14.1 Summary of the Findings: Economisation Comes in Different Shapes

The defining year was 2009 for both issues, the year of the Pittsburgh commitment, the failed attempt to adopt a G20 commitment on climate finance and the fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC COP15) in Copenhagen. This was the year of the most high-level involvement within the G20 concerning both issues, and after 2009, the issues have mainly been addressed on a technical level. Although the overall trend is one of increasing output regarding both issues (on the expert level), the G20 and the IMF have since about 2011 produced less output on climate finance, particularly public climate finance. Thus, there is an overall pattern of high-level involvement followed by technical output, which has gradually increased in volume and to some degree also in political priority.

Fossil fuel subsidies and climate finance have both been addressed by the institutions in ways that frame their environmental impact in economic terms. Yet, the institutions have varied considerably in terms of their output (see also Table 14.1): the G20 went from addressing both fossil fuel subsidies and climate at the level of state leaders and finance ministers in 2009 to addressing it in technical working groups. This development also includes a change from mainly regulatory and declaratory output (notably to the commitment to fossil fuel subsidy reform) to more knowledge-oriented output. While its 2009 attempt to commit to the norm of fossil fuel subsidy reform was successful, the attempt to provide agreement on climate finance was not, although the latter influenced the subsequent climate finance provisions of the Copenhagen Accord. This difference in successful agreements is reflected in the G20’s subsequent output, in which the climate finance output focused on providing knowledge and a shared understanding of technical issues, while the fossil fuel subsidy output focused more on states’ adherence to the Pittsburgh commitment, including far-reaching peer reviews. The G20 did not address the issues of what constitutes fossil fuel subsidies and climate finance as explicitly as the OECD and the IMF, but de facto left them to member states and other institutions (e.g. OECD in the case of the fossil fuel subsidy reviews).

The OECD has been very prolific in terms of regularly producing knowledge about both fossil fuel subsidies and climate finance in the shape of reports, data, meetings and workshops. While there have been important normative dimensions to OECD output on both issues (e.g. promoting the norms that countries should reform fossil fuel subsidies and developed countries provide efficient climate finance), the cognitive aspects of this output is the most important. These cognitive aspects have particularly concerned defining what constitutes fossil fuel subsidies and climate finance, in the former case including a range of policies under its definition. In the latter case, the OECD has implicitly defined public climate finance as a kind of development aid and linked (public and private) climate finance to investment.

The IMF’s output went much further regarding fossil fuel subsidies than climate finance. Technical reports on the scope of fossil fuel subsidies, how to reform them and how to mobilise climate finance constitute the bulk of the IMF’s output. Yet, unlike the other two institutions, the IMF produced important distributive output in the shape of incentives for countries under IMF programmes to reform their fossil fuel subsidies. As regards cognitive output, the IMF’s most important output was its definition of fossil fuel subsidies as including non-priced externalities. Both this definition and the IMF output on mobilising climate finance through carbon pricing had significant normative components focused on ‘getting prices right’ through pricing externalities. Specifically, the IMF provided knowledge about fossil fuel subsidies as macroeconomic distortions and about the possibilities for mobilising and using climate finance through economic instruments such as carbon pricing and de-risking. The linking of the two issues to carbon pricing is key to the way the IMF has framed the issues in terms of Pigouvian environmental economics, the most ideal-typical case of economisation of the book.

The three institutions primarily addressed their membership circles, in the case of the IMF all countries, in the case of the OECD developed countries and the G20 twenty of the largest economies. Yet, the G20 and to a lesser degree the OECD also produced output intended for a global (state and non-state) audience, for example, publications on how to leverage private climate finance. Their audience was more overlapping in terms of whom they interacted with in the different countries: all three institutions interacted regularly with finance ministry officials, the OECD also with development and environment ministry officials, the G20 also with officials working directly for state leaders, and the IMF with central bank officials.

