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Conflict and Accommodation in International Environmental Regimes:
A Neo-Gramscian Analysis of the Climate Change Negotiations
Critical Management Studies Conference, UMIST, July 1999
Environment Stream
David L. Levy
Department of Management
University of Massachusetts-Boston
Boston, Massachusetts 02125
Tel: 617-287-7860
[email protected]
Daniel Egan
Department of Sociology
University of Massachusetts-Lowell
Coburn Hall 404
850 Broadway Street
Lowell, Massachusetts 01854
Tel: 978-934-4304
[email protected]
Environmental pollution and resource depletion have long been recognized as
negative externalities of industrial production, a social cost imposed upon society by
private firms (Cairncross, 1991; Stavins, 1989). The wave of environmental activism
in the U.S. and Europe during the 1960s and 1970s, often traced to the publication of
Rachel Carson's Silent Spring in 1962, represented a significant challenge to industry,
particularly the chemicals sector. This pressure was accommodated in the U.S. by the
establishment of the Environmental Protection Agency and the issuance of a stream of
regulations to address air, water, and land pollution. Business acquiesced in this
compromise, in part because federal regulation could preempt a patchwork of varied
and sometimes stricter state laws that would have been even costlier to meet
(Hoffman, 1996). In the face of the expansion of the regulatory state, U.S. business
interests successfully mobilized political alliances across industry lines, culminating
in the defeat of a proposal to establish a Consumer Protection Agency (Akard, 1992).
Nevertheless, public environmental awareness and concern has continued to
grow. Schot and Fischer (1993:20) have observed that "industry has found that its
environmental performance is under increasing public scrutiny. Caught in a tide of
rising expectations, industry is experiencing something of a crisis of credibility and
faces considerable public mistrust." A vice president of Hill and Knowlton, a major
public relations firm, put it a bit more bluntly: "The big corporations, our clients, are
scared shitless of the environmental movement" (cited in Dowie, 1995:53). During the
latter 1980s and 1990s, companies have developed techniques of environmental
management that ameliorate the more egregious environmental impacts of their
business operations, while positioning themselves as responsible stewards of the
environment. These material and discursive strategies have served to deflect more
interventionist regulatory threats and have helped to sustain the legitimacy, autonomy,
and market position of private industry (Levy, 1997b).
The emergence of global environmental concerns such as ozone depletion and
climate change has shifted concern from local and regional impacts to potentially
catastrophic and irreversible changes in the earth's biosphere. The prospect of
mandatory curbs on production and use of fossil fuels poses a serious economic threat
to corporate actors across a wide range of industries. Carbon dioxide (CO2) is the
single most important greenhouse gas and is released through the combustion of fossil
fuels. Newell and Paterson (1998) p.682 conclude that "when the centrality of fossil
fuels in producing global warming is combined with the centrality of fossil energy in
industrial economies, it becomes clear that the fundamental interests of major sectors
of those economies are threatened by proposals to limit greenhouse gas emissions."
Addressing climate change necessitates a more fundamental restructuring of
technological and market relations in energy producing and consuming sectors; we
might expect that business engagement with the climate issue will be a protracted
process of conflict, and accommodation.
This paper examines corporate responses to the emerging climate change
regime utilizing a neo-Gramscian theoretical framework. Although Gramsci is
perhaps best known as a theorist of culture and ideology, his rich analysis of the
relations among capital, social forces, and the state provides an integrative framework
that recognizes the centrality of organizations and politics in an historical analysis of
social processes and change. It directs attention to the organizational, material, and
ideological pillars of power, while illuminating the strategic processes of conflict,
coalition building, compromise and accommodation that constitute the dynamics of
social change. The empirical basis of this paper is a detailed case study of the
automobile industry, which draws from a series of interviews in the U.S. and Europe
with senior corporate managers, industry associations, government agencies, and
environmental NGOs.
Theoretical Background
Gramsci’s project was to explain political continuity and change in the early 20th
century, and particularly the enduring dominance of capital in liberal democratic
societies. Recognizing that structures of governance in Western societies tended to be
characterized by consent rather than coercion, Gramsci focused on the role of popular
culture in sustaining an ideological system that provides legitimacy to an economic
and social structure. In contrast to some interpretations of Marxism which gave
primacy to the material conditions of production, Gramsci understood the domain of
culture, ideology, and discourse to be interdependent with, yet retain some autonomy
from, the material base of society. The implication for political strategy was a
recognition of the significance of long-term efforts to shape and influence the
institutions of civil society and the state responsible for cultural production,
particularly the media, education, and the church. Anticipating subsequent writing by
Habermas and Foucault, Gramsci argued that conflict over language is the "cultural
struggle to transform the 'popular mentality' and to disseminate philosophical
innovations" (Fontana 38: QC 2:10 p. 1330).
In a departure from models of social change that relied upon technological or
economic determinism, Gramsci emphasized the importance of agency in these
political struggles and the unpredictable course of political development. In this view,
agency arises through the development of knowledge and consciousness among
groups with some latent common interests, a task requiring active organizational
efforts and ideological support from "organic" intellectuals.
The dominance of a particular coalition of social groups, constituting a
hegemonic bloc in Gramsci’s terminology, rests on a particular configuration of
material, ideological, and organizational forces. Achieved through consent rather than
force, hegemony is legitimized by the assertion of moral and intellectual leadership
and the projection of a particular set of interests as the general interest. Implicit in this
conception of hegemony is a notion of power as relational, rather than a reified
construct but possessed by a person or organization. Power emerges out of the
ensemble of relations, the configuration of a network of actors, the relations of
production, and concomitant ideologies. This relational, institutional, and discursive
concept of power again presages Foucault, though for Gramsci power is not quite as
invisible and ubiquitous and still requires an economic, material foundation. The
consensual nature of hegemony corresponds well to what Keohane and Nye (1998)
p.86 have recently termed "soft power", referring to:
the ability to get desired outcomes because others want what you want. It is
the ability to achieve goals through attraction rather than coercion. It works by
convincing others to follow or getting them to agree to norms and institutions
that produce the desired behavior. Soft power can rest on the appeal of one's
ideas or culture or the ability to set the agenda through standards and
institutions that shape the preferences of others.
In our extension of the Gramscian framework, hegemony refers to the
dominance by a coalition of actors over a particular policy arena, in this instance,
climate change and the control of emissions of greenhouse gases. Although clearly
nested within the broader nexus of relations among business, the state, and social
groups, we contend that the dynamics of conflict and accommodation which have
characterized the development of the climate change issue are also tractable from a
Gramscian perspective. Indeed, Gramsci's work is suggestive of the wheels-within-
wheels complexity of systems theory, particularly in his writing on the relationship
between national and international structures. The climate case is particularly
interesting because it is, at once, a single issue receiving attention at the national state
level, yet also a significant international concern embedded within inter-state
negotiations, international scientific assessments, and elements of global civil society.
