Limiting costs or correcting market failures? Finance ministries and frame alignment in UN climate finance negotiations

Abstract

Finance ministries are increasingly involved in UN climate finance negotiations, yet this development received very limited attention in the literature on climate finance or climate negotiations. It is not obvious from the literature on bureaucratic politics how these ministries will position themselves on climate finance: they may frame climate finance as expenditure to be limited or as an instrument for correcting the market failure of climate change. This paper investigates which frames have characterised the positions of finance ministries on key issues in the climate finance negotiations, and whether the use of a given frame corresponds to particular factors. Case studies of Denmark, India, Indonesia and the USA based on official documents and interviews show that the position of each finance ministry is generally consistent with one particular frame. The Indonesian and Danish finance ministries predominantly framed climate finance as a way of correcting a market failure. The Indian Ministry of Finance emphasised Common but Differentiated Responsibilities, which fits with the budget frame. The US Treasury's position similarly fits with the budget frame while sharing elements of the market failure frame. Finance ministries that had the lead on climate finance were more likely follow the budget frame. The use of both frames cuts across the divide between industrialised and emerging economies. With the exception of the USA, left-and right-wing governments were equally likely to adopt either frame. These findings indicate that strengthening finance ministry forums built around the market failure frame can be a way of reducing norm fragmentation.

Special issue: managing fragmentation and complexity in the emerging system of international climate finance

“…Thus, it comes as no surprise that there are norm conflicts, for instance between developing and developed countries on the role of private finance (Pauw 2017), among finance ministries on the rationales for climate finance (Skovgaard 2017), or among political parties on the level of climate finance that contributor countries should provide (Pickering and Mitchell 2017). Yet the articles also find some evidence for synergies and shared norms.…”

“…A further question concerns how domestic fragmentation-for example, in the form of norm contestation among or within bureaucratic agencies or political partiesinfluences and drives international fragmentation (Skovgaard 2017;Pickering and Mitchell 2017).…”

“…This ambiguity partly reflects the different interpretations of these concepts resulting from uncertainty about the nature of the task at hand (what Hall terms ''epistemic ambiguity''), but is also partly a result of heterogeneous preferences or ''strategic ambiguity,'' or deliberately vague wording in international agreements that gives actors discretion to pursue their own interests. Convergence and divergence of preferences across similar ministries (in this case finance ministries) from different countries may increase as well as reduce fragmentation (Skovgaard 2017). Political polarization within contributor countries may increase fragmentation by undermining the predictability of financing flows and eroding support for multilateral funding channels (Pickering and Mitchell 2017).…”

“…aid budgets; see Pickering and Mitchell 2017), even if such a strategy may tend to increase rather than reduce institutional fragmentation. Skovgaard (2017) finds that strengthening forums for finance ministry representatives to cooperate on climate finance can be a fruitful venue for reducing promoting frame convergence between finance ministries and thus reduce norm fragmentation, although expanding such forums contributes to institutional fragmentation.…”

The Role of Finance Ministries in Environmental Policy Making: The case of European Union Emissions Trading System reform in Denmark, Germany and the Netherlands

“…Finance ministries are increasingly involved in environmental policy‐making. The most recent economic crisis made their role as guardians of the budget (see Wildavsky, ) even more salient (Skovgaard, ), while the framing of climate change as an market failure increased their interest in the subject (Skovgaard, , ). Finance ministry involvement is particularly interesting in the case of the European Union (EU) Emissions Trading System (ETS) due to its environmental and fiscal dimensions, which gives us an opportunity to understand the role of finance ministries in environmental policy‐making?…”