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.

WTO rules must extend beyond the links between trade and climate change to strengthen the links between trade and other economic, environmental, and social dimensions of sustainable development., including the global crisis in biodiversity. New rules are needed to free trade in environmental goods and services and to discipline fisheries subsidies and fossil fuel subsidies while promoting sustainable energy.

This chapter repositions the debate on dual pricing as part of the bigger challenge of combating climate change. It addresses dual pricing from the perspective of the broader task of reforming environmentally harmful fossil fuel subsidies. The chapter moves beyond the potentially discriminatory nature of dual pricing to lay out options for disciplining dual-pricing practices in the WTO system in the grounds of their negative environmental impact. After providing some background, the chapter explores two main avenues for dealing with dual pricing: it first discusses what possibilities exist under current WTO rules, and then it explores what action the WTO can take beyond its current legal toolkit in the wider context of fossil fuel subsidy reform. The key argument is that the WTO can be a crucial actor in eliminating dual-pricing policies and can facilitate and significantly contribute to fossil fuel subsidy reform.

Chapter 7 examines both fiscal barriers and incentives to corporate climate action. Barriers such as fossil fuel subsidies and relative political inaction on that issue (at the World Trade Organization and other fora) and on the issue of carbon taxes are assessed. In contrast, the picture at the institutional investor level looks more active, with investors becoming increasingly concerned about the risks of climate change to fiscal stability. Issues of stranded assets, divestment, short-termism and financial regulatory developments are covered. In addition, some limited climate litigation initiated by investors (and its mixed results) is assessed. Varying jurisdictional approaches to sustainable investing from the SEC in the United States to the Bank of England in the United Kingdom are highlighted. Recent statements by Lord Sales at the Anglo-Australasian Law Society, as well as by the institutional investor BlackRock, in 2019 are indicative of a changing approach to climate investing. Regulatory developments requiring climate risk disclosure by the Department for Works and Pension, guidance by the Financial Conduct Authority and the focus on ESG investing in the EU, all signal the slow greening of capital in the context of climate change.

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.

The IMF addressed fossil fuel subsidies along two strands, both recently increasing in importance. The first strand focused on the lack of a carbon price and on solving this problem from the perspective of neoclassical economics, the second on countries which had had fiscal problems exacerbated by fossil fuel subsidies, and which were induced to reform these subsidies. The IMF’s institutional worldview based on neoclassical economics was the key factor shaping its approach. The second strand had considerable influence on fossil fuel subsidy reform in countries under IMF programs such as Indonesia, whereas the first strand had an impact on the public debate in countries including the UK and Denmark.

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 introduction outlines how international economic institutions increasingly are involved in climate politics, why this involvement matters and why it makes sense to describe it in terms of economisation. Specifically, the chapter outlines the concept of economisation and how it consists of framing an issue as an economic issue as well as enabling economic institutions to address the issue. The book uses economisation to understand the G20, OECD and IMF’s respective output regarding fossil fuel subsidies and climate finance respectively, as well as the factors that shape this output and the consequences of the output at the international and domestic levels. Subsequently, the chapter outlines the relevant literature on climate governance and international institutions/organisations, and identifies the contribution of the book to these bodies of literature. Next, the chapter explains why it makes sense to select the cases of climate finance and fossil fuel subsidies, which are both characterised by economic institution involvement, while the relationship between their impact on state budgets and on the environment pulls in opposite directions. The section proceeds with why the selection of the G20, OECD and IMF is academically relevant. The following section outlines the use of data sources and methods in the analysis.

Introduces fossil fuel subsidies and the various attempts to address them on the domestic and particularly the international level, attempts that have taken off during the last ten years. The chapter outlines the different definitions of fossil fuel subsidies, definitions that have far-reaching political consequences, followed by an overview of the estimates of the size and scope of existing fossil fuel subsidies. Subsequently, the chapter discusses the domestic politics of fossil fuel subsidies and their reform, followed by an overview of the efforts to address fossil fuel subsidies of other institutions than the ones studied in this book, including the World Bank, the IEA, and non-state actors.

The OECD has a long institutional history of defining and providing knowledge about fossil fuel subsidies. While the G20 commitment to reform fossil fuel subsidies lifted OECD efforts to address fossil fuel subsidies to a new level, the institutional worldview of the OECD bureaucracy (influenced by the experience of addressing other kinds of subsidies) shaped how it was addressed. The OECD has been important in providing ideas, knowledge and possibilities for learning about fossil fuel subsidies among states, and influenced how the G20 and other international institutions addressed fossil fuel subsidies.

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).