Much of the recent writing on the emergence of global civil society views the
phenomenon from a pluralistic perspective as a healthy counterweight to the power of
states and international institutions in international politics. Shaw (1994) (p.650)
argues that "civil society can be said to have become globalized to the extent that
society increasingly represents itself globally, across nation-state boundaries, through
the formation of global institutions". The social movements engaged in such
representation efforts are typically defined in terms of their common identity and
interests, and their use of mass mobilization as a prime form of sanction and power,
though Peterson (1992) notes that international civil organizations tend to be
decentralized, loose networks which typically lack coherence and common vision or
goals. Some writers locate environmental organizations within the phenomenon of
"new social movements", which, it is argued, transcend class lines and are more
concerned with personal identity than political conflict (Larana, Johnston, & Gusfield,
Gramsci brings a more political and critical lens to the role of global civil
society. For Gramsci, hegemony is rooted in the cultural values and institutions of
civil society, which he refers to in a famous passage as “a powerful system of
fortresses and earthworks” next to which the state is only the "outer ditch” (Gramsci,
1971) p.238. Far from being an autonomous field of democratic societal
representation, civil society is rather an arena for ideological and institutional
contestation. This perspective sheds new light on the political role of the
Intergovernmental Panel on Climate Change (IPCC), the international body of experts
charged with assessing the scientific, social, and economic aspects of climate change.
Despite the increasing attention in international relations to NGOs, epistemic
communities (Haas, 1992), transnational advocacy networks (Keck & Sikkink, 1998),
and private corporate actors (Clapp, 1998; Levy & Egan, 1998), there has been little
exploration of the dynamics of political interaction among state and non-state actors,
nor of the interdependencies across the regional, national and international scales at
which they operate. The development of transnational historical materialism (THM)
(Cox, 1987; Gill, 1993)represents an important effort to extend Gramsci to the
international arena, though it has been more concerned with the subordination of the
national state than with the strategies of corporate power. THM points to the
emergence of a transnational hegemonic bloc, through organizations such as the
OECD, the World Economic Forum, and the Trilateral Commission. This alliance of
multinational business, state managers, and intellectuals transcends any one class and
is bound together through a conscious internationalist perspective by material and
ideological structures. Robinson (1996) p. 19 argues that the transnational hegemonic
bloc exercises power through a "dense network of supranational institutions and
relationships that increasingly bypass formal states" and through the conversion of
national states "into transmission belts and filtering devices for the imposition of the
transnational agenda".
In contrast to this rather monolithic top-down view, we approach the
emergence of transnational hegemonic formations as a fragmented, highly contested
process in which national states, capital, and social forces negotiate over the structure
and process of the new international structures of governance. Indeed, struggles over
the form of particular regimes, as ozone depletion and climate change, are constitutive
of the international institutional infrastructure. In these struggles, national states,
capital, and social forces are strategic actors who have different interests and
capacities, and whose preferences for forms of governance may vary across issues.
Elsewhere we have argued that it is useful to distinguish two forms of international
regimes, market enabling and regulatory regimes (Levy & Egan, 1998). Business is
generally supportive of international institutions responsible for market enabling
regimes such as the World Trade Organization and the now-stalled Multilateral
Agreement on Investment (MAI), which provide the infrastructure for the global
economic system, while NGOs have traditionally opposed the extension of these
institutions. Regulatory regimes, such as the Kyoto Protocol to limit emissions on
greenhouse gases, generally constrain business autonomy and threaten a new layer of
administrative oversight. Business therefore tends to prefer the national level for
regulation and implementation of environmental and social issues, where it has well
developed channels of influence, while NGOs, recognizing their relative weakness at
the national level in confronting globally mobile capital, prefer multilateral
international arenas such as United Nations.
Climate Change as a Threat to Hegemony
Concerns about the impact of greenhouse gases (GHGs) on the global climate system
presented industry with the threat of coordinated international action that could cause
serious disruption to markets (Levy, 1997a; Rowlands, 1995). Although scientific
interest in the response of the climate system to the accumulation of GHGs had been
growing rapidly in the 1970s, and regulatory agencies had issued a number of reports
in the 1980s (Agrawala, 1998; Alfsen & Skodvin, 1998; Bodansky, 1994; Edwards &
Lahsen, 1999; Kruck, Borchers, & Weingart, 1999), it was in 1988 that industry really
woke up to the climate issue. The testimony of Jim Hansen, of NASA, before the US
House Energy Committee in June 1988 was frequently mentioned as the catalyst that
catapulted climate change onto corporate radar screens. Hansen testified during an
unusually hot spell in the eastern U. S. that he was "99 percent certain" that recent
warmer temperatures were attributable to greenhouse gas induced climate change, a
claim which generated considerable media attention (Edwards & Lahsen, 1999). The
same month, the Toronto Conference on the Changing Atmosphere generated a call
for a 20% cut in greenhouse gas emissions by 2005 from 1987 levels, the first specific
target for internationally coordinated emission reductions.
Controls on CO2 would directly threaten oil and coal companies, and
indirectly pose a challenge to industries dependent on these fuels, particularly
transportation and electric utilities. In addition, higher energy prices would raise input
costs for a range of energy intense industries, including aluminum, cement, paper,
cement, and steel. The impact would extend to the commercial and retail sectors,
which use large amounts of energy for heating and cooling. According to Mansley
(1995), the financial markets have not yet incorporated the prospect of regulatory
controls in asset prices. Kevin Fay, director of a “moderate” industry association on
the climate issue, noted that "a handful of companies manufactured ozone-depleting
chemicals, and there were a limited number of uses for them. Controlling carbon
dioxide emissions would affect every aspect of life on earth" (Levy, 1999), p.300.
A number of factors exacerbate industry's perception that greenhouse gas
controls posed a severe threat to their interests. The 1987 Montreal Protocol on
Substances that Deplete the Ozone Layer demonstrated how quickly environmental
issues might move from scientific concern to drastic, internationally coordinated
controls. Although CFC manufacturers, particularly Dupont and ICI, had been
intimately involved in determining country positions in the international negotiations,
industry perceived that it had been "caught napping", in the words of one industry
association, by the ozone issue. International controls posed a particular threat to
fossil fuel and automobile companies, most of whom were multinationals, because
they would affect operations and markets simultaneously in multiple countries,
obviating the traditional multinational advantage of diversification and mobility.
