The credibility of policy-making institutions and regulatory bodies is likely to influence the decision-making of affected entities, such as businesses or subnational governments. Perceptions of low credibility may delay compliance or decisions to invest in low-carbon technology or infrastructure. Political leaders can signal their level of commitment to climate action through a variety of legal, policy and institutional mechanisms. Credible policies and institutions will be key to building trust in and supporting improved commitments through the international process following the Paris Agreement (Averchenkova & Bassi, 2016). Kydland and Prescott (1977: 487) define commitment devices as ‘institutional arrangements that make it a difficult and time-consuming process to change the policy rules in all but emergency situations’.
While economy-wide framework legislation is often the aspiration, this may not be politically feasible, and is not a guarantee of reaching commitments. Poor rule of law may mean laws are flouted or easily overturned. What is most important is that the signal is credible; that there exist adequate institutional capacity and well-designed policies that balance ambition and equity while carefully considering feedback effects; and that supportive coalitions are engaged in the process.
The literature provides complementary definitions of credibility. In assessing how private sectors may perceive credibility, Brunner et al. (2012) propose that, if the expected gains of compliance outweigh the expected gains from deviating, the policy is perceived as credible. A government’s track record for making good on long-term commitments is one reputational measure. However, commitment devices for climate policy must be ‘heteronomous’: they must provide future governments with sufficient incentives (or disincentives) to maintain the commitment (ibid.). Setting long-term targets for carbon reductions with near-term incentives is an important element of a carbon mitigation commitment device as it can frame choices around energy options, land-use planning, transport and other sectors, to guide these sectors down a low-carbon path. A transparent governance structure for setting, implementing and updating carbon policy, including carbon budgeting, and the redistribution of revenues to consumers can enhance visibility and public scrutiny, raising the political costs of backsliding.
Averchenkova and Bassi (2016) evaluate the credibility of countries’ NDCs using a framework of 1) rules and procedures, 2) players and organisations, 3) norms and public opinion and 4) past performance in implementing international commitments and domestic policy. While not using these criteria to rank countries, they sort their findings into three tiers, finding mostly G20 countries in the first tier, with the notable exceptions of the US and Australia. Within the first category, the authors assess whether the country has a coherent and comprehensive legislation and policy framework and whether decision-making is transparent, inclusive and effective, with sufficient constraints to limit policy reversal. In the second category, they consider whether countries have dedicated public bodies with supporting mechanisms, as well supportive private actors. In the third, they assess whether the country has a history of engaging actively at the international level on environmental issues and there is evidence of domestic public opinion support for climate action. Finally, the paper assesses past UNFCCC performance and whether the country has a history of reversing past policies. This framework provides a helpful, though simplified, approach. Notably, the level of influence of different actors is key, and will depend on the institutional context for implementation. These factors are also dynamic, with new political leadership, climate-related events, economic shocks and shifts in public opinion all potentially shifting the likelihood of timely implementation.
Developed and developing nations are enacting novel legal frameworks; creating new institutions or empowering existing ones; and reinterpreting existing laws to enable greater credibility around efforts to meet national climate change goals. Here we list some examples: these are not intended to suggest best practices but rather give insight into how countries are creating commitment devices within their institutional and political contexts, in chronological order.
The UK’s 2008 Climate Change Act was the world’s first long-term, legally binding framework law to address climate change. It commits the UK to reducing its carbon emissions by 80% from 1990 levels by 2050. The law also provides a five-year carbon budget that is guided by the Committee on Climate Change to advise on cost-effective, long-term solutions. This independent committee monitors progress, informs Parliament and sets long-term goals that serve as policy signals to markets for low-carbon investment decisions. Commitment is elevated by a legal requirement for government to regularly obtain and respond to the committee’s advice (Brunner et al., 2012). These signals can help accelerate the scale and pace of transformative change while protecting against backsliding (Global Commission on the Economy and Climate, 2014).
In 2012, Mexico enacted the General Law on Climate Change: a comprehensive, framework climate law, which includes GHG emission targets as well as renewable energy goals and incentives. However, the targets are voluntary and conditional on international support. The law does mandate GHG emissions reporting across sectors and creates a public emissions registry. It also establishes an emissions trading system, an Inter-Ministerial Commission on Climate Change with representation across ministries and a climate change fund to collect and channel climate finance. The National Institute of Ecology’s mandate is expanded to include technical and policy work on climate change and it, along with the Commission, federal legislators and state and municipal governments form the National Climate Change System to coordinate and implement activities across national, state and local government (LSE, 2012). Encouragingly, the law passed easily, winning support from both sides (McCain, 2012). The success of implementation will rest on the ability of new institutional arrangements to coordinate effectively, manage finance, engage the public and stakeholders in implementation and maintain political support to ramp up ambition in future policies.
Kenya enacted the Climate Change Act in May 2016, after several years of political negotiation, including a presidential veto in 2013. The Act applies across the economy and subnational levels with the overall intent of providing mechanisms to build resilience and low-carbon development. It seeks to establish important functions to ensure coherence and to mainstream climate change considerations into decision-making at all levels. It provides incentives and obligations for private sector contributions to low-carbon development, prioritise civil society capacity-building and participation as well as gender equity and promotes technology transfer, mobilisation and transparent management of climate finance. To facilitate coherence and implementation, it establishes a National Climate Change Council, chaired by the president with cabinet secretaries representing the environment, economic planning, treasury and energy, as well as representation from civil society, the private sector, marginalised communities and academia. It also establishes a Climate Change Directorate to implement the law, enforce compliance and coordinate activities (Republic of Kenya, 2016).
