Credibility dilemmas under the Paris agreement: explaining fossil fuel subsidy reform references in INDCs

Abstract

Fossil fuel subsidies are a market distortion commonly identified as an obstacle to decarbonization. Yet due to trenchant political economic risks, reform attempts can be fraught for governments. Despite these concerns, an institutionally and economically diverse group of states included references to fossil fuel subsidy reform (FFSR) in their Intended Nationally Determined Contributions (INDCs) under the Paris Agreement. What conditions might explain why some states reference politically risky reforms within treaty commitments, while most others would not? We argue that the Article 4 process under the Paris Agreement creates a “credibility dilemma” for states–articulating ambitious emissions reduction targets while also defining national climate plans engenders a need to seek out appropriate policy ideas that can justify overarching goals to international audiences. Insomuch as particular norms are institutionalized and made salient in international politics, a window of opportunity is opened: issue advocates can “activate” norms by demonstrating how related policies can make commitments credible. Using mixed methods, we find support for this argument. We identify contextual factors advancing FFSR in the lead-up to the Paris Agreement, including norm institutionalization in regimes and international organization programs as well as salience-boosting climate diplomacy. Further, we find correspondences between countries targeted by transnational policy advocates and FFSR references in INDCs, building on the momentum in international politics more generally. Though drafting INDCs and NDCs is a government-owned process, the results suggest that understanding their content requires examining international norms alongside domestic circumstances.