The differing approaches to climate finance and fossil fuel subsidies among the three institutions underscore that economisation of climate change does not entail one singular way of addressing these issues (or other issues). On both issues, the IMF framed carbon pricing as the solution to climate change, unlike the other two institutions, which treated carbon pricing as one instrument among many. The IMF’s approach to carbon pricing did not only entail giving polluters an economic incentive to reduce their emissions, but also that they should bear the social costs of their pollution, an approach more in line with Reference PigouPigou’s (1932) work on pricing externalities than Reference CoaseCoase’s (1960) on creating markets for externalities (see also Chapter 1). The G20 and the OECD were more closely aligned and adopted positions on the two topics more in line with the approach of domestic economic actors (e.g. finance ministries) in their member states. These two institutions treated fossil fuel subsidies as more of an economic problem than climate finance, which both institutions to a large degree framed as a subtype of development aid or increasingly as an issue of investment (the latter being in line with the IMF’s current approach). The investment approach constitutes a, less ‘pure’ different approach to economisation than the externality oriented, Pigouvian and Coasean approach that dominates neoclassical environmental economics. Although it is also rooted in mainstream economics, it is finance rather than environmental economics. Furthermore, the investment approach does not address the causes of climate change but rather the impact of climate change and climate change policies on the risks associated with investment (Reference Hong, Li and XuHong et al., 2019, Reference Hong, Karolyi and Scheinkman2020; Reference Krueger, Sautner and StarksKrueger et al., 2020).

The IMF’s definition of fossil fuel subsidies as including the non-pricing of externalities puts it at times at odds with the OECD, underscoring that different kinds of economisation may lead to non-synergistic relations between institutions. Nonetheless, the overall picture is one of predominant synergy among the institutions, which treated both issues as primarily economic issues to be addressed in ways maximising economic welfare and efficiency, and which could be measured in economic terms and addressed with economic instruments.

Regarding the causes (see also Table 14.2) shaping how the institutions addressed the two issues, factors stemming from within the institutions rather than their environment – specifically their worldviews and entrepreneurs – played key roles. The worldviews were important in shaping how the institutions framed both issues as economic issues to be addressed with economic instruments. They were particularly influential in the case of the IMF, which has a more entrenched economic worldview, due to a more ‘purely economic’ mandate and staff training than the other two institutions, and unlike the G20 it has a bureaucracy within which the worldview is strongly institutionalised. Perhaps unsurprisingly, the IMF also adopted a ‘purer’ (in terms of relying on neoclassical environmental economics) kind of economisation than the other institutions, due to differences in worldviews as well as fewer extra-institutional constraints to the influence of the worldviews and entrepreneurs, as discussed later in this section.

Policy entrepreneurs within the institutions, from IMF and OECD staff to the US and UK G20 Presidencies, were important in ensuring that both issues were on the agenda of their institution and also in promoting particular framings of the issues. For instance, the US G20 Presidency was important in placing the norm of fossil fuel subsidy reform on the G20 agenda and getting the G20 to commit to this norm, and IMF staff was important in promoting the definition of fossil fuel subsidies as including the non-pricing of externalities. Entrepreneurship has been more important as regards fossil fuel subsidies than climate finance, which is one of the explanations for the institutions going further (also compared to institutions not studied here) regarding the former rather than the latter.

Concerning extra-institutional factors, relations with the member states, including both the degree of autonomy of International Organisation (IO) bureaucracies, decision-making procedures, which countries are members and the ministries that represent them have played indirect roles. The high degree of autonomy of the IMF bureaucracy meant it was able to go against the preferences of powerful member states (Reference Bauer and EgeBauer and Ege, 2016), even the United States in the case of climate finance, in a way the OECD Secretariat was not. Thus, autonomy from the collective principal acted as a scope condition for the institutional worldview and the entrepreneurship of IO staff. The differences in autonomy explain why the IMF was able to address the two issues in ways that were more purely economic and less influenced by member state preferences.

Differences in membership, the ministries involved and decision-making procedures play less important roles in explaining differences between the institutions. There is relatively little correlation between the aggregated preferences of the member states (taking into consideration the differences in decision-making rules) and the differences in positions of the institutions. Although the G20 reflected the preferences of major emerging economies to a greater degree than the other institutions, the IMF (especially as concerns climate finance) went against the preferences of the United States and also Japan, the countries with the largest vote shares. The institutions are rather similar in terms of interacting with finance ministries, although OECD interaction with development ministries regarding climate finance played a role. Hence, interaction with finance ministries played a role for their approaches, including the economisation of the two issues, but does not explain the difference between them.

Another extra-institutional factor, institutional interaction, played a more substantial role. Particularly the G20 and the OECD interacted closely, with the G20 inducing the OECD to move particularly fossil fuel subsidies up its agenda, and the OECD shaping how the G20 addressed both issues by providing reports and other analyses for G20 meetings. The only case of the IMF interacting closely with another institution was in 2010, when the G20 induced the IMF to address climate finance, by requesting reports on mobilising climate finance which in return influenced G20 output. As regards other institutions, the three institutions interacted to a large degree with the same institutions, particularly the World Bank, other development banks and think tanks. Such interaction with a similar set of institutions pulled in the direction of convergence among the institutions. Finally, the perceived deadlock within the UNFCCC regarding climate finance spurred G20 member states to place the issue high on the G20 agenda.

