Hybrid Governance in Practice : Public and Private Actors in the Kyoto Protocol's Clean Development Mechanism

Abstract: It is commonly argued that the private sector needs to become actively involved for society to stand a chance of solving the most pressing global problems. This thesis, consisting of five articles previously published in refereed journals and an introductory essay, studies one case of private actor participation in global environmental governance: the Kyoto Protocol’s Clean Development Mechanism (CDM). Through the CDM, actors from developed countries can use emission reduction credits from projects implemented in developing countries to count against their own binding emission reduction targets under the Kyoto Protocol. The CDM provides a very active role for private actors compared to most other intergovernmental governance processes, as both the implementation and supervision of projects have been delegated to private actors. The contribution of this thesis is both theoretical and empirical. Theoretically, the thesis argues that private actor involvement in ‘hybrid’ governance arrangements, involving both public and private actors, is not a homogenous phenomenon but can take many different forms. A distinction is therefore introduced between hybrid governance with ‘delegated’, ‘joint’, and ‘entrepreneurial’ authority. Empirically, the thesis discusses whether private actor participation in the CDM has contributed to increased effectiveness. One of the main reasons for delegating certain tasks to private actors in global environmental governance is to increase cost-effectiveness. Nevertheless, a key conclusion of the thesis is that, in practice, the involvement of private actors in the CDM has not furthered cost-effectiveness in any of the examples studied. As counter-intuitive as it might sound, delegating the tasks of implementing and supervising projects to private actors seems to have reduced cost-effectiveness in the CDM. Even though private actors, following a logic of profit maximization, have actively strived for reducing costs, the concurrent reduction in the quality of both projects being implemented and of project supervision has offset any gains made in this regard. It is likely that a large part of the projects implemented through the CDM would have been realized also without the incentive provided by the mechanism, which means that they do not reduce net emissions. If projects do not reduce net emissions, they cannot be cost-effective no matter how cheap they are to implement. Is it a good idea to involve private actors in a future climate agreement, or any other global environmental governance arrangement, then? In the end, it all comes down to how it is done. Trying to channel the interests of private actors towards public interests such as climate protection might be both tempting and necessary for saving the environment, but as the example of the CDM shows, unless the involvement of private actors is wisely designed, engaging them in global environmental governance may reduce rather than increase effectiveness. Future research should therefore continue to scrutinize the merits of different types of hybrid governance arrangements.