coalition between the associate members would
enable greater aggregate political capital, which
could be leveraged to bring about modifications
to the IEA’s voting system. This stalemate is the
context in which the questions of new institutional creation or formalised partnerships have
arisen.
Case study 2: IRENA
The literature is unclear on the process by which
states form new international institutions. This is
made more complex as institutional formation
often runs in parallel to diverging from existing
institutions. What is clear is that new organisations are difficult to establish, especially as new
institutions sometimes perform overlapping
functions with those in existence, leading to
fragmentation. Further, new institutions have
high start-up costs, which can be avoided by
simply working within, and reforming, existing
organisations.
The formation of IRENA in 2009 can help
probe these questions. IRENA was instigated by
Germany, Spain and Denmark to balance the
IEA’s support for fossil fuels and nuclear power,
in favour of greater support for renewable technologies. By forming a coalition of the willing
(or coalition of dissatisfied states), rather than a
bland consensus, the Germany-led coalition
gradually grew in membership to become
IRENA. In a broad sense, states chose to join
during the formation stage to influence the
institutional structure and objectives. Many
governments had specific and unique drivers: the
Obama administration, for example, viewed
IRENA as a timely way to demonstrate a different approach to carbon options from that of
the Bush administration.
It is too early to determine if IRENA has the
teeth to achieve its goals. However, its formation
represents a relatively unique departure from the
crisis catalyst that drove the formation of the UN
and the Bretton Woods institutions, one which
may be difficult to repeat. The formation of
IRENA as an entity with its own governing
structures differs to the formation of the
International Partnership for Energy Efficiency
Cooperation (IPEEC). Formed around the same
time as IRENA, the eventual nesting of IPEEC
within the IEA again illustrates that the formation
of IRENA is relatively unique. It could be that
the costs associated with institutional reform of
the IEA outweighed those of institutional creation, leading to the formation of IRENA as an
entity within its own right.
Case study 3: Carbon trading
Unilateral action can play a catalytic role in the
development of an international or multilateral
response. This interplay between unilateral and
multilateral responses is clearly demonstrated in
the parallel systems of the UK and EU emissions
trading systems (ETS). The UK was able to
implement carbon trading faster by going it
alone, or unilateral action, but then extended that
knowledge and expertise to the collaborative and
multilateral approach of the EU ETS. This catalytic effect can also be observed in the recent
proposal by the Climate Leadership Council’s
carbon tax proposal, which included a proposed
border adjustment tax:
Border adjustments for the carbon content of both
imports and exports would protect American
competitiveness and punish freeriding by other
nations, encouraging them to adopt carbon pricing
of their own.
The merits of this strategy are debatable.
However, the intention is clear: by taking unilateral action a future interlinked carbon pricing
system could develop, achieved in the first
instance without multilateral cooperation. Such a
unilateral decision by the USA would have farreaching implications on trade and hence on
global energy governance.
While the border adjustment tax could, in
theory, be implemented more swiftly, the
downside would likely be a trade war. While the
border adjustment tax is not technically an
import tariff, it is unlikely to comply with WTO
rules. Even if it did, other countries would likely
start to impose similar border adjustment taxes to
protect their exporting industries and hence a
696
W. Jigang and P. Webb
enable greater aggregate political capital, which
could be leveraged to bring about modifications
to the IEA’s voting system. This stalemate is the
context in which the questions of new institutional creation or formalised partnerships have
arisen.
Case study 2: IRENA
The literature is unclear on the process by which
states form new international institutions. This is
made more complex as institutional formation
often runs in parallel to diverging from existing
institutions. What is clear is that new organisations are difficult to establish, especially as new
institutions sometimes perform overlapping
functions with those in existence, leading to
fragmentation. Further, new institutions have
high start-up costs, which can be avoided by
simply working within, and reforming, existing
organisations.
The formation of IRENA in 2009 can help
probe these questions. IRENA was instigated by
Germany, Spain and Denmark to balance the
IEA’s support for fossil fuels and nuclear power,
in favour of greater support for renewable technologies. By forming a coalition of the willing
(or coalition of dissatisfied states), rather than a
bland consensus, the Germany-led coalition
gradually grew in membership to become
IRENA. In a broad sense, states chose to join
during the formation stage to influence the
institutional structure and objectives. Many
governments had specific and unique drivers: the
Obama administration, for example, viewed
IRENA as a timely way to demonstrate a different approach to carbon options from that of
the Bush administration.
It is too early to determine if IRENA has the
teeth to achieve its goals. However, its formation
represents a relatively unique departure from the
crisis catalyst that drove the formation of the UN
and the Bretton Woods institutions, one which
may be difficult to repeat. The formation of
IRENA as an entity with its own governing
structures differs to the formation of the
International Partnership for Energy Efficiency
Cooperation (IPEEC). Formed around the same
time as IRENA, the eventual nesting of IPEEC
within the IEA again illustrates that the formation
of IRENA is relatively unique. It could be that
the costs associated with institutional reform of
the IEA outweighed those of institutional creation, leading to the formation of IRENA as an
entity within its own right.
Case study 3: Carbon trading
Unilateral action can play a catalytic role in the
development of an international or multilateral
response. This interplay between unilateral and
multilateral responses is clearly demonstrated in
the parallel systems of the UK and EU emissions
trading systems (ETS). The UK was able to
implement carbon trading faster by going it
alone, or unilateral action, but then extended that
knowledge and expertise to the collaborative and
multilateral approach of the EU ETS. This catalytic effect can also be observed in the recent
proposal by the Climate Leadership Council’s
carbon tax proposal, which included a proposed
border adjustment tax:
Border adjustments for the carbon content of both
imports and exports would protect American
competitiveness and punish freeriding by other
nations, encouraging them to adopt carbon pricing
of their own.
The merits of this strategy are debatable.
However, the intention is clear: by taking unilateral action a future interlinked carbon pricing
system could develop, achieved in the first
instance without multilateral cooperation. Such a
unilateral decision by the USA would have farreaching implications on trade and hence on
global energy governance.
While the border adjustment tax could, in
theory, be implemented more swiftly, the
downside would likely be a trade war. While the
border adjustment tax is not technically an
import tariff, it is unlikely to comply with WTO
rules. Even if it did, other countries would likely
start to impose similar border adjustment taxes to
protect their exporting industries and hence a
696
W. Jigang and P. Webb