The identifiable consequences (see also Table 14.3) of the economisation by the three institutions are more pronounced as regards the international level than the domestic one. Besides influencing each other, the three institutions also influenced a range of other international institutions. Especially regarding fossil fuel subsidies, the G20 was crucial for getting the norm of fossil fuel subsidy reform on the agenda of other international institutions, including Asia-Pacific Economic Cooperation (APEC), the North American Leaders’ Forum and the Sustainable Development Goals (SDGs), and for the creation of the Friends of Fossil Fuel Subsidy Reform. The three institutions, especially the OECD, provided important new knowledge about both issues, knowledge that was used by institutions including the UNFCCC (particularly climate finance), the SDGs (particularly fossil fuel subsidies), the World Bank and other multilateral development banks (MDBs), United Nations Environment Programme (UNEP), United Nations Development Programme (UNDP) and a range of other economic, development and environmental institutions. Furthermore, without the IMF’s output, carbon pricing and the non-pricing of externalities would not have been linked to fossil fuel subsidies in a very ideal-typical case of economisation.

Influences on incentive structures are rather absent among the international influences, except for the important influence of the G20 on the UNFCCC Copenhagen Accord provisions on climate finance in 2009. The G20 process established an understanding among the finance ministries of both developing and developed countries, which meant that the G20 representatives involved in the drafting of the Copenhagen AccordFootnote ¹ had an understanding of what would be acceptable to the other G20 countries. The understanding included the climate finance target, that private finance would count as climate finance and that developed countries had an obligation to fund adaptation and made reaching an agreement easier. This agreement, together with other output from particularly the G20 and the OECD, helped establish and maintain an international climate finance system in which key decisions regarding the allocation of climate finance was left to the contributor countries. The more recent focus on investment has contributed to the wider trend of focusing on such finance among international institutions also including UNEP and UNDP.

The domestic consequences are more difficult to discern. The IMF has played a very significant role in making countries under its programmes reform their subsidies, although this incentive-based influence was motivated by the Fund’s dislike of subsidies in general for economic rather than environmental reasons. The institutions in general played more of a discernible role regarding fossil fuel subsidies, getting the hitherto overlooked subject on the policymaking agenda in countries including the United Kingdom and providing knowledge about how to reform such subsidies to countries which undertook reforms, including India and Indonesia. The G20 voluntary peer review of fossil fuel subsidies– which also involved the OECD and initially also the IMF – held the participating member states accountable for the norm of fossil fuel subsidy reform. Yet, with the exception of the IMF programmes, the institutions helped prepare the ground for and shape the content of fossil fuel subsidy reform but with actual reforms being directly driven by domestic rather than international factors.

Concerning climate finance, the domestic influences are generally difficult to pinpoint, and perhaps the most significant consequence comes in the shape of contributing to a climate finance system in which the important decisions regarding climate finance allocation are made by the contributor countries. In this context, the OECD’s data on climate finance has constituted an incentive and a normative pressure to provide more climate finance inter alia via other governments and non-governmental organisations (NGOs) shaming developed countries for not providing sufficient amounts of climate finance. All three institutions, especially the G20 and the OECD, yielded cognitive and normative influence through meetings and workshops enhancing the participants’ understanding of climate finance. This was relevant as many of them came from finance ministries and were new and more susceptible to new framings of climate finance, especially as regards defining climate finance in terms of investment.

14.2 Limitations to Economisation

This book has found that the economic institutions have contributed to the fight against climate change. Although their impact has varied from being a driving force (G20 and fossil fuel subsidies) to supporting roles (IMF and climate finance), one conclusion is that their involvement has constituted a positive force for addressing climate change. However, there are important limitations to such a positive impact. First, the analysis shows how economisation may work under conducive circumstances, but also how it can be limited when such circumstances are not in place (e.g. when the IMF paid limited attention to climate finance since it was considered beyond its mandate). It is far from certain that economisation will work in other circumstances.

Second, another concern relates to their involvement adding to the fragmentation of the climate complex. Such fragmentation concerns the number of institutions involved and their relations (nested or distinct), the alignment of norms within the complex and which states are members (Reference Biermann, Pattberg, van Asselt and ZelliBiermann et al., 2009a). The institutions’ contribution to fragmentation is evident as concerns climate finance, where they have added to the number of institutions, promoted normative ideas such as efficiency often at odds with UNFCCC norms (e.g. CBDR), and diverged from the UN institutions in terms of membership and decision-making procedures. Regarding the latter issue, as discussed in the following paragraph, the institutions grant developed countries more influence than the UNFCCC does. Unsurprisingly, the involvement of economic institutions contributes more to conflictive fragmentation when they address an issue already being addressed by other institutions than when they address a ‘new’ issue such as fossil fuel subsidies.