Investments in R&D appeared highly risky, because of the uncertainty regarding
climate science, regulatory responses, and the potential market for low emission
technologies. Moreover, there was little assurance that existing fossil fuel companies
would be the winners in future markets for low emission products; unlike the CFC
case, technologies to address greenhouse gases, such as photovoltaic or wind energy,
or advanced batteries and fuel cells, were far from the core areas of expertise of
incumbent firms (Levy, 1997a).
In the climate issue, some fossil fuel based companies saw not just an
economic threat but a broader ideological challenge to the industrialized way of life
and the role of private automobiles. As a former VP of Government Relations put it,
“there are people who have cast the automobile as a villain. It is a puritanical view,
that we are having too much fun, that we have too much mobility and freedom, that
suburban sprawl is bad. They think we should all live in beehives. So when scientists
say that CO2 is a greenhouse gas, they jump on board.” There was an explicit fear
among automobile industry managers that the climate issue touched emotional chords
that could be exploited by activist environmental groups, and might lead US
regulatory agencies to tighten Corporate Average Fuel Economy (CAFE) standards,
which were deeply resented as an intrusion on corporate autonomy regarding product
The societal response to climate change could potentially lead to a crisis of
hegemony, in which an existing dominant constellation of social actors is threatened
with a loss of legitimacy, autonomy, influence, and market position. Regulatory
measures reduce demand for fossil fuels and derivative products, and the potential
advent of substitute products, threaten the economic and market positions that
constitute the material base of hegemony. Scientific evidence that unchecked growth
in industrial emissions is threatening the climate system, which has received modest
media coverage, serves to undermine the ideological legitimacy of corporate
hegemony. On the political and organizational level, the threat is that increased
scientific and regulatory concern would strengthen not just those national actors who
have traditionally contested the power of capital, but also nascent international
institutions under the auspices of the United Nations which seek to monitor and
address global environmental problems, and which are less subject to the traditional
channels of corporate influence over the state (Levy & Egan, 1998). The growth of
international environmental assessments and negotiations has also expanded the
organizational capacity and legitimacy of NGOs (Wapner, 1995) and communities of
scientific experts (Haas, 1993).
The Corporate Response to Climate Change
Hegemony rests upon material-economic, discursive-ideological, and organizational
pillars, so it is not surprising that corporate responses to the climate issue take place
along each of these three axes. The initial efforts along each dimension, as discussed
in more detail below, are generally aimed at deflecting challenges while preserving
and strengthening existing hegemonic structures. When these efforts prove
inadequate, however, in stemming the challenge to hegemony, we observe a strategic
shift toward accommodation and compromise, which entails a broader reconfiguration
of economic relations, discursive structures, organizational forms, and political
alliances. In the climate case, this shift was clearly visible by 1997, though its roots
lay in dormant contradictions and fault lines.
Organizational Politics
Political agency is effected through organizational structures, so it is not surprising
that the most immediate business response to the perceived threat of greenhouse gas
was in the organizational domain. In an effort to form a broad-based coalition
representing multiple sectors, thee Global Climate Coalition (GCC) was formed in
1989 under the auspices of the National Association of Manufacturers (NAM), though
it was reorganized as an independent entity in 1992. The GCC represents about 40
companies and industry associations, primarily major users of fossil fuels such as the
oil, automobile, and electric utility sectors, but also including other energy intense
sectors such as cement, aluminum, iron and steel, chemicals, and paper. A senior
GCC staff member, discussing motivations for the creation of the GCC, expressed the
view that industry had become involved late in the negotiations leading to the 1987
Montreal Protocol, and that there was also considerable dissatisfaction with the Clean
Air Act process. Although the GCC was constituted as a U.S.-based organization and
was focused on domestic lobbying, a number of US subsidiaries of European
multinationals also joined, and the GCC quickly rose to be the most prominent voice
of industry, both in the US and in the international negotiations.
The negotiations to limit ozone-depleting substances, which culminated in the
Montreal protocol, revealed significant differences in interests between the European
and US chemicals industries (Benedick, 1991; Rothenberg, 1995). During the 1990s, a
number of organizational initiatives attempted to improve communication and
coordination among multinational corporations from different countries, not always
with great success. These efforts include the Business Council for Sustainable
Development, which was particularly active at the U.N. Rio conference in 1992, the
Transatlantic Business Dialogue, and the International Chamber of Commerce (ICC).
The ICC, whose membership is primarily drawn from OECD countries, has a very
active working party on climate change which met in London in January 1996 to plan
strategy for the COP-2 negotiating session in Geneva in July 1996.
Recognizing the importance of civil society in policy struggles, one industry
tactic has been to establish organizations ostensibly representing private citizens. Such
efforts to create the impression of grassroots lobbying, which have been termed
“astroturf organizing”, attempt to gain credibility by masking the corporate interests
involved (Stauber & Rampton, 1995). A number of groups of this type have engaged
with the climate issue, including People for the West, a mining industry group, and
the Coalition for Vehicle Choice, which is run by the US auto industry. In an effort
focused specifically on climate change, coal, oil, and utility interests in the US
established a group called The Information Council for the Environment (ICE) in
1991, whose purpose, as stated in internal documents, was to "reposition global
warming as theory, not fact" (Ozone Action, 1996). ICE developed a sophisticated
print and radio media campaign directed at "older, less educated men" and "young,
low income women", and set up a Science Advisory Panel which included three
"climate skeptics," Robert Balling, Pat Michaels and S. Fred Singer, all of whom have
received funding from fossil fuel industries.
These organizational initiatives by industry have not been uncontested.
National environmental groups formed an international umbrella organization called
the Climate Action Network (CAN) to coordinate positions, engage in the
international negotiations, and publish ECO, a newsletter that was widely read in
climate policy circles. According to Chris Flavin from the WorldWatch Institute,
CAN “ran circles around industry” at the first Conference of the Parties (COP-1) in
Berlin. Environmental NGOs have also been active in publicizing industry tactics,
which was probably the reason for the termination of the ICE campaign and of a
similar effort by the American Petroleum Institute to establish a Global Climate
Science Data Center (National Environmental Trust, 1998).
In addition to strengthening its own organizational base, industry has attempted to
undermine the credibility and legitimacy of the Inter-governmental Panel on Climate
Change (IPCC). This epistemic community of scientists conducts periodic reviews of
the causes, likely impacts, and possibilities of mitigation of climate change, and
constitutes an emerging formation within global civil society that provides a motive
force behind international efforts to regulate greenhouse gases. In May 1996, Don
Pearlman of the Climate Council and William O'Keefe of the GCC and the American
Petroleum Institute publicly accused IPCC lead authors Ben Santer and Tom Wigley
of secretly altering the IPCC report to reduce the expression of uncertainties,
particularly in chapter 8. This chapter was the source of the oft-quoted IPCC
statement that “the balance of evidence suggests that there is a discernible human
influence on global climate.” Although the basic expression of this conclusion had
survived a number of reviews and revisions (Callander, 1997), the GCC placed
advertisements in the Washington Times and Energy Daily, stating that "unless the
management of the IPCC promptly undertakes to republish the printed versions...the
IPCC's credibility will have been lost" (Gelbspan, 1997) p.78. Fred Seitz of the
Marshall Institute followed with an op-ed piece in the Wall Street Journal on June 12,
which became the forum for a spirited exchange (Edwards & Schneider, 1997).
