Study quantifies the effects of political lobbying on climate policy

How much power do lobbyists wield when it comes to enacting climate change policy? A first-of-its-kind study, published in the journal Nature Climate Change, explores that question by focusing on one prominent example from recent history.

In 2009, American lawmakers had the chance to pass what would’ve been among the most comprehensive climate change regulation to date: the American Clean Energy and Security Act, also known as the Waxman-Markey bill. The bill was based on a cap-and-trade system in which the government would’ve issued a set number of permits to companies that allowed them to produce emissions. These companies, in turn, would’ve been able to buy and sell these permits among one another.

The bill passed in the House but never made it to the Senate floor, setting the tone for climate change regulation in the U.S. in the following decade. Why did it fail? For one, climate change regulation often doesn’t pass because of weak incentives: Why should one jurisdiction suffer the costs of regulation when it can benefit from the reductions of others? Beyond that, how much of a role did lobbying play in the process?

Using a statistical analysis based on lobbying records, the authors found that lobbying lowered the probability of the Waxman-Markey bill passing by 13 percent (55 to 42 percent), resulting in an estimated social cost of $60 billion. According to the researchers of the study, two general findings emerged:

“First, we find that firms that are expected to lose are more effective at lobbying to lower the policy’s chances than firms that are expected to gain are at lobbying to raise the policy’s chances. Second, regardless of whether a firm gains or loses, there are diminishing returns to lobbying.”

The authors weren’t quite sure why lobbying from oppositional firms proved to be more effective. But they said their results suggest that “subtle design changes to market-based climate policies can alleviate political opposition and increase chances of adoption,” as study author Kyle Meng, an economist and UC Santa Barbara professor, told UC Santa Barbara’s The Current.

The Waxman-Markey bill, for example, would’ve issued free permits to some firms. If regulators had identified the firms expected to lose from the bill, and then made an effort to issue free permits to those same companies, the likely result would’ve been less oppositional lobbying.

“Our findings also provide a glimmer of hope by paving a path toward more politically robust climate policies,” Meng said.