Among other things, I have spent quite some time in the past few days thinking about the problem of empowering clean energy producers in politics. A major problem in climate and energy policy is that a public policy (such as a renewable energy standard) does not induce investments in clean energy production and conservation unless investors expect that it will remain intact for years to come. This is only possible, however, if the public policy remains popular among the people and influential interest groups.
This basic dilemma raises a question that is, in my view, one of the most fundamental in all of modern social science: how should public policies designed to ensure that they will enjoy a long and prosperous life? If we can answer this question, then we can, at the very least, avoid wasting precious opportunities to create a sustainable energy transition just because we did not understand the political economy of clean energy policy.
The answer to this question is by no means obvious. One seemingly plausible answer is that public policies should maximize cost-effectiveness or be broadly popular at the time they are enacted.
But this answer is incorrect. In politics, influence is often concentrated. Even if a policy is cost-effective, it may be costly to influential opponents, such as coal and oil companies. And it may have few vigorous defenders, because nobody really profits from it a lot. Concentrated costs and diffused benefits undermine the cost-effectiveness criterion. They also render popularity, however measured, a questionable measure of robustness in the long run.
Would it be enough to pass the best policy subject to political feasibility (whatever that means)? This is perhaps the most common way that policy analysts incorporate politics into their models. However, it is also not a very good answer. Political feasibility can perhaps tell us whether a policy can be passed now, but among those policies that are politically feasible, it does not tell which ones will survive in the future. It is rather pointless to triumphantly pass a policy that will be repealed the next day.
Analyzing this question is difficult because it will, I suspect, involve identifying positive feedback loops. By creating a public policy for clean energy, a policymaker is essentially creating her own green constituencies for the future. In Denmark, wind energy policies emphasized local ownership and thus created intense public support for continued support. In Germany, wind and solar equipment manufacturers are a powerful political force. Heck, even in the United States, clean energy producers have in recent years greatly increased their lobbying expenditures.
Of course, such public policies may also intensify the opposition to clean energy (thanks to Chris Marcoux for emphasizing this point). If proponents of dirty energy recognize it as potentially empowering clean energy producers, they may work even harder to undermine it than otherwise. So passing a truly robust public policy may well be particularly difficult.
At this point, I do not have a really good answer to this (If I did, I doubt I would have the time to write a blog). But I am nonetheless writing an academic paper on the topic. In that paper, entitled “A Political Rationale For Renewable Energy Standards,” I use game theory to identify the circumstances in which a renewable energy standard can help mobilize green constituencies. However, the model is very stylized and intended to provide a foundation for analyzing this question rather than answering it in any particular context.
The paper is not ready for prime time, so I will not publish it here or on my website yet. But if you are interested in seeing what I’ve been doing, send me a message and I’ll send you a draft.