Although some changes were subsequently made to the review process and
industry interviewees considered this a successful effort to open up the IPCC process,
in broader political terms the challenge to IPCC's credibility fell short. Levy (1998)
argues that the challenge had little impact on the international negotiations because
the IPCC institutions had already secured a degree of autonomy and legitimacy in the
international process. Moreover, the US delegation, under pressure to respond, chose
to distance itself from the fossil fuel lobby. Tim Wirth, the US Under-Secretary of
State for Global Affairs and head of the US delegation at the Second Conference of
the Parties (COP-2) in Geneva in 1996, declared:
We are not swayed by and strongly object to the recent allegations about the
integrity of the IPCC's conclusions. These concerns were raised not by the
scientists involved in the IPCC, not by participating governments, but rather
by naysayers and special interests bent on belittling, attacking and obfuscating
climate change science" (Wirth, 1996).
Discursive Politics
Central to the Gramscian approach to social contestation is the struggle over ideology,
culture and discourse. These are considered to be relatively autonomous arenas for
political engagement that stand in a dialectical relationship to the economic and
material bases of power. If hegemony is consensual, it must be constructed upon
foundations of legitimacy derived from the projection of moral and intellectual
leadership. One environmental marketing writer explicitly cautions business
concerning the environmental threat to this legitimacy:
Business leaders must now get actively involved in defining and managing the
process of environmental communications. Failure to do so will increasingly
pose the risk of their companies' real present (and potential future) value being
challenged; their position as a responsible corporate citizen being undermined;
and competitive advantage draining away as customers and consumers turn to
others who are - or are seen to be - more environmentally responsible
(Elkington, 1994) p.97.
A key strategy of the GCC in its opposition to mandatory emission controls
has been to challenge the science of climate change, pointing to a spectrum of opinion
rather than consensus among scientists and highlighting the uncertainties. Several
scholars have noted that industry can attempt to protect itself from regulation with the
authority and credibility of science, by invoking the high standards of proof required
to accept a new scientific theory. Shackley (1999a) describes "scientism” as “the
belief that what effective policy formulation and implementation most needs is robust
knowledge (with physics as the gold standard)." Edwards and Lahsen point to the
strategic deployment of this belief (p.12) "Economically powerful groups targeted by
possible regulations, such as the fossil fuel industry, are well aware that closure of
debate can be delayed by challenging key scientific results, or, sometimes even more
effectively, by raising the level of certainty required of scientific knowledge".
Industrys’preference for "sound science" is discussed by Jasanoff (1987) as part of
the political negotiation of boundaries between science and policy. The GCC makes
this explicit in its mission statement: "A bedrock principle for addressing global
climate change issues is that science -- not emotional or political reactions -- must
serve as the foundation for global climate policy decisions."
The appeal to “sound science” and rejection of emotional criteria for
environmental decision-making reflects an effort to shape the climate debate through
gendered discourse. Advocates of precautionary action are labeled as emotional,
irrational, even hysterical, overly anxious about the risks associated with industrial
"progress", and implicitly unfit to participate in the masculine realm of public
decision-making. Casting aspersions on the masculinity of opponents still serves as a
powerful form of social control. A related theme is that the earth's climate system is
resilient and independent rather than fragile and vulnerable to anthropogenic
interference, suggesting a masculine earth that does not need human protection. This
stands in contrast to eco-feminist arguments that nature is generally feminized in
western discourse, in a process that legitimizes its subordination to human material
exploitation (Merchant, 1992; Salleh, 1992).
Industry efforts to challenge the scientific basis for greenhouse gas emission
controls took a number of forms. The GCC actively promoted the views of climate
skeptics such as Patrick Michaels, Fred Singer, and Richard Lindzen in its literature,
press releases, and congressional testimony, and would direct press inquiries to these
people. It sponsored a number of reports, such as Accu-Weather (1994) and Davis
(1996), and would also use reports from other sympathetic organizations, notably the
Marshall Institute. The GCC regarded favorably the voluntary approach of the US
Climate Action Plan (House, 1993), and in December 1994 asserted that "the state of
the science does not justify adopting any additional commitments or actions at this
time. Key aspects of the science, particularly climate and regional weather effects,
remain highly uncertain " (Global Climate Coalition, 1994) p.30. The Western Fuels
Association has funded the publication and distribution of a monthly newsletter called
the World Climate Review. Edited by Patrick Michaels of the University of Virginia,
the newsletter is dedicated to debunking climate change science and is mailed to all
the members of the Society of Environmental Journalists.
The extent of scientific uncertainty is generally overstated in industry
literature. An undated GCC Backgrounder from the mid-1990s acknowledged that
greenhouse gases trap the sun’s warmth and that their atmospheric concentrations are
rising, but asserted that "scientists differ on whether the increase in the concentrations
of these gases will cause an ‘enhanced greenhouse effect’, or warming of the planet.”
(emphasis added - note the future tense). This statement, with which even science
skeptics would disagree, is, in a rhetorical sleight of hand, “supported” by a Gallup
poll of American climate scientists, in which, when asked whether there has been any
identifiable, human induced global warming to date, 49 percent of respondents replied
no, and only 18 percent replied positively (emphasis added). The theme of uncertainty
is developed in another Backgrounder that presents a more detailed critique of general
circulation models (GCMs), pointing to their well-known limitations in modeling
complex phenomena such as cloud cover, regional processes, and ocean circulation
(Shackley, 1999b). They even cite Dr. Stephen Schneider from a 1990 Greenpeace
report on the need for high resolution, coupled atmospheric models. This skeptical
approach to GCMs stands in ironic contrast to the credibility the GCC has bestowed
on general equilibrium economic models such as that used by the WEFA
Group(1996), which predict a high cost for GHG mitigation, even though these
models are even more complex and rest on less secure theoretical foundations than
Advertising and education are two channels through which industry
associations have tried to influence public opinion. Western Fuels, a US utility
association and member of the Global Climate Coalition, ran an advertisement in
1993 titled "Repeal Rio" calling climate change a "controversial theory" with "no
support in observations", and made the claim that "CO2 fertilization of the atmosphere
helps produce more food for people and wildlife." The association also spent around
$250,000 to produce a video in 1991 called "The Greening of Planet Earth", which
carried the same message and was apparently influential in the Bush administration. A
number of larger companies and industry associations produce environmental
education kits for classroom use (Union, 1995). Enterprise for Education, which
markets "educational" materials on behalf of clients in the utility and energy sectors,
has produced a kit called The Greenhouse Effect and Global Warming. According to
the Consumers Union report, this material "acknowledges that fossil fuel use and
production are major sources of greenhouse gases, but suggests that global warming
may not be a serious problem and may not be occurring" (p.45). Exxon Education
Foundation's Exxon Energy Cube, with 9 videos, books, games and posters "implies
that fossil fuels in general pose few environmental problems and that alternative
energy is unattainable and costly (Ibid, 14).