Third, while it may be beneficial for the climate to involve powerful institutions in climate policymaking, it may also have negative repercussions for justice concerns. As discussed earlier, the institutions have emphasised efficiency over equity, especially as regards climate finance. While the increased involvement of economic institutions may enhance the efficiency of climate finance measures (especially mitigation) it may also downplay the equity of such measures. For instance, the institutions have prioritised mitigation over adaptation (although they pay increasing attention to the latter), financing measures in emerging economies over Least Developed Countries (due to efficiency) and avoiding issues of historical responsibility and equal per capita emissions. Yet, regarding fossil fuel subsidies, the institutions have emphasised that reforms should prevent ‘adverse impacts on the poorest’ (G20 Heads of State and Government 2009b), thus adding a justice-oriented normative idea to a policy discussion that hitherto had been very efficiency oriented. In terms of procedural justice, the membership and decision-making procedures of the institutions also allow richer countries a greater say within the institutions than the poorest and most vulnerable countries. The OECD covers only developed countries, the G20 only twenty of the largest economies (and thus only developed and emerging countries) and voting within the IMF is determined on the basis of the level of income. Unsurprisingly, their output tends to reflect the preferences of richer and developed countries rather than those most affected by climate change, which are for the most part residents of developing countries.

Furthermore, when assessing their roles it is important to look beyond the cases of climate finance and fossil fuel subsidies. Climate finance, fossil fuel subsidies and climate change in general constitute only a small corner of the activities of the three institutions, but many of their activities that do not have an explicit climate focus still have an impact on the climate and on resilience to climate change. This includes output addressing energy, trade, development and economic growth in general. The question is how and how far the institutions address climate change within these policy areas, in other words how far the climate has been integrated within them (on climate policy integration and environmental policy integration; see inter alia Reference Adelle and RusselAdelle and Russel, 2013; Reference Nilsson and PallemaertsNilsson and Pallemaerts, 2009; Reference Tosun and PetersTosun and Peters, 2018). A ‘silo’ approach where climate change is addressed solely within its policy domain separate from other issues is unlikely to bring about the transition to a low-carbon society (Reference Boas, Biermann and KanieBoas et al., 2016; Reference Jordan and LenschowJordan and Lenschow, 2010; Reference Tosun and PetersTosun and Peters, 2018). Although it is beyond the scope of this book to provide a full survey of the climate policy integration of the three institutions, even a cursory overview reveals that there are limits to such policy integration.

The institutions pay increasing attention to climate issues across policy domains, as witnessed in how they address energy. For instance, since 2014, the G20 state leaders and energy ministers have consistently framed being ‘clean’ or low-carbon as a necessary feature of future energy (Reference DownieDownie, 2015; G20 Energy and Environment Ministers, 2019; G20 Energy Ministers, 2015, 2016, 2018; G20 Heads of State and Government, 2014). Yet, this framing has not prevented the G20 energy and environment ministers from – even in 2019 – defining gas as potentially playing an important role in supporting the transition to low-emission societies (G20 Energy and Environment Ministers, 2019; G20 Energy Ministers, 2016). Furthermore, the G20 has continued to focus primarily on economic issues without integrating climate change into these issues, but treating it as a distinct (and less important) issue (G20 Heads of State and Government, 2017, 2018, 2019). The Trump administration’s refusal to address climate change within the G20 has further limited the integration of climate change into other G20 policy areas. The OECD (which has a division of labour with the International Energy Agency [IEA] according to which energy is mainly an IEA responsibility) has increasingly addressed energy through a climate framing stressing the necessity of a transition to low-carbon energy.

Nonetheless, climate change, including the risk climate change poses to the economy both in terms of climate impact and of stranded fossil fuel assets (Reference Campiglio, Dafermos, Monnin, Ryan-Collins, Schotten and TanakaCampiglio et al., 2018), is only beginning to be integrated into the core activities of the institutions. In December 2019, the IMF Executive Board agreed with the suggestion of the IMF bureaucracy (specifically Managing Director Georgieva) that climate change could have macro-critical (essential to economic stability and growth) implications (Bretton Woods Project, 2019; IMF, 2019f). Consequently, the Fund – which has considerable power to influence all states through Article IV consultations and conditionalities – plans to integrate discussions of the fiscal and macro-economic consequences of both climate mitigation policies and climate change impacts into its consultations with states (IMF, 2019f). The Fund has already integrated mitigation policies into some of its Article IV consultations. The OECD also increasingly treats climate change as a cross-cutting priority, yet it is only to a limited degree addressed among the ten key actions proposed by Secretary General Gurría in his 2020 report (OECD, 2020b). The G20 is a clear laggard in this respect, inter alia due to the climate scepticism of the Trump administration.

