The Waning of Neoliberalism - Global Climate Governance in Transition

COP 26 in Glasgow has just ended. The number added to this conference, twenty-six, is a sign that United Nations policies under the Framework Convention on Climate Change (UNFCCC) have come a long way since COP 1 in Berlin 1995. And there seems to be no foreseeable end to these negotiations. While global warming is speeding up everywhere, climate policies continue to move slowly. To this point, there is no measurable success of any of these international negotiations. The record of greenhouse gas (GHG) emissions in the last thirty years shows a growing trend from year to year, interrupted by two little troughs that occurred in 2009 and 2020. The first was caused by the most recent global economic crisis, the latter came during the COVID-19 pandemic.

For many observers this is a frustrating record. The number of people doubting the effectiveness of UN negotiations seems to be growing. But what exactly is the reason for this prolonged and continuous failure? I will argue in the following that UN climate policies, from their institutional beginnings in the late 1980s, came under the influence of neoliberal ideas about how to tackle climate change; that these ideas have proven ineffective; that we are witnessing the waning of neoliberalism; and that the celebrated Paris Agreement 2015 was a clear symptom of this changing political atmosphere. However, it is doubtful whether this change is for the better. It is equally doubtful whether the prospects for solving the mounting problem of climate change by means of an international agreement on emission reductions have improved since Paris.

The origins of neoliberal climate governance

The origins of neoliberal climate governance are going all the way back to the late 1980s. They coincided with the end of the Cold War, the collapse of the Soviet Union, and the rise of the Chinese economy. The latter has been characterized as a peculiar form of neoliberalization, pushed forward under the undisputed leadership of the People’s Republic Communist Party. Democracy was shot down in the Tiananmen Square Massacre 1989. That, however, wasn’t the end of history as China’s unhampered ascent to economic glory with the Communist Party still in control would prove.

From the point of view of 1989, this was of course unforeseeable. The West had won the Cold War, and the narrative that Reaganomics had outperformed real-existing socialism was adopted beyond the circles of neoconservatism. China’s transition to democracy appeared to be a matter of time in the belief system of neoliberal market economics, where democracy would follow free markets, just like back in the day, some believed that the rain would follow the plow.[1] In this atmosphere, ‘deregulation’ became a synonym for ‘freedom’. But it also implied a weakening of state power to control globally expanding economic forces. That expansion seemed desirable not only economically, but also politically, if only to support former Eastern Bloc countries and successor states of the Soviet Union in transforming their economic and political systems. Neither the attraction of neoliberal policies, nor their longevity is easily explained without the unexpected constellation that arose when the Cold War ended.

Why did the only surviving superpower even decide to get involved in UN climate policies? The question may look anachronistic, as disengagement with the UN is a more recent habit of US governments. However, we need not forget that the critical years for building an institutional framework for UN climate policies were 1987 to 1992, which fall into a prolonged period of Republican administrations between 1981 and 1992. The first Reagan administration in particular showed very little interest in climate change and was concerned that unilateral action on climate protection would interfere with the recovery of the US economy from inflation and unemployment (Oreskes, Conway, and Shindell 2008: 133, 135–136). But the second Reagan administration adopted a much more constructive approach.

The role of Republican presidents in the childhood years of global climate governance is more often than not neglected (Mauelshagen and López-Rivera 2020: 319–320). Standard narratives that put James Hanson’s congressional testimonies in 1986 and 1987 center stage, overlook that the political pressure emanating from those hearings would never fully explain US climate policies in that era. The Republicans of our day would easily shake it off anyway — which hints at an important difference: Neither Reagan nor George H.W. Bush had argued against science, well aware that American prosperity and Cold War superiority rested on its shoulders.

The recognition of climate science was a principle guiding early neoliberal policies by the Reagan and Bush administrations. What characterizes these policies as neoliberal, however, were the conclusions they drew from the fact that climate change was real and threatening. First of all, to avoid the dangers of unilateral measures imposed on the national economy and make emission reductions acceptable, an international agreement was needed that would balance the costs of emission reductions among all the economies of major emitters. The successful negotiations over the Montreal Protocol (1987), in which the second Reagan administration had played as much a constructive role as in the institutional setup of the IPCC in 1988, nurtured the expectation that an international agreement on climate change mitigation was within reach (Wampler 2015). Yet, the Bush administration didn’t yield to the idea of binding emission reductions in Rio, stating that the American way of life wasn’t up for negotiation. Bush declared that his administration wouldn’t risk putting national prosperity in harm’s way by an agreement that adds concrete numbers to verbal declarations of intent. Instead, markets were supposed to do the job. Bush had signed an amendment to the Clean Air Act already in 1990, which introduced the first cap-and-trade system (Mast 2019: 83). Thus, emission trade became a trademark of neoliberal climate policies.

