Advertisement

Who opposes climate regulation? Business preferences for the European emission trading scheme

  • Federica Genovese
  • Endre Tvinnereim
Article
  • 101 Downloads

Abstract

When do firms oppose international climate policy? Existing work often assumes that firms disapprove of climate regulation due to the immediate costs of compliance. We claim that if policy is implemented gradually, private preferences for climate policy vary as a function of its progressive stringency. That is, supportive views may rise in the initial phase of the policy, while opposing views may emerge as the policy becomes more stringent. We also argue that emissions of individual companies, as well as emissions levels in their respective sectors, influence corporate positions on these two dimensions. We test our argument with new corporate survey data on the European Union Emission Trading Scheme (EU ETS). We find that firms’ views on the performance of the EU ETS vary based on whether they concentrate on the policy’s current state or its future, more stringent development. Moreover, we find that individual firm and sectoral emissions correlate with support for the early-stage, more lenient version of the ETS, but that high-emission firms are more interested in disinvesting and relocating if the ETS becomes stricter. Our findings imply that both firm and sectoral organization can constrain environmental regulation, and that domestic compensation, especially at early stages, can have important effects on the continuity of climate policy.

Keywords

European Union Climate policy Corporate interests Environmental regulation Opinion survey 

JEL Classification

F53 F55 K23 L11 C83 

Notes

Acknowledgments

We thank Stig Schjølset and Anders Nordeng at Thomson Reuters for data access, and Roman-Gabriel Olar and Luis Everdy Mejia for research assistance. We are also grateful to Michaël Aklin, Jacob Copas, Iza Ding, Julia Gray, Megan Mullin, Jakob Skovgaard, Paul Tobin, Simon Weschle, the editor Axel Dreher, two anonymous reviewers, and the APSA 2015, EPSA 2016, IPSA 2016 and the 2017 InoGov Durham workshop participants for very useful feedback.

Supplementary material

11558_2018_9318_MOESM1_ESM.pdf (787 kb)
(PDF 786 KB)
11558_2018_9318_MOESM2_ESM.zip (596 kb)
(ZIP 596 KB)