Altogether, the three institutions have hardly embarked on paradigm changes. Rather, they have addressed climate change issues according to core ideas and largely within predefined policy domains (although there is increasing climate policy integration). This verdict corresponds to similar findings regarding how the IMF has addressed inequality (Reference Clift and RoblesClift and Robles, 2020). While shifts to de-growth or post-growth paradigms seem extremely unlikely for institutions established predominantly to improve growth, there are attempts to reconcile sustainability with economic growth in other corners of global governance and academia. These attempts exist as more or less strong or weak versions of concepts such as ecological modernisation, green growth, the Green Economy and the Green New Deal (Reference EckersleyEckersley, 2004; Reference JacobsJacobs, 2012; Reference KleinKlein, 2019; Reference Meckling and AllanMeckling and Allan, 2020; Reference Mol and SpaargarenMol and Spaargaren, 2000; Reference TienhaaraTienhaara, 2014). Common to these approaches is the importance of integrating environmental objectives into all aspects of economic policymaking, and in the stronger versions also to de-prioritise growth and elevate justice-oriented political objectives such as interracial and gender justice to top priorities (Reference EckersleyEckersley, 2004). Yet, these notions have rarely been integrated into the output of the three institutions, even though the OECD (2011b) has stressed the importance of green growth. The OECD has defined green growth as ‘fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies’ (OECD, 2011b, p. 114), that is, a weaker version stressing that environmental protection can enhance growth. Thus, unsurprisingly the three institutions do not support radical change, but wish instead to address climate change within existing economic paradigms. As discussed in Section 14.4, future research could explore to which degree these paradigms would constitute stumbling blocks for the transition to sustainability, even if they bought the world badly needed time to transition.

14.3 Theoretical Implications

The perspectives and findings outlined in this book have wider theoretical implications. Beyond having contributed to the literature on international environmental governance and on the international economic institutions, the book contributes to more general theoretical discussions. By developing and exploring the concept of economisation in the case of the international economic institutions, the book contributes to the literature on environmental-economic relations (see Reference EkinsEkins, 2000; Reference Grubb, Hourcade and NeuhoffGrubb et al., 2014; Reference Katz-Rosene and PatersonKatz-Rosene and Paterson, 2018; Reference Newell and PatersonNewell and Paterson, 2010; Reference StevensonStevenson, 2019) and on international institutions and organisations (see e.g. Reference Barnett and FinnemoreBarnett and Finnemore, 2004; Biermann, Siebenhüner, et al., 2009; Reference Gutner and ThompsonGutner and Thompson, 2010; Reference YoungYoung, 2001). Regarding the former, by developing and applying the concept of economisation, including its causes and consequences, the book has shown that it is possible to reconcile economic and environmental objectives in economic institutions, albeit in a way that is predicated on core economic tenets. As discussed in Section 14.2, there are also limitations to this approach in terms of economisation being contingent on other factors, for example, the downplaying of justice concerns, fragmentation at the international level, and perhaps most importantly the absence of more widespread and paradigmatic change.

Importantly, the findings of the book underscore that economisation does not entail one, monolithic approach. Rather, as demonstrated in the divergence between the IMF and the OECD regarding the definition of fossil fuel subsidies, the economisation of a subject may result in diverging, even conflicting approaches. Furthermore, much of the recent focus on climate finance as investment draws from a different, but not conflicting strand of mainstream economics, namely finance, rather than neoclassical environmental economics. The former kind of economisation (framing in terms of investment) may be less ideal-typical than the latter kind (based on neoclassical environmental economics), but still constitutes economisation. The diverging approaches are not surprising given that mainstream economics differ on a range of issues, even if they agree on fundamental tenets such as economic growth and stability constituting the key objectives and all kinds of costs and benefits being measurable in economic terms (see Chapter 1). The finding that economisation does not inevitably produce one kind of output, but rather acts as a framing device making certain kinds of (economics-based) output possible, leaves room for the role of the individual economic institution as well as for individual agency. Thus, it matters which institution undertakes the economisation, but there is also scope for individual actors within the institution to shape the economisation.

