Since 2008, G20 leaders have repeatedly committed themselves to conclude WTO negotiations expeditiously and refrain from resorting to protectionism. They have not, however, lived up to these commitments. Trade growth has been anaemic for much of the intervening period, with deadlock in the WTO and reversion to aggressive unilateralism by the United States undermining global trade governance. Current trade tensions primarily involve the major trading powers. Resolving these tensions requires agreement between the main actors and greater focus on addressing the concerns of all WTO members regarding the operation of the organization. The major actors are all members of the G20. The G20 constitutes an important forum for the EU to provide leadership and to use its soft power to address geo-economic conflicts and bolster global trade governance. The chapter reviews the prospects for resolving current trade tensions and revitalizing the multilateral system through a discussion of the measures that could constitute EU trade leadership in the G20.

Chapter 4 focuses on addressing climate change. International action is failing to deliver on slowing greenhouse gas emissions to keep the planet from warming dangerously, yet considerable progress is occurring by some countries, companies, states or provinces, and even cities. The chapter argues that ending the underpricing of fossil fuels is essential to a low-carbon transition. Major economies must lead by removing fossil fuel subsidies and employing carbon taxes and other policies to further reduce the social cost of fossil fuel use, and allocate any resulting revenue to public support for green innovation and key infrastructure investments. Ending the underpricing of fossil fuels in low- and middle-income countries must occur through policies that are compatible with achieving immediate development objectives, such as ending poverty and especially the widespread “energy poverty” in rural areas. Climate policies need also to expand beyond actions by national governments and instead focus on a “bottom-up” strategy that supports and expands initiatives by corporations, local governments and other “subnational” entities that are pushing and innovating low-carbon strategies.

The chapter compares how the G20, the OECD and the IMF addressed fossil fuel subsidies and finds that while the three institutions agreed on the importance of reform of fossil fuel subsidies due to their environmental and economic consequences, they also differed in how they addressed these subsidies. Most notably, the IMF adopted a radical definition of fossil fuel subsidies based on the notion of corrective taxes, which stood out against the more established definition of the OECD. The chapter demonstrates that economisation may lead to diverging framings of the issue in economic terms. Subsequently, the chapter outlines how this divergence was driven by the differences in worldview, policy entrepreneurship and the degree of autonomy of the IO bureaucracy from principals. Yet, the similarities between their worldviews (they agreed on a range of fundamental issues), institutional interaction and overlapping memberships pulled in the direction of convergence between the institutions. Finally, there is a discussion on the consequences of this divergence at the international and domestic levels, while the convergence between the institutions was important for the attention to the issue and the norm of fossil fuel subsidy reform.

This chapter describes the history and track record regarding environmental issues and institutional worldview of respectively the IMF, the G20 and the OECD. Following the 2008–2009 financial crisis the G20 became the global forum for the coordination of economic policy, and the emphasis on economic objectives is visible in its prioritisation of issues and their economic impact. One of the most powerful international institutions, the IMF has a strong track record when it comes to influencing state policy, but has traditionally not paid much attention to environmental protection. Finally, the OECD promotes policies improving the economic and social well-being of people, and since the 1970s it has influenced environmental policy on the global level and within the OECD countries.

This chapter summarises the main findings of the book: international economic institutions address climate issues through economisation, yet there are differences in how exactly this economisation defines the issue at hand, differences mainly shaped by the institutional worldview of the institution and to lesser degrees by the relationship with member states. The differences were mitigated by the interaction between the institutions. The institutions were more influential regarding fossil fuel subsidies than regarding climate finance. This is due to fossil fuel subsidy reform resonating more with domestic actors than climate finance due to its positive fiscal impact (unlike climate finance that constitutes expenditure) and closer fit with neoclassical economics. These findings are discussed in the wider perspective of economic institutions and climate politics, arguing that economisation does not lead to a paradigm shift away from established practices of environmental politics. Furthermore, the economisation of climate finance and fossil fuel subsidy reform does not necessarily entail an overarching paradigm shift within the institutions, which continue with unsustainable practices such as political and economic support to fossil fuel production and consumption.

The G20 has addressed climate finance from the attempt to reach an agreement in 2009 to the more technical working groups that have addressed climate change from an economic perspective. This perspective entails stressing cost effectiveness, the economic consequences of climate change and addressing climate change with economic instruments. Its consequences were most pronounced on the international level and particularly the UNFCCC and the industrialised countries’ commitment to mobilise 100 billion dollars in climate finance, as well as on institutions tasked with providing analysis to the G20 the World Bank, the OECD, the IMF. The consequences on the domestic level are less discernible. The G20 output on climate finance has been shaped by entrepreneurship from Presidencies, membership circles, interaction with the UNFCCC.

