Supply Chain Linkages and the Extended Carbon Coalition

The forthcoming article “Supply Chain Linkages and the Extended Carbon Coalition” by Jared Cory, Michael Lerner and Iain Osgood is summarized by the author(s) below. 

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Which special interest groups in the United States oppose effective action to reduce CO2 emissions and confront global climate change? In public debates, the fossil fuel industry is generally identified as having the most to lose from climate actionCertain non-fossil fuel emitters of CO2 – like the cement industry – and heavy consumers of electricity – like aluminum smelters  might also stand to loseSince the set of all industries that directly benefit from unrestricted CO2 emissions is generally thought to be small, only a relatively narrow base of directly affected industries ought to oppose proposals to mitigate climate change by putting a price or tax on carbon.  

A few examples might lead one to question this simple model. If aluminum smelters face significant costs from climate regulation due to their heavy use of electricity, wouldn’t consumers of aluminum also face higher costs from a carbon tax as the price of aluminum went up? For that matter, wouldn’t the bauxite mining industry, which depends on supplying ore to the aluminum industry, face a loss of sales if aluminum were to become more costly to make?  A similar chain of reasoning might lead you to ask whether the concrete pipe industry and the silica mining industry – major consumers and suppliers of concrete manufacturers, respectively – might come to oppose climate action due to their close links with a heavily emitting industry. 

In order to systematically test this idea, we assembled the largest-ever dataset on special interest activity around climate politics in the United States. We identified over 80 public coalitions which included US firms or trade associations with a focus on climate politics, totaling over 13000 unique members. 27 of these coalitions opposed climate action. Using these data, we found that the number of firms that have publicly opposed climate action is not small. Moreover, firms and associations opposed to climate action are drawn from a diverse set of industries, spanning all sectors of the economy. Surprisingly, the majority of opposition to climate action comes from firms and associations with no business activity whatsoever in the most heavily emitting and electricity-consuming industries.  

We then show that the opposition to climate action among these firms can be explained by their supply chain linkages to heavy CO2 emitting industries. Firms that consume the products of heavily emitting industries as inputs are much more likely to join a coalition opposing climate action than firms that don’t. Likewise, firms that sell more to heavily emitting industries are also substantially more likely to oppose climate action. These patterns explain the considerable reach of climate opposition throughout US industry.  

Why does this matter? Crafting effective policies to combat climate change requires developing successful political coalitions in support of that goal. Our research suggests that policymakers should develop political strategies with the supply chain in mind, because the economic consequences of decarbonization can spread beyond direct emitters. For example, plans to compensate firms (and their workers) for the redistributive effects of decarbonizing the economy may need to include a far wider group of stakeholders than is generally acknowledged. Understanding how supply chains create complex networks of shared interests will help in both the design and adoption of the next generation of policies to confront climate change. 

About the Author(s): Jared Cory is a PhD Candidate, Department of Political Science at University of Michigan, Michael Lerner is a PhD Candidate, Department of Political Science and Gerald R. Ford School of Public Policy at University of Michigan and Iain Osgood is an Assistant Professor, Department of Political Science at University of Michigan. Their research “Supply Chain Linkages and the Extended Carbon Coalition” is now available in Early View and will appear in a forthcoming issue of the American Journal of Political Science. 

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The American Journal of Political Science (AJPS) is the flagship journal of the Midwest Political Science Association and is published by Wiley.

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