In spite of economisation not leading to one fixed output, the consequences of economisation are rather similar in terms of stressing the economic impact of policy problems, framing them in economic terms (e.g. as externalities) and economic solutions (taxes, positive economic incentives such as risk reduction). As regards climate change, economisation has already played a role beyond the institutions studied here in terms of finance ministries, central banks and other economic institutions promoting carbon taxes, emissions trading, fossil fuel subsidy reform and the incorporation of climate risks in financial risk assessments (Reference Campiglio, Dafermos, Monnin, Ryan-Collins, Schotten and TanakaCampiglio et al., 2018; Reference CarneyCarney, 2015; Reference SkovgaardSkovgaard, 2017c). Economisation has arguably also taken place within a range of other fields, including education, health, energy, science and sustainability (see also Reference Alvial-Palavicino and UretaAlvial-Palavicino and Ureta, 2017; Reference BinaBina, 2013; Reference Schimank and VolkmannSchimank and Volkmann, 2012; Reference Wilshusen and MacDonaldWilshusen and MacDonald, 2017). Given the power of economic institutions and discourses, economisation holds major (within established paradigms) transformational potential. While such transformational potential may be beneficial for bringing about the transformations urgently needed to mitigate and adapt to climate change and other environmental issues, economisation has tended to downplay concerns about social justice and inequality (Reference Momani and HibbenMomani and Hibben, 2018; Reference StieglitzStieglitz, 2002). Thus, economisation is not only much stronger on the environmental aspects of sustainable development compared to social ones, but it also hardly constitutes radical change, as discussed in Section 14.2.

The literature on economic–environmental relations has long argued that environmental (and other kinds of) policymaking predicated on economic principles have been successful inter alia due to support from powerful economic actors and resonance with economic discourses (Reference BernsteinBernstein, 2001; Reference NewellNewell, 2012; Reference Newell and PatersonNewell and Paterson, 2010; Reference Wilshusen and MacDonaldWilshusen and MacDonald, 2017). The concept of economisation contributed to this literature by focusing more explicitly on the role of economic institutions, including the agency of individual institutions and actors within them. The book has also identified factors that may enable economisation, including entrepreneurship, autonomy from principals, and economic (fiscal) benefits and costs, as well as factors that may hinder economisation, including economic (fiscal) benefits and costs and the policy issue already being addressed by other institutions.

The concept of economisation also contributes to ongoing debates about similar dynamics, including whether the world is characterised by the climatisation of other policy domains (Reference Aykut, Castro, Aykut, Foyer and MorenaAykut and Castro, 2017). While economisation, climatisation (Reference Aykut, Castro, Aykut, Foyer and MorenaAykut and Castro, 2017), securitisation (Reference Buzan, Wæver and WildeBuzan et al., 1998), marketisation (Reference MasseyMassey, 1997) and financialisation (Reference Epstein and EpsteinEpstein, 2005) are not mutually exclusive concepts, they draw attention to different aspects of political phenomena. It is possible that the world is experiencing climatisation within some policy spheres and economisation of climate change within others. Yet, unlike climatisation the concept of economisation not only allows for comparison with other policy issues experiencing similar economisation dynamics (e.g. gender and education), it also draws attention to economic institutions and framings which historically have been very important. In a time when the role of economics, economic thinking and economic institutions are being intensely debated, the concept of economisation can bring the dual dynamic of economic institutions addressing an issue and framing it in economic terms into the spotlight. The focus on the agency of individual institutions means that economisation (in the sense used here) is not portrayed as a development progressing due to its own inherent dynamics (the way some accounts of marketisation and economisations do, see, for example, Reference BinaBina, 2013; Reference Çalışkan and CallonÇalışkan and Callon, 2009, Reference Çalışkan and Callon2010; Reference MasseyMassey, 1997; Reference Schimank and VolkmannSchimank and Volkmann, 2012; Reference WenzlaffWenzlaff, 2019). Rather, it is the agency of economic institutions and actors that can drive economisation forward or block it.