References

  1. Ambec, S., Coheny, M.A., Elgiez, S., Lanoie, P. (2013). The porter hypothesis at 20: can environmental regulation enhance innovation and competitiveness? Review of Environmental Economics and Policy, 7(1), 2–22.CrossRefGoogle Scholar
  2. Armingeon, K., Careja, R., Potolidis, P., Gerber, M., Weisstanner, D. (2015). Comparative political data set 1990-2013., Technical report, Bern Switzerland. Institute of Political Science, University of Berne.Google Scholar
  3. Auld, G., Bernstein, S., Cashore, B. (2008). The new corporate social responsibility. Annual Review of Enviornment and Resources, 33, 413–435.CrossRefGoogle Scholar
  4. Baldwin, R.E., & Forslid, R. (2010). Trade liberalization with heterogeneous firms. Review of Development Economics, 14(2), 161–176.CrossRefGoogle Scholar
  5. Bechtel, M.M., Genovese, F., Scheve, K.F. (2018). Interests, norms, and support for the provision of global public goods: The case of climate cooperation. British Journal of Political Science, Forthcoming.Google Scholar
  6. Bernauer, T., Böhmelt, T., Koubi, V. (2013). Is there a democracy-civil society paradox in global environmental governance. Global Environmental Politics, 13(1), 88–107.CrossRefGoogle Scholar
  7. Böhmelt, T. (2013). Civil society lobbying and countries’ climate change policies: a matching approach. Climate Policy, 13(6), 698–717.CrossRefGoogle Scholar
  8. Brooks, S.M., & Kurtz, M.J. (2007). Capital, trade, and the political economies of reform. American Journal of Political Science, 51(4), 703–720.CrossRefGoogle Scholar
  9. Büthe, T., & Mattli, W. (2011). The new global rulers: the privatization of regulation in the World economy. Princeton: Princeton University Press.CrossRefGoogle Scholar
  10. Cao, X., & Prakash, A. (2010). Trade competition and domestic pollution: a panel study, 1980–2003. International Organization, 64(3), 481–503.CrossRefGoogle Scholar
  11. Damania, R., Fredriksson, P.G., List, J.A. (2003). Trade liberalization, corruption, and environmental policy formation: theory and evidence. Journal of Environmental Economics and Management, 46(3), 490–512.CrossRefGoogle Scholar
  12. De Massis, A., Sharma, P., Chua, J., Chrisman, J. (2012). Family business studies: an annotated bibliography. Edward Elgar Publishing.Google Scholar
  13. Dimantchev, E., Lawson, A., Ferdinand, M., Chai, H., Nordeng, A., Fjellheim, H., Schjølset, S., Melum, F. (2013). Carbon 2013: at a tipping point.Google Scholar
  14. Fernandez, R., & Rodrik, D. (1991). Resistance to reform: status quo bias in the presence of individual-specific uncertainty. American Economic Review, 81(5), 1146–55.Google Scholar
  15. Genovese, F., Kern, F., Martin, C. (2017). Policy alteration: rethinking diffusion processes when policies have alternatives. International Studies Quarterly, 61(2), 236–252.CrossRefGoogle Scholar
  16. Hacker, J., & Pierson, P. (2002). Business power and social policy: employers and the formation of the american welfare state. Politics & Society, 30, 277–325.CrossRefGoogle Scholar
  17. Helpman, E., Melitz, M.J., Yeaple, S.R. (2004). Export versus fdi with heterogeneous firms. American Economic Review, 94(1), 300–316.CrossRefGoogle Scholar
  18. Kim, I.S. (2017). Political cleavages within industry: Firm-level lobbying for trade liberalization. American Political Science Review, 111(1), 1–20.CrossRefGoogle Scholar
  19. Kim, S.E., Urpelainen, J., Yang, J. (2016). Electric utilities and american climate policy: lobbying by expected winners and losers. Journal of Public Policy, 36 (2), 251–175.CrossRefGoogle Scholar
  20. Levy, D.L., & Kolk, A. (2002). Strategic responses to global climate change. conflicting pressures on multinationals in the oil industry. Business and Politics, 4, 275–300.CrossRefGoogle Scholar
  21. Lyon, T.P., & Maxwell, J.W. (2008). Corporate social responsibility and the environment: a theoretical perspective. Review of Environmental Economics and Policy, 2(2), 240–260.CrossRefGoogle Scholar
  22. Mattli, W., & Woods, N. (2009). The politics of global regulation. Princeton: Princeton University Press.CrossRefGoogle Scholar
  23. Meckling, J. (2011). Carbon coalitions: business, climate politics, and the rise of emissions trading. MIT Press.Google Scholar
  24. Meckling, J. (2015). Oppose, support, or hedge? distributional effects, regulatory pressure, and business strategy in environmental politics. Global Environmental Politics.Google Scholar
  25. Meckling, J., Kelsey, N., Biber, E., Zysman, J. (2015). Winning coalitions for climate policy. Science, 349(1170).Google Scholar
  26. Murphy, D.D. (2004). Dynamics of regulatory change: how globalization affects national regulatory policies, (pp. 84–117). London: University of California Press. Chapter The business dynamics of global regulatory competition.Google Scholar
  27. Olson, M. (1965). The logic of collective action: public goods and the theory of interest groups. Harvard University Press.Google Scholar
  28. Ostrom, E. (2010). Polycentric systems for coping with collective action and global environmental change. Global Environmental Change, 20(4), 550–557.CrossRefGoogle Scholar
  29. Paterson, M. (2012). Who and what are carbon markets for? politics and the development of climate policy. Climate Policy, 12, 82–97.CrossRefGoogle Scholar
  30. Perkins, R., & Neumayer, E. (2012). Does the california effect’ operate across borders? Trading- and investing-up in automobile emission standards. Journal of European Public Policy, 19(2), 217–237.CrossRefGoogle Scholar
  31. Pierson, P. (1993). When effect becomes cause: policy feedback and political change. World Politics, 45(4), 595–628.CrossRefGoogle Scholar
  32. Roberts, M.E., Stewart, B.M., Tingley, D. (2014). STM: R package for structural topic models. Journal of Statistical Software.Google Scholar
  33. Roberts, M.E., Stewart, B.M., Tingley, D., Lucas, C., Leder-Luis, J., Gadarian, S.K., Albertson, B., Ran, D.G. (2014). Structural topic models for open-ended survey responses. American Journal of Political Science, 58 (4), 1064–1082.CrossRefGoogle Scholar
  34. Røine, K., Tvinnereim, E., Hasselknippe, H. (2008). Carbon 2008: post-2012 is now. Point Carbon Annual Survey Report., 11.Google Scholar
  35. Szakonyi, D., & Urpelainen, J. (2014). Who benefits from economic reform? Firms and distributive politics. Journal of Politics, 76(3), 841–858.CrossRefGoogle Scholar
  36. Tvinnereim, E. (2015). Explaining topic prevalence in answers to open-ended survey questions about climate change. Nature Climate Change, 5, 744–747.CrossRefGoogle Scholar
  37. Urpelainen, J. (2010). Regulation under economic globalization. International Studies Quarterly, 54(4), 1099–1121.CrossRefGoogle Scholar
  38. Venkatachalam, I. (2008). Behavioral economics for environmental policy. Ecological Economics, 67, 640–645.CrossRefGoogle Scholar
  39. Victor, D.G., & House, J.C. (2006). BP’s emissions trading scheme. Energy Policy, 34, 2100–2112.CrossRefGoogle Scholar
  40. Whaller, N., & Whitehead, B. (1994). It’s not easy being green. Harvard Business Review, 72(3), 46–52.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of EssexColchesterUK
  2. 2.University of BergenBergenNorway

Personalised recommendations