After the Chapter 8 affair, industry became much more circumspect about
challenging the fundamental science of climate change. In planning its campaign in
the run-up to Kyoto in December 1997, the GCC decided to shift the focus from
scientific uncertainties toward the high costs of mitigation and the lack of developing
country commitments. This decision was based, in part, upon market research that
suggested the public was not engaged with the scientific debates and did not find
industry a particularly credible source. Rather than challenge the credibility of the
IPCC, the GCC has begun to use the cautious language of the SAR to its own
advantage; in a June 20, 1997 press release, it cited the SAR in repudiating claims
made by the environmental group Ozone Action.
The American Petroleum Institute (API) dissented from the 1997 decision to
downplay the science, and began preparing a new “Global Climate Science
Communications Plan” to enroll a group of climate skeptics who were not previously
identified with the fossil fuel lobby. The API campaign was to be primarily directed at
the US public and media rather than policy makers, suggesting an awareness of the
importance of civil society in discursive politics. In internal documents leaked to the
National Environmental Trust and the New York Times (National Environmental
Trust, 1998), the API claimed that "those who oppose the treaty have done little to
build a case against precipitous action on climate change based on the scientific
uncertainty. As a result, the Clinton administration and environmental groups
essentially have had the field to themselves." The action plan expressed concern that
the US media conveyed an impression of emerging scientific consensus "while
industry and its partners ceded the science and fought on the economic issues". The
document argued that this stance was a strategic miscalculation because it put
opponents of the Kyoto protocol in a weak position; a successful campaign to
challenge the science "puts the United States in a stronger moral position and frees its
negotiators from the need to make concessions as a defense against perceived selfish
economic concerns." An auto industry executive with a public relations background
made a similar point: “Once you concede the science, all that is left is to argue the
extent of liability and the timetable for emission reductions. It's a lost cause." The
importance of moral and intellectual leadership in sustaining corporate legitimacy is
evident in these statements.
The dangers of this oppositional approach, in terms of industry's credibility
and legitimacy in national and international negotiations, are also well understood by
companies and industry associations. Environmental groups in Europe and the US
seized upon the lobbying and public relations efforts of the fossil fuel industry, issued
a number of reports that noted industry support for some climate skeptics and
attempted to frame the issue as big business using its money and power to distort the
scientific debate (Corporate Europe Observatory, 1997; Friends of the Earth
International, 1997; Gelbspan, 1997; Hamilton, 1998). This publicity caused the API
to suspend its 1998 campaign. Ford’s VP of Economics and Strategy acknowledged
that "appearing negative hurts. We lost the first round of battles. We are now trying to
be more positive with the science, while still pointing to the high cost of precipitate
action before scientific uncertainties are resolved. Our actions will be less strident in
the future.”
In addition to challenging the scientific basis for regulatory action, industry
associations have stressed the potentially high economic cost emission controls. The
structural dependence of the economy on investment, employment, and taxation
generated by fossil fuel related industrial sectors represents an important lever of
influence over state policy (Levy & Egan, 1998; Newell & Paterson, 1998). The GCC
commissioned a series of economic studies that indicate that the US might suffer
economic losses in the region of three to five percent of GDP annually if it follows
proposals to cut emission twenty percent below 1990 levels by 2005 (Montgomery,
1995; WEFA Group and H. Zinder & Associates, 1996). In a September 1996 press
release, the GCC warned that measures to curb emissions by twenty percent "could
reduce the US gross domestic product by 4% and cost Americans up to 1.1 million
jobs annually." Following the US State Department's decision to support some form
of mandatory controls in July 1996, the GCC stepped up its efforts to warn of
economic peril and resuscitated the American Energy Alliance, an organization that
was formed in 1993 to fight the Clinton administration's proposal for an energy tax.
The AEA sent a letter on August 7, 1996 to its member companies, warning that the
costs of emissions cuts "would be staggering, dwarfing the impact of the BTU tax."
In the run-up to the Kyoto conference in December 1997, industry’s message
shifted from the high cost of control measures to the unfair economic burden and
limited environmental effectiveness of an agreement that would exclude developing
countries from emission controls. The GCC channeled $13 million through the Global
Climate Information Project for an advertising campaign with the slogan “It's not
global and it won't work”. This theme was echoed in an editorial by Robert Eaton, the
Chairman of Chrysler, in the Washington Post in July 1997: "we're moving toward a
solution involving a massive transfer of American wealth that won't do a thing to keep
the polar ice caps from melting, but would severely undermine this country's
international competitiveness" (Eaton, 1997).
Discourse Coalitions on Climate
Discursive politics not only shape the contours of public debate but also provide the
symbolic foundations for coalitions in pursuit of policy goals. Organizational and
discursive politics are therefore intertwined. According to Hajer (1995) p.13 "what
unites these coalitions and what gives them their political power is the fact that its
actors group around specific story-lines that they employ whilst engaging in
environmental politics." The concept of discourse coalition is elaborated and given a
more strategic flavor in Callon’s (1986) description of the processes of
problematization, “interessement”, enrollment, and mobilization.
The alliance between the fossil fuel industry, climate skeptics, and a key group
of Republican Congresspeople in the 1994-96 House appears to be an example of
such a discourse coalition, whose members appear to share a broad distrust of
governmental regulation, a suspicion of the ideological roots of climate advocates,
and a concern that policy be guided by rigorous science and consideration of
economic impacts. The Global Climate Information Project (GCIP), responsible for
the $13 million pre-Kyoto advertising campaign, shifted the terrain of discursive
struggle from science to economics, enabling the coalition against mandatory controls
to be broadened. By emphasizing the potential impact of emission controls on fuel
prices and employment, the GCIP secured the endorsement of a number of
associations representing a spectrum of civil society, including unions, black
businesses, farmers, and retired people.