The second broader theoretical strand that this book has contributed to is the literature on international institutions and organisations. First, the book has added to the literature on institutional output by constructing a framework for studying the causes and consequences of institutional output that included institutional interaction as well as more ‘traditional’ factors such as institutional worldview, entrepreneurship and membership relations. While the latter factors (worldview, entrepreneurship and membership relations) are often included in studies of institutional output (Reference Biermann, Siebenhüner, Bauer, Biermann and SiebenhünerBiermann et al., 2009b), the inclusion of institutional interaction means that each institution is not treated as an isolated entity, but that the influences from its institutional environment are also studied. Expanding the focus beyond the individual institution draws upon and contributes to the literature on institutional complexity or polycentricity of global climate governance (for institutional complexity see Reference Biermann, Pattberg, van Asselt and ZelliBiermann et al., 2009a; Reference Keohane and VictorKeohane and Victor, 2011; for polycentricity see Reference Jordan, Huitema, van Asselt and ForsterJordan et al., 2018; Reference OstromOstrom, 2010) as well as institutional interaction (Reference Oberthür and StokkeOberthür and Stokke, 2011; Reference StokkeStokke, 2001, Reference Stokke2012). Thus, the framework allowed for studying intra (worldview, policy entrepreneurs) and extra-institutional factors (relations with member states, institutional interaction) as well as the relationship between these factors, an approach that could be useful for the study of other institutions and issues.

Second, the book has contributed to the literature on international institutions and organisations by demonstrating the importance of the intra-institutional factors of institutional worldview and entrepreneurs operating within the institutions. The importance of such factors may have been well established by inter alia Reference Barnett and FinnemoreBarnett and Finnemore (2004) and Reference ChwierothJeffrey Chwieroth (2010), but by showing that autonomy constituted an important scope condition whereas membership was less important, the book has developed our understanding of the circumstances under which worldviews and entrepreneurs play a role. Third, the book has contributed to this literature by studying how institutions address issues beyond their normal portfolio, and by identifying scope conditions (autonomy, economic consequences of the policy at hand, the degree to which the issue was already addressed by other institutions) for how far they could go regarding new issues. In this way, the book contributes to the literature on how international institutions deal with new issues (e.g. Reference HallHall, 2016; Reference Nielson and TierneyNielson and Tierney, 2003; Reference ParkPark, 2010).

14.4 Future Research

The findings open up new pathways for future research. While this volume has focused on the economisation of just two issues at the international level, analysis of how economisation has played out at the domestic level, within other institutions at the international level and regarding other issues would be fruitful. Such research could enhance the understanding of the extent of economisation, particularly which policy issues that have been subject to economisation and which policy issues have not. This kind of research could also further explore the causes and consequences of economisation, particularly whether the same causal factors have played similar roles regarding other issues and institutions at the international level, and which causal factors enable, hinder and shape economisation at the domestic level. In the latter respect, it would be highly relevant to include economisation at the international level as a factor, and thus expand on the domestic consequences of the international economisation undertaken in this book.

In empirical terms, future research should also focus on non-environmental issues such as gender. Gender is, like climate change, an issue historically seen as non-economic and even as standing in opposition to economic paradigms, Nonetheless, in 2015, the IMF identified gender (and climate change and inequality) as an emerging structural issue (IMF, 2015b), and has argued in favour of women’s economic participation referring to its inherent value and its positive impact on growth (IMF, 2020a). Likewise, the G20 and the OECD have also addressed gender issues, including the OECD providing reports to the G20 on the economic benefits of gender equality (OECD and International Labour Organization, 2015; OECD et al., 2014). All three institutions have focused on economic aspects of gender issues, such as pay gap, economic empowerment and entrepreneurship. Future research could focus on the economisation of gender issues by these three institutions or by other, public or private, international or domestic economic institutions.

In more strictly theoretical terms, the concept of economisation needs further development. Especially the relationship between, on the one hand, economisation and, on the other, the concepts of depoliticisation (Reference BurnhamBurnham, 2001; Reference HayHay, 2007) and politicisation (Reference ZürnZürn, 2014) could benefit from further development. Is the economisation of climate change studied in this book inherently a case of depoliticisation? Arguably, this would be the case only if the issue had been previously politicised, as was partially the case with climate finance during the UNFCCC negotiations. The economisation of a hitherto depoliticised issue would hardly constitute depoliticisation. Perhaps the more important questions are how to conceptualise (de)politicisation when an issue already addressed within one (non-economic) set of institutions and framed in one (non-economic) way is economised? What kinds of conflicts or synergies would we expect, and under what conditions would economic institutions and framings prevail? Arguably, the economisation of climate change and other issues provide ample empirical material for exploring these questions. Likewise, there is ample material for studying the relationship between climatisation (Reference Aykut, Castro, Aykut, Foyer and MorenaAykut and Castro, 2017) and economisation: These two concepts are different heuristic lenses for studying developments that may be distinct or overlap, for example, the efforts to make investments climate-friendly, which can be understood both as an instance of climatisation and of economisation. Since the different concepts capture different dynamics, the question of which concept to employ largely depends on the theoretical interest that motivates the inquiry. Yet, future research could explore which of the two concepts that are most theoretically enlightening, and which best capture current developments in climate politics. On one level, economisation has the advantage of being a broader concept that can be used to understand developments outside environmental politics, such as gender or education.

