Background and context

The full brunt of cumulative greenhouse gas (GHG) emissions will be felt over the years to come but climate change impacts are already here. Fifteen of the 16 warmest years on record (since 1880) have occurred since 2001 (NASA, 2016). At the same time, Hallegatte et al. (2016) estimate that, without the rapid implementation of pro-poor, climate-informed development policies, climate change impacts could result in 100 million more people in extreme poverty by 2030. The world’s poor are more vulnerable to loss of critical assets, health risks and food insecurity from drought or price shocks. To address these risks, development policies must consider climate risk scenarios while expanding ‘no-regrets’ social protection programmes that provide benefits to vulnerable populations under different climate scenarios.

This Topic Guide looks at climate change governance and the political economy of climate policy development and implementation at the national scale. Its primary purpose is to help Department for International Development (DFID) staff better support country partners in implementing climate and sustainable development policy that is equitable, effective and coherent and that can adapt to changing circumstances. It highlights national procedural, policy, institutional, political, economic and social-behavioural challenges and identifies potential entry points for addressing them. It is intended for both climate change and governance advisors, hence covers issues and concepts that will be very familiar to one group but not necessarily the other.

The 2015 Paris Agreement at the United Nations Framework Convention on Climate Change (UNFCCC) Conference of Parties 21 (COP21) reflects a new international governance model that seeks to balance ambition, accountability and transparency in commitments with fairness, equity, justice and sustainable development goals. The Agreement was formally ratified in November 2016, with over 55% countries signing up to its provisions. While the Agreement was hailed as a historic achievement (United Nations, 2016) for having secured nationally determined contributions (NDCs) from 189 countries representing nearly 99% of global carbon emissions, these contributions are also widely recognised as insufficient to achieve the goal of keeping warming well below 2°C or efforts to limit it to 1.5°C. Many operational rules must be determined at subsequent meetings, but the Agreement establishes a ‘global stocktake’ every five years to review progress towards meeting the global goals and has regular five-year intervals for countries to increase their level of action (Dagnet et al., 2016). Critical to the success of these commitments is the rapid mobilisation of $100 billion a year annually until 2025 to build resilience and aid in the transition to a low-carbon economy. To build trust and accountability in the process, countries will need to demonstrate they are meeting their commitments and, in many cases, increasing their ambition and updating their adaptation plans. Without effective institutions and political commitment at the national level, this is unlikely to happen (Robinson, 2015).

Structure of the Topic Guide

Section 2 summarises a selection of key literature on political economy approaches to environment and development, drawing key insights relevant to climate governance. It argues that, in any discussion of potential policy options, national climate governance must consider prevailing political narratives, economic incentives and relationships of power. Building on this, the Guide investigates different types of ‘commitment devices’ that will be important for both developed and developing nations in setting credible long-term signals that policies and plans will be upheld. A commitment device is a law, regulation, executive order, policy or other action that shapes future choices in order to meet a long-term policy objective ‒ in this case carbon mitigation, low-carbon development or climate-resilient sustainable development.

Section 3 summarises the literature on the institutional capacities needed to develop and implement cross-cutting policy changes in a way that enables vertical and horizontal information flows and is responsive to diverse societal needs. Here, it draws on climate and development governance literature, considering common challenges to institutional change, as well as those presented by wicked problems ‒ notably, how institutions can support decision-making that is robust in the context of uncertainty. This section also explores ways to address the disproportionality of climate impacts through gender-inclusive decision-making and enabling a more engaged and effective role for civil society. It does this specifically in the context of climate vulnerability and adaptation and through the governance of climate finance.

Section 4 draws on recent case studies from different countries to discuss the political and institutional contexts in which multi-sectoral coalitions have been effective in shifting towards more sustainable energy policies. Finally, Sections 5–8 look, respectively, at the role of the private sector; key sectors, including agriculture and the rural economy and electricity; city and subnational climate change governance; and, finally, fiscal reform, in particular the issue of fossil fuel subsidies.

We draw on examples from both developed and developing countries to show how different institutional and political settings are responding to challenges, ranging from emissions reduction to the building of adaptive capacity to respond to climate impacts. There is, of course, no ‘best practice’ formula that can be applied across all countries. National context matters, and the political ideologies and narratives, capacity needs, influential stakeholders and incentive structures will vary not only by country but also within countries over time.

As this Topic Guide shows, the degree to which climate policies are implemented and receive sustained public and political support depends on a range of factors. Critically, national institutions will need to coordinate, share information, enable learning and be adaptive to new feedback on climate impacts and social, economic, and ecological system responses. Climate policy development and implementation should also be gender-responsive. All this requires opening up data and providing enabling conditions for its effective use by non-state actors, including accountability mechanisms.

Political economy approaches can assess ways to frame proposed policies to catalyse new coalitions or address vested interests. Creative climate policy design can help by providing innovative ‘commitment devices’ that can promote decision-making for the long term, enabling future flexibility in implementation while still providing protection from quick shifts in political support.

As many DFID staff are well aware, it is critical to conduct a political economy analysis (PEA) before engaging at the country level in any type of development policy. It is arguably even more so with climate policy, as this requires systemic transformations involving a wide range of actors working under uncertainty, with costs that are often acute and benefits that are more diffuse. For mitigation, these benefits are primarily global, whereas for adaptation they tend to be more concentrated. The costs and benefits for mitigation are more easily comparable (tons of CO2, avoided costs, etc.), whereas adaptation benefits are dependent on the specific context in which interventions are implemented (Asselt et al., 2015).

A note on the scope

This Guide reflects on how the 2015 Paris Agreement is likely to alter the incentives for domestic actors but does not attempt to cover international climate governance. Nor is it able to comprehensively cover the many sector-specific governance issues, especially those related to land use and forests. Meanwhile, although the political economy of development has received significant attention in recent years ‒ including from DFID ‒ there has been less analysis of the political economy of national climate policy, particularly adaptation, and the literature is much less abundant.

On certain areas that receive brief summaries in this Guide (e.g. gender, public financial management, climate change and social development), GSDRC has previously produced Topic Guides and Reading Packs, which can be found at gsdrc.org/publications.