The alliance with Republican congressmen was most clearly demonstrated in a
series of hearings before the House Subcommittee on Energy and the Environment in
Fall 1995, pointedly titled "Scientific Integrity and the Public Trust" (Brown, 1996;
Gelbspan, 1997). Dana Rohrabacher from California, Chair of the House Science
Subcommittee on Energy and Environment, presented skeptic Patrick Michaels as a
heroic dissenter in the image of Galileo, bravely confronting the scientific priesthood,
and openly derided the testimony of serious climatologists such as Jerry Mahlman,
director of NOAA's Geophysical Fluid Dynamics Lab. On the question of sea level
rise, Rohrabacher was moved to remark "I am tempted to ask what this will do to the
shape of the waves and the rideability of the surf." (Gelbspan, 1997) p. 72. The
committee recommended significant cuts in budget allocations for climate research.
On closer inspection, however, a number of revealing discrepancies
demonstrate the presence of fault lines and contradictions in this coalition. Statements
by congressional committee leaders reveal a deep ideological antagonism toward
environmentalism in general; Dana Rohrabacher termed the ozone depletion issue
"another basically Chicken Little, a cry we've heard before when the American people
were scared into the immediate removal of asbestos from their schools." Industry, by
contrast, after fighting the good fight, demonstrated a more pragmatic,
accommodationist approach (Levy, 1997a).
The common commitment to sound science is also questionable. While one or
two of the skeptics, notably Lindzen, are widely acknowledged to adhere to the
practices and norms that confer scientific legitimacy and credibility, others such as
Patrick Michaels and Fred Singer do not publish on climate in the refereed literature.
The politicians, who proclaim their desire for sound science, express distrust for the
institutionalized procedures of the scientific community. Representative John
Doolittle, when questioned about Fred Singer's credentials, responded that he was
"not going to get involved in a mumbo jumbo of peer reviewed documents”
(Gelbspan, 1997) p.65. Both Doolittle and Rohrabacher claimed that the established
community of climate scientists were exaggerating the problem in order to obtain
greater funding. Moreover, the fossil fuel lobby was on record for requesting more
research, but the Republicans controlling congressional on the committees were
interested in cutting government funding for climate research. At the May 1996
hearing, Rohrabacher called climate change research "money right down a rathole"
(Gelbspan, 1997) p.77. One insight to be gleaned from these hearings is that
discursive coalitions are incomplete, unstable and contingent affairs. As we will see
later in this paper, alliances can shift as some companies began to reconsider their
economic interests and became more open to the scientific conclusions of the IPCC.
Economic-Material Dimensions of Politics
In the neo- Gramscian framework, economic power represents the third pillar of
hegemony and thus an important resource for societal struggles. The organizational
and discursive dimensions of politics described above clearly rest on material
foundations. The GCC is funded by some of the world's largest multinational
corporations, enabling it to send large delegations to international negotiations, mount
expensive advertising campaigns, commission reports, and donate substantial sums to
Political Action Committees to finance congressional election campaigns (Hamilton,
1998). The structural power of the industry, though reinforced through discursive
strategies that emphasize economic dependence, rests on material foundations of
investment, employment and tax revenues.
Companies threatened by regulatory measures relating to greenhouse gases
have also begun to adopt a number of strategies to protect their material interests more
directly. A new wave of industry consolidation has begun in the late 1990s in the oil
and automobile industries, including multibillion dollar deals such as DaimlerChrysler, Ford-Volvo, Exxon-Mobil, and BP-Amoco. These mergers, many of which
are cross-border, strengthen the bargaining positions of key firms relative to states and
other social actors. The mergers also provide opportunities for economies of scale and
cost-cutting, and reduce the burden of risky investments in low emission technologies.
Companies are also actively forming non-equity alliances to pursue new technologies,
such as the GM-Toyota agreement for joint research on alternative drive chains, and a
series of agreements between oil and auto companies to work jointly on low-emission
fuels and engines.
The Dynamics of Hegemonic Instability
US policy on climate, at least until Tim Wirth’s speech accepting the need for
internationally binding controls in Geneva in 1996, can be understood in terms of a
hegemonic coalition against mandatory emission controls. In a briefing by the
President's Council of Advisers for Science and Technology, President Clinton is
reported to have remarked that he was in favor of significant mandatory emission
reductions, but that this was politically impossible in the face of opposition from the
public, business, and Congress. By mid-1999 however, a number of writers had noted
an apparent sea change in industry’s stance on climate, as companies began to accept
the scientific basis for emission controls and to invest significant sums in low carbon
technologies (Anon., 1998; Nauss, 1999; Newswire, 1999).
A simple rationalist explanation for the shift in industry position would point
to the emerging scientific consensus since the Second Assessment Report of the IPCC
in 1995 and the strategic benefits for companies to “board the train” once it was seen
to be leaving the station. By 1997, the business press in the US and Europe was
conveying the impression of consensus. (Raeburn, 1997; Stipp, 1997; The Economist,
1997). From Jon Holdren's perspective, advances in basic science were fundamental
to this change: "the whole fingerprint argument has become much stronger since the
SAR. You've got the empirical data of record warmth, and the arguments about
satellite measurements and solar effects have been resolved in refereed scientific
publications." While new data in scientific journals have surely played an important
role in shifting corporate perspectives on the climate issue, the growing literature in
the Social Studies of Science tradition supports the view, consistent with a neoGramscian approach, that social conceptions of science are inherently contested and
political, and are mediated by institutional environments. Here we attempt to explain
the shift in industry position in the context of a reconfiguration of the discursive,
institutional, and material foundations of a hegemonic formation.
A hegemonic bloc represents a specific systemic configuration of social and
economic forces with some capability of reproducing the relations of production and
meaning within which it is constituted. A hegemonic bloc always contains tensions
and uneasy alliances to one degree or another, so that a perturbation to any element of
the system is potentially capable of causing serious disruption to the entire edifice.
Behind the seemingly solid wall of opposition, there were tensions between
automobile and oil companies, and between industry and the Republican congress.
Another fault line stemmed from the strategic reliance by opponents of Kyoto on an
appeal to “sound science”; their position became precarious as sound science began
to eliminate sources of uncertainty concerning climate change.
Complexity theory provides a useful analogy for considering how dynamic
non-linear systems react to small perturbations; most of the time, small changes in any
one component are absorbed easily by the system, but occasionally, disruptions
cascade through the system requiring major system-wide reconfiguration if stability is
to be restored (Levy, 1999 forthcoming; Stacey, 1995). The timing, path, and end
state of such systemic change are essentially indeterminate, consistent with Gramsci's
rejection of any form of determinism in social historical analysis. The implication for
the climate case is that major shifts in the political landscape and in the stance of
industry, such as that observed in the period 1996 to 1998, may be triggered by a
series of relatively minor changes in the organizational, discursive, or material
foundations of the hegemonic bloc.
