The Political Economy of Clean Energy Transitions at Sub-National Level. Understanding the Role of International Climate Regimes in Energy Policy in Two Brazilian States

Jose A. Puppim de Oliveira and Celio Andrade


There is tremendous potential for investments in clean energy over the next few years to take the energy matrix in a more sustainable direction to tackle climate change and air pollution. The global bill for oil, electricity, and natural gas is around US$5 trillion annually and investments in clean energy reached US$230 billion in 2011 and US$286 billion in 2015 (UNEP, 2016). These annual investments could reach US$500 billion in 2020 (Glemarec and Puppim de Oliveira 2012). However, much larger investments in clean energy are needed, particularly in developing economies, to change the course of unpredictable climatic change (heading towards an average temperature increase of over 2°C) in the near and medium-term future. Even though, in many instances, clean energy is technically and economically viable, the political economy at the national, sub-national, and local levels does not allow the fulfilment of the possibilities for expansion in clean energy production. This could undermine the implementation of the new Paris Agreement on climate change under the United Nations Framework Convention on Climate Change.

The analytical framework of this research focuses on the analysis of the political economy of clean energy transitions, particularly understanding how sub-national and local institutions for tackling climate change are established and evolve, building on previous efforts (Keohane and Ostrom 1995; Bulkeley and Betsill 2003; Puppim de Oliveira 2009,2011). There is less research on the dynamics of domestic policies and politics, and on the nature of federal systems, in climate change discussions, as most of the research focuses on international dynamics of climate negotiations (Harrison and Sundstrom 2010). The local and domestic political economy can shed light on the factors that determine the effectiveness of international climate and energy regimes locally, and how to align international institutions to national and local institutions and context. The mismatch between the international goals and the national and sub-national institutions already in place leads to ineffective results in climate policy implementation (Puppim de Oliveira 2014). There is often a decoupling between the networks of public and private actors and institutions working on the ground and those coming from the top, particularly at the international level (Pinto and Puppim de Oliveira 2008; Andrade and Puppim de Oliveira 2015). Better connections between the international regimes in climate change and sub-national political economy could identify ways to boost clean energy sources both at demand and supply.

The objective of this chapter is to shed light on discussions about the political economy at the sub-national/local level surrounding the Clean Development Mechanism (CDM) of the Kyoto Protocol.[1] The CDM is a good research object for looking at the political economy of clean energy transitions at sub-national level. Even though it is an international mechanism, its implementation is done at the local level and influenced by sub-national governance. Moreover, CDM could be implemented only in developing countries, where the energy demand will grow most in the next few years. We examine the main political economy obstacles, particularly at the sub-national levels, including international-national-sub-national relations, to enabling global climate initiatives, such as the Kyoto Protocol’s CDM, to have a larger impact in developing countries. This enables us to recommend possible ways to overcome those obstacles, strengthen the implementation of clean energy policies, and inform the design of the implementation mechanisms for future climate change agreements. We examine the policy process for climate and energy policies in two states in Brazil (Rio Grande do Sul and Bahia), and, in particular, the influence of CDM in the development of those policies.

  • [1] This chapter is also based on long-term research and several publications co-written by theauthors, particularly Andrade, Nascimento, and Puppim (2010); Andrade etal. (2010); Silva-Junior etal. (2013a, 2013b); Falleiro etal. (2014, 2015); and Andrade and Puppim de Oliveira(2015).
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