In environmental and energy policy, business interests often play an important role. Businesses have the resources to invest into lobbying for their preferred positions. Environmentalists often complain about the advantages that polluters enjoy in the political process due to their ability to “buy” policies with campaign contributions and lobbying expenditures.
In recent American environmental policy, the most important period of lobbying by business was undoubtedly the 2009 effort to enact a comprehensive federal climate policy. The Waxman-Markey bill (American Clean Energy and Security Act) would have imposed a cap on America’s greenhouse gas emissions and enabled emissions trading, along with a dizzying number of complementary policies. The legislation passed the House but failed in the Senate.
Due to its significance, the 1,400-page legislation was the subject of much business interest. In a recent paper with two Columbia doctoral students, Sung Eun Kim and Joonseok Yang, forthcoming in The Journal of Public Policy, we tried to understand patterns of business lobbying by exploring the behavior of electric utilities. Because the electricity sector is responsible for about 40% of carbon dioxide emissions in America, this sector has a strong interest in the design of any federal climate policy.
We found that both the expected winners (renewables and, to a lesser extent, natural gas) and losers (coal) from federal climate policy lobbied aggressively through trade associations. However, we also uncovered a crucial difference in their individual lobbying efforts: while the expected winners often lobbied individually as companies, the expected losers did not. Specifically, renewable energy and natural gas use were strong predictors of lobbying behavior, whereas coal use was not.
This result is initially surprising, but upon closer inspection it makes a lot of sense. Among electric utilities, coal users had a strong and homogeneous interest in weakening or preventing climate policy. Given this shared interest, collective action through trade associations made a lot more sense than individual lobbying. After all, even the largest electric utility in America could not expect to have much effect on the policy individually.
At the same time, users of renewable energy and natural gas would have gained from constraints on carbon dioxide emissions. However, electric utilities in these winning segments had heterogeneous interests and a keen interest in securing particular policies that would have favored their own technology and business model. Gambling on the possibility that the bill would pass, these electric utilities engaged in individual lobbying to ensure that the final legislation would reflect their interests.
These results have one troubling implication for (the already so depressing) prospects of American climate policy: if expected losers work together to lobby while expected winners focus on pursuing their particular interests, the asymmetry in favor of the opponents of action grows stronger.