When challenged, hegemonic coalitions usually respond in the first instance
with offensive strategies to preserve their position and undermine opposition, as
discussed in sections on organizational, discursive, and material responses above. If
the challenge turns into a crisis, the repertoire is often extended to include more
defensive strategies of accommodation, compromise and cooption. According to the
Gramsci scholar Sassoon, “Gramsci uses the word crisis in the sense of an organism
which is threatened and develops defence mechanisms to ensure its survival. Crisis,
therefore, does not signify a breakdown but a reorganization of society. A
breakthrough, the founding of a new society, is not the result of the collapse of the old
one. Rather it is made possible by political intervention in the course of this
reorganization. The new society is not built et novo after a cataclysmic break, but on
the basis of the old"(Sassoon, 1987) p. xi. Gramsci's concept of "passive revolution"
describes this process of evolutionary change brought about through extensive
concessions by relatively weak hegemonic blocs. The notion of "war of position"
suggests how groups challenging the position of hegemonic coalitions might exploit
fissures and contradictions in hegemonic coalitions through a long-term strategy
coordinated across multiple bases of power. In the sections below, we apply these
perspectives to explore the recent shift in the fossil fuel industry’s position on climate
Competing Discourses
The first major change in the official US position on climate came on the heels of the
GCC's attempt to challenge the legitimacy of the IPCC process, when Tim Wirth
declared at the Second Conference of the Parties in Geneva in July 1996 that the US
would support an internationally binding agreement on greenhouse gases (Wirth,
1996). Forced to show its hand, the administration chose to endorse the international
process, arguing that “the science cannot be ignored and is increasingly compelling”.
More to the point, the US would have lost significant credibility and influence in the
negotiations had it sided with the detractors of the IPCC. Most notable, however, was
Wirth's effort to assuage the business community by promising that the U.S. would
pursue "market-based solutions that are flexible and cost-effective", and that "meeting
this challenge requires that the genius of the private sector be brought to bear on the
challenge of developing the technologies that are necessary to ensure our long term
environmental and economic prosperity." The US government was clearly signaling
that it would work toward a climate treaty that was compatible with industry’s
material interests and would not allow an erosion of its hegemonic position.
Wirth’s statement is also a lucid expression of the emerging "win-win"
discourse of “ecological modernization” (Hajer, 1995). The obvious appeal of this
discursive paradigm is the assertion that being "green" can also be good for business,
and that addressing environmental problems can be a positive sum game. To generate
these "win-win" situations, ecological modernization puts its faith in the
technological, organizational, and financial resources of the private sector, voluntary
partnerships between government agencies and business, flexible market-based
measures, and the application of environmental management techniques (Hart, 1997;
Schmidheiny, 1992). Building on insights from Total Quality Management, green
business advocates argue that reducing waste and pollution through production
process improvements rather than end-of-pipe fixes can generate significant cost
savings (Fischer & Schot, 1993). Recently, this approach has been applied to carbon
emissions, particularly in the context of energy efficiency (Casten, 1998; Romm,
Although a number of critics have questioned the empirical and ideological
basis of the win-win green business paradigm (Jones & Rubin, 1999; Levy, 1995;
Levy, 1997b; Walley & Whitehead, 1994), it has rapidly gained currency among a
number of industry associations active on the climate issue, such as the Business
Council for Sustainable Energy, the World Business Council for Sustainable
Development, and the International Climate Change Partnership. Influential
environmental NGOs in the US, especially the World Resources Institute and the
Environmental Defense Fund (Dudek, 1996), advocate this perspective and have
initiated partnerships with business to pursue profitable opportunities for emission
reductions. Business school professors have become the movement’s "organic
intellectuals", a turn used by Gramsci to describe the “strata of intellectuals which
give [a social group] homogeneity and an awareness of its own function not only in
the economic but also in the social and political fields" (cited in Sassoon (1987) p.
The US government’s approach to climate change bears the imprint of this
paradigm. The US Climate Change Action Plan states that "returning US greenhouse
gas emissions to their 1990 levels by the year 2000 is an ambitious but achievable
goal that can be attained while enhancing prospects for market growth and job
creation, and positioning our country to compete and win in the global market"
(House, 1993).The joint EPA/Department of Energy Climate Wise program similarly
describes itself as "a unique partnership that can help you turn energy efficiency and
environmental performance into a corporate asset" (US DoE, 1996). The discourse of
markets and private capital has also permeated the Second Assessment Report of the
IPCC, particularly the section by Working Group III, which addressed social and
economic policies. Despite the failure of voluntary programs in the US and most other
industrialized countries in returning emissions to 1990 levels, the report stresses the
potential for reducing emissions through "cost-effectively reducing imperfections and
institutional barriers in markets through policy instruments based on voluntary
agreements, energy efficiency incentives, product efficiency standards, and energy
efficiency procurement programmes" (Bruce, Lee, & Haites, 1995).
The "win-win" discourse of green business constitutes the ideological
foundations for a reconfigured hegemonic formation, based on acceptance of climate
science, the need for precautionary action, and flexible, market-based policy
measures. The now famous speech by British Petroleum’s Group Chief Executive,
John Browne at Stanford University on May 19, 1997 represented the first major
fissure in the fossil fuel industry’s position on the science of climate change. He stated
that "there is now an effective consensus among the world's leading scientists and
serious and well informed people outside the scientific community that there is a
discernible human influence on the climate, and a link between the concentration of
carbon dioxide and the increase in temperature." While acknowledging that
considerable uncertainties still exist, Browne explicitly invoked the precautionary
principle by saying “The time to consider the policy dimensions of climate change is not
when the link between greenhouse gases and climate change is conclusively proven, but
when the possibility cannot be discounted and is taken seriously by the society of which
we are part.”
The US automobile companies also toned down their criticism of climate
science as Kyoto approached. According to the trade journal Automotive Industries,
(Sorge & McElroy, 1997) when the three US auto CEOs and UAW president Steve
Yokich met with President Clinton in the Oval Office in early October, “they never
questioned whether global warming was a scientifically proven concept.” Ford’s
Trotman recalled that “We did not argue the science with the President. We didn't
think that was a good use of his time or ours. It's generally agreed that the CO2 in the
air has increased in the last decades and that there's cause for concern, and that we
should be doing something."
