The Globalization of Carbon Trading: Transnational Business Coalitions in Climate Politics

Over the last decade, carbon trading has emerged as the policy instrument of choice in the industrialized world to address global climate change. This paper argues that a transnational business coalition, representing mostly energy firms and energy-intensive manufacturers, actively promoted the global rise of carbon trading. In this process, business could draw on the support of government allies and business-oriented environmental groups, particularly in the UK and the US. Alongside its allies, the coalition had pivotal influence in the internationalization of carbon trading through the Kyoto Protocol, in the U-turn of the EU from sceptic to frontrunner on carbon trading and in the re-import of carbon trading to the US. While business could not prevent mandatory emission controls, it could critically affect the regulatory style of climate policy in favor of low-cost, market-based options.