Box 3: Legislative ‘pre-commitment strategies’ to prevent backsliding in the US
In the context of the US, environmental law scholar Richard Lazarus (2010) argues that ‘pre-commitment strategies’ could be embedded within the law itself to prevent lawmakers in the near term from undoing legislation meant to benefit future generations. Emphasising the fragmentation of authorities (e.g. committees and subcommittees within Congress) and a structural bias for incrementalism, he notes that this is especially the case for environmental laws that have redistributive impacts. These institutional design features, Lazarus argues, should also be balanced with provisions to allow for flexibility to adapt to new information. Drawing from a range of historical precedents, the author recommends various asymmetric mechanisms that would favour those who are seeking to protect and strengthen law but not repeal it, including:
- Requirements for independent analysis of any amendment designed to weaken the law’s goals or using revenues to support the law and insulate it from the congressional appropriations process;
- Insulating appointees to chair climate commissions or head new departments through term length and protections against removal;
- Interagency consultation requirements to build capacity for implementation and ensure transparency and accountability (making this public record so that citizens may file lawsuits if laws are not enforced);
- Creating a new expert governmental entity (similar to UK’s Committee on Climate Change) to oversee implementation;
- Special participatory rights for historically disempowered groups in implementation processes;
- Mechanisms to ensure the executive branch cannot derail implementation, such as separation of policy goals and implementation strategies between the congressional and executive branch; and
- Limiting certain types of judicial review and promoting others.
When national laws are not in place, subnational instruments may become tenuous under shifting economic and political conditions. A study of the durability of subnational cap-and-trade regimes in the US and Canada found that more than half the states and three-quarters of the provinces had abandoned their commitments to regional cap-and-trade regimes (Rabe, 2015). In the Western Climate Initiative, only California remains a partner with the four Canadian provinces, only two of which have enacted regulations. The most politically durable has been the Regional Greenhouse Gas Initiative (RGGI) in the north-eastern US. This was more successful in part because the policy was designed in ways that developed new constituencies; others were more vulnerable to political shifts, particularly at the gubernatorial level. By implementing a full auction of permits, RGGI created revenue streams that could be invested in clean energy programmes or social welfare, or redistributed to citizens in some form ‒ and how the revenue is used is left to the state’s discretion.
The credibility of commitments will also depend on how effective civil society is in using domestic accountability mechanisms to hold governments accountable, such as courts and tribunals. This will depend on judicial costs, duration of court procedures, independence and impartiality of the judiciary and civil society capacity ‒ including the ability to access relevant information. In 2015, The Hague District Court in the Netherlands provided an historic precedent in Urgenda Foundation vs. The State of the Netherlands when it ruled that the government’s current emissions reduction trajectory was below the norm for a country and declared that it must increase reductions to 25% below 1990 levels. This was unprecedented: it represented the first successful climate suit founded in tort law. Previously, this had been attempted in the US against polluting energy industries but the courts had ruled that the executive or legislative branches had to determine the issue (Cox, 2015). To date, this approach has not been tested in a developing country context, even though there is clearly scope for doing so.
- (Intended) Nationally Determined Contributions (INDCs) are the communications submitted by parties to the UNFCCC leading up to and following COP21 in Paris to facilitate the ‘clarity, transparency, and understanding’ of their national contributions towards meeting a global climate agreement.
- Averchenkova, A. & Bassi, S, (2016). Beyond the targets: assessing the political credibility of pledges for the Paris agreement (Policy Brief). Grantham Research Institute on Climate Change and the Environment and Centre for Climate Change Economics and Policy.
- Brunner, S., Flachsland, C. & Marschinski, R. (2012). Credible commitment in climate policy. Climate Policy, 12(2): 255–71.
- Cox, R., (2015). A climate change litigation precedent: Urgenda Foundation v. The State of The Netherland (Working Paper 79). Waterloo: Center for International Governance Innovation.
- Global Commission on the Economy and Climate (2014). Better growth, better climate: The new climate economy report. London: Global Commission on the Economy and Climate.
- Kydland, F. & Prescott, E. C. (1977). Rules rather than discretion: The inconsistency of optimal plans. Journal of Political Economy, 85(3), 473–91.
- Lazarus, R. (2010). Super wicked problems and climate change: Restraining the present to liberate the future. Environmental Law Reporter, 40.
- LSE Grantham Research Institute on Climate Change and the Environment, (2012, updated May 7, 2014) ‘Mexico General Law on Climate Change’. LSE
- McCain, C. (2012). Mexico’s historic climate law: An analysis. Washington, DC: Environmental Defense Fund.
- Rabe, B. (2015). The durability of carbon cap-and-trade policy. Governance: An International Journal of Policy, Administration, and Institutions, 29,1.
- Republic of Kenya. (2016). The Climate Change Act, 2016. Kenya Gazette Supplement No. 68.