Moving away from economisation, future research could also draw on and further develop the analytical framework for studying the role of intra- and extra-institutional factors determining institutional output. Particularly the question of the relationship between the different sets of factors could be explored further. The analysis found that member state relations (autonomy of the bureaucracy, membership circle) acted as a scope condition for intra-institutional factors (entrepreneurship, institutional worldview), but what kind of relationship exists between institutional interaction and these intra-institutional factors? More specifically, to what extent does it matter if the institutional worldview of the institution in question, fits or conflicts with the worldviews of the institutions it interacts with? Moreover, to what extent can entrepreneurship shape institutional interaction, for example, by establishing particular kinds of interaction, and how far can institutional interaction shape the possibilities for entrepreneurship, for example, by opening up windows of opportunity? These questions and others could be developed further theoretically and tested empirically on a wider set of cases.

14.5 Recommendations for Future Policy and Practice

The present book has studied the economisation of climate change in two cases, as well as its limitations. Fundamentally, the analysis indicates that economic institutions are capable of taking environmental issues seriously, but they do so according to their own economic worldview and often struggle to integrate these environmental concerns into their wider practices. These findings matter, as economic institutions – both at the international and domestic levels – are much more powerful than environmental ones.

Perhaps the most instructive set of recommendations emerge from the comparison between fossil fuel subsidies and climate finance. That the economisation of fossil fuel subsidies had more far-reaching consequences than the economisation of climate finance was due to the latter issue already being addressed by a set of international institutions and having negative economic consequences for a large number of actors (in contributor countries), whereas fossil fuel subsidies have fiscal and macroeconomic benefits. This tells us that while economisation may be worth pursuing when the issue has not already been addressed by other institutions and the issue fits with an economic agenda, it can be counterproductive if other institutions address it and the economic ‘fit’ is less evident. In the case of climate finance, economisation added to the fragmentation of the international climate finance system in terms of institutions, norms and actor constellations. In terms of fit with an economic agenda, issues such as carbon pricing, fossil fuel subsidies and the integration of climate concerns into long-term policymaking, are conducive to economisation because they overlap more with the economic institutions portfolio and fit with environmental economics as well as economic priorities such as removing market distortions and reducing public expenditure. The emphasis on reducing expenditure also means it may be more fruitful that these institutions address anti-climate policies (besides fossil fuel subsidies policies such as agricultural subsidies and spending on road or aviation infrastructure) than climate policies.

In this respect, it is important that economisation implies prioritising efficiency and effectiveness over equity. Hence, it makes less sense that economic institutions address issues with important equity dimensions such as biodiversity, climate refugees and the role of indigenous peoples. On a related note, while the urgent state of climate politics may mean that it is better to prioritise immediate and effective action over concerns of equity and justice (be it procedural or in terms of outcomes), this is inherently a political choice. The trade-off between on the one hand equity and on the other effectiveness and efficiency is very much salient in the case of economisation because of the power and centrality of economic institutions at the international and domestic level. This book has shown that these institutions can be part of the solution, but likely at the expense of equity concerns. Making the right choices regarding this trade-off requires an acute awareness of the implications of economisation. In this respect, the differences between the different kinds of economisation rooted in different strands of mainstream economics also play a role. More Keynesian approaches may be suitable for times when economic stimulus is needed, for example, following the Corona pandemic, whereas carbon pricing may be easier to adopt once the need for economic stimulus is over, and governments need new, sustainable sources of revenue. Specific kinds of economisation may also be more conducive for alliances between economic and environmental actors, for example, economisation rooted in Pigouvian economics may be conducive to alliances between environmentalists, economic experts and finance ministries in favour of carbon taxes, while more Keynesian kinds of economisation may be conducive to alliances between environmentalists, trade unions and industry associations in favour of green recovery packages. The latter kind of alliance may be more relevant in the immediate aftermath of the pandemic, the former more in the longer run.

The political nature of the choice of whether to pursue economisation or not underscores the importance of bringing the political sphere back in and of politicising the question of economisation. In other words, the meta-question of whether and how to economise should not be left to the economic institutions, but should instead be subject to public debate about collectively binding decisions concerning the common good (Reference ZürnZürn, 2014).