The 2009 G20 commitment to reform fossil fuel subsidies has proved to be a catalyst for the efforts to promote such reform. The chapter outlines the factors shaping this commitment as well as subsequent efforts to ensure that member states lived up to this commitment (the policy entrepreneurship of the US government, the G20 being an informal institution) and the consequences of the commitment on the international level. The commitment catalysed action in a range of other institutions including the World Bank, the OECD, the International Energy Agency and the Asia-Pacific Partnership) and the domestic level (in some states the commitment led to discussion of whether fossil fuels were subsidised or not).

All three institutions have framed climate finance in economic terms and stressed normative ideas such as efficiency. They have also linked climate finance to issues such as fossil fuel subsidies, carbon pricing, risk and investment to a larger degree than environmental institutions. Despite the overarching convergence between the institutions around addressing climate finance as an economic issue rather than an issue of environmental protection or global justice, the institutions also diverged on climate finance to some degree. The divergence is most notable regarding whether carbon pricing should constitute a source of climate finance, and to some extent also regarding how equity should be prioritised. Subsequently, this chapter explains this alignment in terms of economic worldviews and interaction pulling towards convergence. Divergence between the institutions has been driven less by fundamental differences in worldviews (e.g. between the OECD Development Directorate and the IMF) and the degree of autonomy from member states. Finally, the consequences of the output are described, identifying more significant (cognitive) influences at the international level than the domestic level, but also incentive-based influences from the OECD and the G20.

Fossil fuel subsidy reform can contribute to both climate change and sustainable development goals. However, subsidies to fossil fuel consumption and production continue to persist in developed and developing countries. International cooperation can play an important role in promoting or hindering reform. This chapter examines the coherence of international governance of fossil fuel subsidy reform. The chapter discusses the emergence of a core norm of fossil fuel subsidy reform, the distribution of membership across international institutions, and the various governance functions fulfilled by the international institutions active in this area. To further assess coherence, the chapter focuses on a subset of three international coalitions active in the area of fossil fuel subsidy reform: the Group of 20 (G20), the Asia-Pacific Economic Cooperation (APEC), and the Friends of Fossil Fuel Subsidy Reform. The chapter identifies an emerging division of labour, with different institutions taking charge of various governance functions. Where activities do overlap, they generally appear to reinforce one another. With respect to the G20, APEC, and the Friends of Fossil Fuel Subsidy Reform, the high level of consistency appears to be the result of planned coordination, overlapping memberships, as well as a brokering role taken on by some countries. test

This chapter asks how do international institutions adjust to changes in the number, diversity, and relative power of system members? It combines the Weberian concept of social closure and the idea of club goods to argue that, as IOs come under pressure to open up to new and more heterogenous members, the logic of closure creates incentives for incumbent members to create institutional designs that preserve their privileges. In the face of membership diversity, rules that promote procedural equality—i.e., consensus and majority voting rules—challenge status quo interests. In response, incumbents pursue designs that preserve clubs of like-minded actors through assimilative, hierarchical or exclusive multilateralism. The chapter discusses how self-determination, the principled basis for membership expansion, serves as a rule of closure. Then it considers the cases of the United Nations at its founding, the United Nations during its main period of expansion under demands for a New International Economic Order, and the G20, which many have pointed to as a new model of inclusive governance. Each case shows how expanding institutional membership may improve formal equality while triggering a decrease in procedural equality, creating institutional arrangements in which all are equal, but some are more equal than others.

This chapter discusses the contribution of BIS research to the shift in the way financial stability issues have been looked at before and after the great financial crisis of 2007–9. It also considers the policy implications for the post-crisis reforms. The 1997–8 Asian crisis was an important turning point, focusing BIS research on the endogenous causes of financial instability and thus on the resilience and the risks of the financial system as a whole. From the late 1990s, the BIS started advocating a macroprudential approach to financial stability, including the adoption of countercyclical macroprudential policies. These ideas, while being shared by some academics and central banks, were largely ignored in policy circles, including in the Basel Committee on Banking Supervision. The chapter argues that the great financial crisis of 2007–9 catapulted these same ideas to the top of the reform agenda. Work done previously by the BIS and others, i.a. on the issue of countercyclical capital buffers, could be leveraged and find its way on the reform agenda pushed by the Financial Stability Board and the G20. The ‘measured contrarianism‘ of the BIS in this area thus added real value.