The magic of NDCs

To cut a long story short, the unresolved problem of a binding agreement on emission reductions continued to haunt international climate negotiations and rendered the UNFCCC ineffective with regard to its main purpose—mitigation of climate change. Both the Kyoto and post-Kyoto process failed, making 23 years of international negotiations between 1992 and Paris 2015 under the UNFCCC look like a waste of precious time. Several emission trade systems have been tried—none delivered. However, it doesn’t require extraordinary economic skill to understand why the missing agenda on emission reductions per country undermines the effectiveness of carbon trade markets. Only legally binding reductions would have produced the scarcity necessary to turn emissions into a commodity. Clearly, without the backing of national governments, market instruments were doomed to fail. Thus, market failure and state failure were intertwined. Both define the legacy of neoliberalism.

With time, negotiations under the UNFCCC were complicated by the ascent of China to leading the world ranking in total GHG emissions (in 2005). Quite obviously, China’s spot in the list of developing countries with no obligations to reduce emissions was impossible to maintain for much longer. Other rapidly growing economies, such as Brazil and India, raised the same question. However, these growing economies rejected being treated as equal to traditional industrial nations, at least with regard to their historical responsibility—and quite understandably so. Several solutions to the problem of inequality were proposed and negotiated, based on calculations by scientists in consideration of the +2°C target, historical emissions, and their implications for global justice. But to no avail.

The lock-in that international climate policies had reached with Copenhagen 2009, at the latest, was finally broken in Paris 2015. Nationally Determined Contributions (NDCs) provided a solution to the conundrum of emission reductions, but this came at a high price. Leaving the budgetary approach behind widened the gap between science and climate change governance. This is in line with an atmosphere that has generally become more skeptical towards science, sometimes even hostile – not only in the US, but far beyond. On a more positive note, the emerging regime of global climate governance has also opened up to agency below the state level, which may, to some degree, compensate for the aforementioned state failure. But this has changed little if anything about the crucial role of nation states and their representatives in international negotiations. Describing the new regime as polycentric, as if the structure of global climate governance would already match the ideas that Elinor Ostrom had in mind when she introduced this neologism (Ostrom 2010), is in danger of idealizing the current state of affairs. A lot of realism is needed for an analysis unbiased by optimism or, worse, wishful thinking.

NDCs have detached political action on climate change from science in more than one way. NDCs disregard a mismatch between their total and the requirements defined by the +1.5° / 2°C targets of the Paris Agreement. Moreover, historical responsibilities have been taken out of the equation. These shortcomings make it seem illogical that the Paris Agreement was signed in the first place. Looking for answers it is, of course, impossible to generalize across all members of the UNFCCC. But if we consider some of the key players and main contestants in recent COPs, it is noteworthy that the USA, China, India and Russia all seemed more than comfortable with paying lip service to the idea of national sovereignty. It looks like this was a crucial part of the NDC’s magic spell. It helped India’s and China’s governments dispel any suspicion that agreeing to reduce emissions was due to pressure from the US or ‘Western science’.

While the sensitivities of emerging economies from the ‘Global South’ about their national sovereignty are historically rooted in colonial experiences, the attraction of the NDC rhetoric for the governments of Western democracies is less clear. However, the anti-globalist atmosphere created by the subprime mortgage crisis and the following global financial crisis may help explaining it. During the crisis, neoconservatives learned how to turn anti-globalism against global governance by appealing to nationalist sentiments. This is how they argued against international agreements on regulating global financial markets. The same arguments were adopted to discredit global climate governance. 

From neoliberalism to nationalism

In the financial crisis, nationalist slogans — such as ‘We want our country back’ — made it clear to neoconservatives that neoliberal narratives had been rendered unpopular. To survive in this atmosphere, and in order to protect the status quo of de- or non-regulation in global affairs, they started to replace them by nationalist appeals.

Have we become witnesses of the waning of neoliberalism and the emergence of a post-neoliberal political regime? Quite possibly. This insight, however, should come with a warning against the temptation to celebrate the end of neoliberalism. Collective fears of economic demise after 2007 have revived the spectre of nationalism, which has now befallen too many democracies in the West. Fear is what gave birth to it in the first place. This atmosphere was sensed and capitalized upon by Brexiteers and Donald Trump in 2016.

The world may be different in 2021. But how much different? If political action in international affairs becomes increasingly obsessed with the idea of protecting national sovereignty little is to be expected from UN negotiations — no matter whether they are about tax havens, regulating financial markets, or mitigating climate change. However, none of the walls that can be erected by nationalism will withstand climate change. Some people may want their country back. But it is sheer madness to believe this can be achieved by pretending there is no outside world to deal with. World leaders everywhere should resolutely oppose this delusion. After all, there is a planet to lose.

[1] ‘The Rain follows the Plow’ was a slogan used to attract farmers to settle the American and Canadian prairies before the Dust Bowl years, 1934, 1936 and 1939-1940.