the private sector (Brinkman 2009), local ownership instead of imposed conditionality (Ghosh and Woods 2009), as well as accountability and transparency (Werksman 2009). Similarly, Ballesteros et al. (2009) emphasize power, responsibility, and accountability as the core dimensions of climate finance.
While important, these criteria are insufficient from the perspective of dynamic climate governance. Mutually acceptable projects may fail to contain technological or political transformation potential, and the inclusion of private sector need not be beneficial in all circumstances. Accountability and transparency are not helpful unless the implementation of projects contributes to favorable changes in the payoffs of the global warming game.
North–South climate finance has ample transformation potential. As to technology, the rapidly growing economies in particular offer many opportunities for decarbonization and avoidance of carbon lock-in through “leapfrogging” (Gallagher 2006). Climate finance may also help expand renewables production and energy conservation efforts in developing countries. These activities create employment and profits, so they can mobilize green constituencies that will support mitigation activities in the future. To reap these benefits, it is essential that transformation potential will be an explicit criterion for climate finance.
In the long run, these small wins could help achieve the big dream of transforming developing countries into staunch supporters of national climate policy and global cooperation. Decarbonization, technology diffusion, and the creation of local constituencies with a direct interest in climate policy would change the domestic politics of climate change in these countries. This would help mitigate distributional conflict in negotiations. In the case of climate finance, then, a big dream of climate stabilization could be “operationalized” by imagining a scenario in which countries such as China and India play a very constructive role in climate negotiations.
These observations have two key implications for climate finance. First, the role of the private sector is particularly important in view of building support for continued climate finance. Energy companies from the North should be included to create a constituency that will support climate finance in the future, but they should not be allowed to monopolize the mitigation activities. It is equally important to ensure that climate finance will catalyze the creation of clean energy businesses and other political constituencies in the South.
Second, the notion of dynamic transformation potential lays particular emphasis on national capacity building. The effectiveness of climate finance in the long run will depend on the average performance of individual mitigation activities, and national implementation capacity is essential for improving this performance (Victor 2011). Thus, dynamic climate governance gives a strong rationale for implementing projects in recipients with robust regulatory agencies while also including national capacity building as a core element of climate finance.
In the implementation of climate finance, the institutions mandated to coordinate small wins should reject all forms of climate finance that fail to promote decarbonization and create constituencies for climate mitigation. For example, donors could be tempted to give climate finance to strategically or geopolitically important recipients, without requiring genuine technological and political transformation potential. The coordinating institutions should continually investigate whether climate finance is allowing recipients to achieve lower carbon intensities and build domestic political support for ambitious future mitigation. Without demonstrable progress, the institutions should alert states to the failure of these climate finance initiatives and recommend alternative courses of action that are politically feasible but contain genuine transformation potential.
If the present political realities do not allow a comprehensive global treaty to avert climate change, what can be done to achieve such a treaty in the future? I began by arguing that global warming features three strategic problems: global collective action, distributional conflict, and deep uncertainty. I then criticized static to this problem approaches. As to treaty designs, I argued that they are not useful until political realities are such that there is appetite for a comprehensive treaty. As to bottom-up approaches, I criticized them for not explaining how the politically feasible small steps would constitute progress toward a comprehensive solution in the future.
My model integrates elements already found in the extant literature. Treaty designs can be most usefully seen as big dreams: infeasible in the present but not necessarily in the future. They are the guiding light for politically feasible strategies toward effective climate governance. Conversely, bottom-up approaches contain the basic building blocs of a strategy of small wins: a series of politically feasible and constructive measures of moderate importance that will pave the way for a comprehensive solution in the future. Gradualist strategies build on political and technological transformation potential.
Transformation potential bridges the small wins and big dreams. First, technological transformation potential constitutes advances that reduce the cost of ambitious mitigation activities in the future. Second, political transformation potential refers to the creation of green constituencies that will support mitigation activities in the future. These two dimensions are mutually complementary, as technological advances will create green constituencies that are willing and able to develop new technologies for pollution abatement.
See http://unfccc.int/kyoto_protocol/items/2830.php for the text and ratification status of the Kyoto Protocol. Accessed February 16, 2012.
Any gradual or incremental approach to climate change is problematic in view of possible tipping points (Schneider 2004). But again, it is important to compare a climate governance model against the relevant benchmark: the status quo (Victor 2011). The approach proposed here may not achieve the social optimum, but the multilateral UNFCCC negotiations have also been ongoing for more than two decades.
Scholars in the socio-cognitive tradition have also argued for a strategy of small wins (Antal and Hukkinen 2010; Ostrom 2009). While these lines of inquiry focus on such issues as cognitive framings or trust within communities as foundations of social institutions, they often arrive at a similar conclusion: shared visions provide a basis for concrete action at the local level, and such concrete action can address even global levels.
One concrete example of successfully combining technological and political transformation potential is the central role that the chemical industry played in addressing the ozone depletion problem both in regard to technology innovation and political mobilization (Parson 2003).
Technological and political transformations may, of course, also have negative consequences. Lock-in and path dependence may result in the diffusion of inferior technologies, and the creation of “green” constituencies may put pressure on the government to implement policies that are costly from a societal perspective (Arthur 1989; Unruh 2000). I do not intend to downplay these problems, but it is important to examine them against the appropriate benchmark: not an idealized policy instrument, such as a global carbon tax, but the present reality of rapidly increasing greenhouse gas emissions.
Importantly, my purpose here is not to show that technology agreements and North–South climate finance are already elements of successful dynamic climate governance. Instead, I intend to examine their potential and offer clear guidelines for evaluating their future trajectories.
See http://unfccc.int/essential_background/convention/background/items/1349.php for the treaty text. Accessed February 19, 2012.
“Murky Climate Finance Risks Undermining Trust at U.N. Talks.”Reuters June 4, 2010.