Abstract
Abstract There is a long and continuing debate in the literature on corporate political power about whether businesses that advocate public-interest regulation do so for strategic political reasons or because they anticipate economic gains. Previous research on Big Oil’s strategies in climate politics has largely converged on the first view, arguing that global majors feign support for moderate carbon pricing largely to prevent the adoption of more drastic and costly policies. In contrast, this article argues that Big Oil’s growing stake in natural gas expansion is its economic motive for supporting favorably designed carbon pricing. The article finds that policy, technology, and energy market changes have paved the way for a shift toward natural gas and that a moderate carbon price, by triggering coal-to-gas switching, supports the realization of a gray transition in which “Big Gas” can expand its market share at the expense of coal and become a major bridge fuel next to renewables. Our findings underscore the importance of studying the competitive rivalry that underpins evolving industry demands for climate policy and regulation.
Highlights
There is a long and continuing debate in the literature on corporate political power about whether businesses that advocate public-interest regulation do so for strategic political reasons or because they anticipate economic gains
Studies of corporate political power disagree on whether support for publicinterest reform by previous business opponents mirrors some form of strategic accommodation or, alternatively, an economic self-interest in such regulation
We find that a combination of policy, technology, and energy market change has paved the way for a shift toward natural gas, which burns cleaner than coal, and that a moderate carbon price serves the evolving economic interests of more gas-invested majors
Summary
The idea that business support for public-interest policies reflects some form of “strategic accommodation” was proposed by Hacker and Pierson (2002) in their study of business power and the American welfare state. Business support for welfare state reforms should be seen as a strategic calculation or effort to prevent the potential endorsement of more radical alternatives Their focus on accommodation to strategic circumstances that constrain what can be achieved has influenced other scholars, such as Broockman (2012, 2019), who argues that businesses often face strong incentives to misrepresent their genuine preferences when seeking to position themselves strategically, in anticipation of policies that will hurt their bottom line. After the adoption of the Kyoto Protocol in 1997, European oil majors faced a new political reality where they were no longer able to prevent climate regulation in the European Union (EU)—which led oil majors like BP and Shell to shift their focus from opposing regulation toward shaping it (Skjærseth and Skodvin 2003) They joined new, pro-reform coalitions lobbying for market-based emissions trading systems (Victor and House 2006), seen as the least costly, less radical alternative to taxes or command-and-control regulation (Meckling 2011). The shift from opposition to support for climate policy, first among European and later among some US oil and gas majors, has been widely interpreted as an accommodative move in response to homecountry political and regulatory risks and pressures (see Levy and Kolk 2002; Meckling 2011; Pinkse and Kolk 2012; Pulver 2007; Skjærseth 2013; Skjærseth and Skodvin 2003)
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