Institutional Realignments
A breach was opening up in industry ranks which was to bear broader political
implications in the US. On June 8, 1997, the Business Roundtable sponsored full-page
advertisements in the US press signed by 130 CEOs, which argued against mandatory
emissions limitations at the forthcoming Kyoto conference, citing scientific
uncertainties and the high cost of action. It was no accident, however, that the other
80 Business Roundtable members did not endorse the advertisements. Monsanto had
led an unsuccessful effort to draft an alternative text, which acknowledged that
sufficient scientific evidence had accumulated to warrant concern, and that industry
should be constructively engaged in developing precautionary measures. This
dissenting view was brought to President Clinton's attention at the June 1997 meeting
of the President’s Council of Advisers for Science and Technology (PCAST), at
which a report on energy R&D options was presented (Energy Research and
Development Panel, 1997). According to Jon Holdren, Harvard scientist and chair of
the PCAST panel responsible for the report, the President’s awareness of the minority
industry faction had significant political ramifications: “We actually did get the
President off the dime at that meeting. He mobilized an interagency task force, and
started a process which eventually converged on a set of policy recommendations for
A more public effort to coalesce an industry bloc supportive of emission
reductions was led by Eileen Claussen, a former U.S. Assistant Secretary of State for
Environmental Affairs and negotiator at the climate change negotiations, who formed
the Pew Center on Global Climate Change in April 1998. The Pew center provides not
only a channel of policy influence for member companies, but also an organizational
vehicle for securing institutional legitimacy. Thirteen companies joined immediately,
including BP, Toyota, Boeing, Lockheed, Enron, United Technologies, American
Electric Power, Whirlpool, Maytag, and 3M. These companies endorsed a series of
newspaper advertisements stating that they "accept the views of most scientists that
enough is known about the science and environmental impacts of climate change for
us to take actions to address its consequences" (Cushman, 1998). Claussen was
forthright in explaining the benefits of membership: "Joining Pew gives companies
credibility, and credibility means political access and influence". The value of being
perceived as the moderate, constructive voice of industry had been apparent at the
first Conference of the Parties in Berlin in 1995, where the final conference document
reflected the principles contained in a draft provided by the ICCP to the U.S.
delegation (Newell & Paterson, 1998). Ford’s Kaericher also recognized this
potential: “If you move to the front of the class, you have a more credible voice in
helping to shape policy.”
The growth of organizations such as the Pew Center and the BCSE
undermined the GCC’s claim to be the voice of industry on climate. The GCC was
weakened by a series of defections in the post Kyoto period. BP left in late 1997, and
Shell in April 1998, though most US oil companies stayed firmly within the fold. US
automobile manufacturers have remained with the GCC, though their loyalty is
reported to be wavering, and the US administration's proposals to tighten regulations
under the Clean Air Act of 1990 has created a political rift between the oil and auto
industries (Bradsher, 1999). GM joined an initiative of the World Resources Institute
called Safe Climate, Sound Business in 1998, and expressed the position that climate
was an issue of sufficient concern that precautionary action needed to be taken. It is
notable that this step induced disciplinary pressure from GM's erstwhile allies.
Following a hostile response from the Detroit press, competitors, and congressional
allies, GM attempted to clarify that it was still firmly opposed to the Kyoto protocol
(Mastio, 1998).
Individual environmental activists and NGOs have played an active role trying
to broaden the alliance of industries supportive of the Kyoto process. Of particular
note have been the efforts of Jeremy Leggett, formerly of Greenpeace International, to
gain the support of banking and insurance companies. Political tensions between
financial and manufacturing capital are not uncommon concerning other issues such
as trade (Ferguson, 1995) and the strategic exploitation of these divisions can be
considered part of the "war of position". Insurance companies have faced substantial
claims for weather related property damage during the late 1980s and 1990s, which
some have attributed to the effects of climate change (Tucker, 1997). Leggett has been
instrumental in educating insurance companies about the potential risks and has
successfully worked with some of them to take a more active role in the international
climate negotiations (Leggett, 1996; Leggett, 1999).
Economic Adjustment
A reconfiguration of the discursive and institutional dimensions of a hegemonic
system necessarily entails adjustments within the material-economic base of societal
structures. In the latter 1990s, business sectors associated with low carbon products
and technologies have become stronger economically, and, while lacking the
organizational and financial resources of the GCC, have increasingly exerted their
collective voice through industry associations such as the Business Council for
Sustainable Energy (BCSE). The BCSE, which has affiliates in the US and Europe,
represents insulation manufacturers and the fragmented renewable energy sector,
comprising many small companies active in solar and wind energy. Increasingly,
however, it has attracted larger companies engaged in natural gas and electronic
controls, including Honeywell, Enron, and Maytag.
Oil and auto companies have begun to make substantial investments in low
emission technologies, as one component of a strategy of accommodation with the
emerging climate regime. BP-Amoco is now the world's largest producer of solar
photovoltaic panels, with plans to reach $1 billion in sales by 2010, and Shell has also
announced its intention to invest $500 million in PV over five years as part of a new
International Renewable Energy Division (Boyle, 1998). Ford and Daimler-Chrysler
have each invested several hundred million dollars in a fuel cell joint venture with the
Canadian company Ballard, while GM has formed an alliance with Toyota to invest in
a range of technologies. The scale and risk of these investments is one factor driving
the current wave of mergers and alliances, reshaping the economic structure of these
Give the high level of uncertainty concerning policy measures, technological
developments, and competitor reactions, these investments could not yet be justified
on the basis of expected rates of return using conventional capital budgeting
techniques. Nevertheless, companies feel pressure to hedge their bets by investing
modestly in an array of technologies, in order to be in a position to move quickly as
policy measures and markets evolve. In the absence of rational, objective tools for
assessing these investments, discursive and institutional factors tend to play an
important role in corporate decisions. US auto companies still express considerable
pessimism concerning the prospects for low emission vehicles in the US market in the
next 10 to 15 years, but have been nervously eyeing the planned launch by Toyota and
Honda of gas-electric hybrids in the US in 2000. Despite evidence that there are few
first mover advantages, managers responsible for corporate strategy fear a loss of
leadership over the technologies that will become dominant in the early decades of the
third millennium.
In keeping with Tim Wirth’s 1996 promise to business in Geneva, the U.S. has
steered the international negotiations toward flexible, market mechanisms for
implementing greenhouse gas controls. The U.S. insisted on a few key points; the
basket approach to greenhouse gases, which allows some choice over which gases to
focus reduction efforts on; emissions trading, which enables countries with high
mitigation costs to buy carbon credits from other countries where costs might be
lower; the Clean Development Mechanism, which provides funding for emissionreducing projects in developing countries, while awarding the carbon credits to the
industrialized countries and firms investing in the project; calculation of emissions net
of carbon sinks from changes in land use, such as reforestation; and five year budget
periods, possibly with banking among periods, allowing flexibility over emission
reduction trajectories. These measures not only reduce the adjustment burden on
industry, they also create profit opportunities for firms selling relatively low-emission
technologies and products. Industry groups such as the Pew Center, the WBCSD, and
the ICCP have been broadly supportive of these measures. This is the essence of the
emerging grand compromise that will enable the climate regime to move forward.
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