Editing IPCC:AR6/WGIII/Chapter-17 (section)

=== 17.4.4 Institutional Capacities and Multi-level Governance ===

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Capable institutions and multi-level governance often support the inter-agency coordination and stakeholder coalitions that drive sustainable transitions. Such institutions and governance arrangements are frequently required to formulate and implement the multi-sectoral policies that spur the adoption and scaling of innovative solutions to climate change and other sustainable development challenges. For example, such institutional and governance conditions have helped support the industrial policies that will be needed to spread renewables through the creation of domestic supply chains ( [[#Zenghelis--2020|Zenghelis 2020]] ) or to pilot CDR methods ( [[#Quarton--2020|Quarton and Samsatli 2020]] ).

However, government agencies with climate and other remits do not always work well together: the absence of coordination and consensus-building mechanisms can further deepen inter-agency conflicts that stall a transition. These challenges appear not only within but also between levels of decision-making. Studies of developing megacities, for instance, have found the lack of mechanisms promoting vertical cross-level integration to be a sizeable constraint on decarbonisation ( [[#Canitez--2019|Canitez 2019]] ). Differences in perspectives across non-state actors can similarly frustrate transitions in areas such as green buildings ( [[#Song--2020|Song et al. 2020]] ).

Here coordination complicates matters: coalition-building may require mutually reinforcing changes to institutions and policies. For example, decentralised renewable energy has made progress in Argentina, but consumer electricity subsidies give agencies and firms supporting conventional energy an advantage over those promoting renewable energy. Similarly, the lack of concrete guidance in green finance policies can deprive government agencies and other stakeholders of the information needed to balance ecological and financial goals ( [[#Wang--2016|Wang and Zhi 2016]] ). Many of these challenges can be particularly formidable in developing countries, where agencies lack sufficient financial and other capacities. A lack of government funds to cover ongoing maintenance costs along with resource shortages in rural locations can pose constraints on sustainable energy ( [[#Schaube--2018|Schaube et al. 2018]] ).

Building inter-agency or multiple stakeholders is frequently challenging because of the mutually reinforcing interactions between institutions and ideas. The imperceptible embedding of long-standing development paradigms (such as ‘grow now, clean up later’) in agency rules and standard operating procedures can make changes to governance arrangements challenging. This is partly because these rules and procedures can also shape the interests of key decision-makers (e.g., the head of an environmental agency). For some, this suggests a need to look not just at changing prevailing ideas and interests, but also at broader institutional and governance arrangements ( [[#Kern--2011|Kern 2011]] ).

However, institutional and governance reforms can be more than a technical exercise. Political, economic and other power relations can lock-in dominant institutional and economic structures, making the integration of climate and sustainable development agendas exceedingly difficult. For example, though there have been recent reforms, the initial lack of early progress in Australia’s energy transition is partly attributable to institutions of political economy being oriented to providing steady supplies of affordable fossil fuels ( [[#Warren--2016|Warren et al. 2016]] ).

This suggests that it is important to look closely at the pre-existing political economic system as well as the institutional context and capacities in assessing the prospects for transitions to sustainability. Furthermore, this is how existing institutions interact with ideas that often strengthen lock-ins. To illustrate, studies have shown that the status-quo orientations of leaders (including decision-makers’ disciplinary backgrounds, world views and perceptions of risk) ( [[#Willis--2018|Willis 2018]] ), as well as the organisational culture and management paradigms within which they operate, affect the speed and ambitions of climate policies ( [[#Rickards--2014|Rickards et al. 2014]] ).

Some studies have focused on factors that can break institutional and ideational lock-ins ( [[#Arranz--2017|Arranz 2017]] ), while others have found that intentional higher-level (or, in the language of socio-technical transitions, ‘landscape’) pressures can be the destabilising force needed to move transitions forward ( [[#Falcone--2015|Falcone and Sica 2015]] ). Often the state or national government (as the sovereign that determines how resources are used and allocated) can play a key role in destabilising incumbent energy regimes, a role that is significantly strengthened by public support ( [[#Arranz--2017|Arranz 2017]] ; [[#Avelino--2016|Avelino et al. 2016]] ). However, this role is not limited to government insiders. In some contexts, regime outsiders have also played a pivotal role in destabilising regimes by combining persuasive narratives that gain market influence ( [[#Arranz--2017|Arranz 2017]] ). Carbon-intensive luxury goods and services for wealthy consumers, for instance, especially if applied at the ‘acceleration’ phase of a transition, can help transform long-term social practices and behaviour and dissolve the ‘structural imperative for growth’ ( [[#Wiedmann--2020|Wiedmann et al. 2020]] ). In a similar fashion, environmental taxes can remove ‘locked-in’ technology and place pressure on dominant regimes to become more sustainable ( [[#Bachus--2018|Bachus and Vanswijgenhoven 2018]] ).

In many contexts, it is not multiple institutional and policy variables that come together to break unsustainable inertias. In South Korea, where the state was an initiator and enabler of change, the clean-energy transition took much longer than anticipated due to private-sector resistance. However, when policymakers focused on incorporating adaptive learning and flexibility into their decision-making, public- and private-sector interests gradually converged and joined with top-down policymaking to drive the transition forward ( [[#Lee--2019|Lee et al. 2019]] ). Thus, a political strategy can help align the interests and institutions needed to break lock-ins.

This becomes clear in studies that show that political coalitions can affect the speed of transitions ( [[#Hess--2014|Hess 2014]] ). These same studies show that incumbent industry coalitions are now competing with ‘green’ coalitions in terms of campaign spending over environmentally friendly ballot proposals ( [[#Hess--2014|Hess 2014]] ). Another way of shifting political-economic incentives is by offering a realistic exit strategy for incumbents, like interventions that provide long-term incentives for renewable-energy firms ( [[#de%20Gooyert--2016|de Gooyert et al. 2016]] ; [[#Hamman--2019|Hamman 2019]] ).

Overall, the previous subsection suggests that complementary policies and institutions that simultaneously integrate across multiple sectors and scales and also alter political economic structures that lock in a carbon-intensive energy system are more likely to move a sustainable transition forward ( [[#Burch--2010|Burch 2010]] ). Yet, despite a trend in climate governance towards greater integration and inclusivity and certain other novel governance approaches, traditional approaches to governance and a tendency to incrementalism remain dominant ( [[#Holscher--2019|Holscher et al. 2019]] ). Building the governance arrangements and capacities that prioritise climate change across all sectors and scales while destabilising entrenched interests and putting pressure on existing norms, rules and practices is still needed in many contexts ( [[#Holscher--2019|Holscher et al. 2019]] ).

At least three themes require further research in the scholarship on the governance of transitions: (i) the role of coalitions in supporting and hindering acceleration; (ii) the role of feedback, through which policies may shape actor preferences, which in turn create stronger policies; and (iii) the role of broader contexts (political economies, institutions, cultural norms, and technical systems) in creating conditions for acceleration ( [[#Roberts--2018|Roberts et al. 2018]] ). Importantly, these themes may serve as both barriers to and opportunities for transitions (ibid.).

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