Sectors, Pollution, and Trade: How Industrial Interests Shape Domestic Positions on Global Climate Agreements

Abstract

It is usually assumed that the cost of abating pollution is the main deterrent of domestic support for international climate cooperation. In particular, some scholars have argued that, due to the burden of pollution abatement, businesses commonly constrain governments, which then take less cooperative positions on global climate agreements. I suggest that this argument needs further qualification: pollution-related costs rarely have unconditional effects on preferences for global climate agreements. Instead, a sector's pollution level is more likely to influence preferences for climate cooperation if mediated by its trade exposure. If pollution is high, firms in high-trade sectors may be less able to absorb climate regulation, and hence they should be more sensitive to climate cooperation. If pollution is low, firms in high-trade sectors may support climate cooperation, because by being more efficient they are more capable of adjusting to regulation. These dynamics should then affect governmental positions on global climate politics. I test my sectoral argument with original data from business statements and national communications at the United Nations climate negotiations. In line with my argument, I find that businesses in trade-open sectors are more likely to oppose climate agreement as their sector's emissions increase. I also find that in countries where high-emission sectors are open to trade, governments have low preferences for climate cooperation. The findings have implications for the domestic politics of environmental agreements and the distributive politics of global public good provision.

Prisoners of the Wrong Dilemma: Why Distributive Conflict, Not Collective Action, Characterizes the Politics of Climate Change

“…Meckling (2011) links the emergence of emissions trade worldwide to "carbon coalitions" between environmental groups and businesses that stand to benefit materially from climate policy. Genovese (2019) shows how firms push for different climate regulations depending on how polluting they are. Coalitions can also include voters who may form preferences because they are affected by climate policies or because they hold ideational (nonmaterial) beliefs.…”

The Home State Effect on National Business Coalitions: Evidence from U.S. Climate Politics

“…The literature on firm preferences toward climate policy specifically reflects the importance of both economic and institutional factors (Levy and Kolk 2002;Meckling 2015). Collectively, the literature has begun to develop a systematic understanding of how in particular economic factors shape climate policy preferences, with recent research highlighting the trade exposure of polluting sectors (Genovese 2019), competitive dynamics vis-a-vis other producers (Kennard 2020), and embeddedness in fossil fuel supply chains (Cory, Lerner, and Osgood 2020) as explanatory variables. A systematic understanding of the effect of institutions on climate policy preferences, however, remains elusive.…”

“…Firms that are more reliant on fossil fuel intensive assets or processes are more likely to actively seek to block policies that would mitigate climate change by reducing greenhouse gas emissions (Downie 2017;Meckling 2015). Recent scholarship has added nuance to these explanations, broadening explanatory factors from firm assets and business models to trade exposure of polluting sectors (Genovese 2019), competitive dynamics vis-à-vis other producers (Kennard 2020), and embeddedness in fossil fuel supply chains (Cory, Lerner, and Osgood 2020).…”

Beliefs About Consequences from Climate Action Under Weak Climate Institutions: Sectors, Home Bias, and International Embeddedness

“…But information about sectors can also implicate information about their international competitiveness (Genovese, 2019;Meckling and Nahm, 2019). Accordingly, we posit that the international nature of climate change policy has two implications for our theory of belief formation.…”

“…Climate pledges are voluntary commitments: if they turn out to be mostly empty promises, the credibility of the climate architecture under the Paris Agreement is undermined. In this weakly institutionalized setting, where power and responsibility is delegated to the national level, better understanding the microfoundation of the domestic political economy of climate policy is essential (Aklin and Urpelainen, 2013;Bayer and Urpelainen, 2016;Genovese, 2019;Mildenberger, 2020). In particular, we focus on individual beliefs around the distributive politics of climate change, because we expect beliefs to capture how people process information about the economy and therefore what effect economic facts can have on people's perception of climate policy-independently of their (more or less partisan) support for climate action.…”