The Rise of Emissions Trading in Global Climate Politics. Business Power and Pro-Regulatory Collective Action.

The role of transnational advocacy networks and coalitions has been widely discussed with regard to the rise of global civil society. However, little is known about transnational coalition formation among multinational firms in processes of market creation. This paper focuses on the transnational mobilisation of firms in promoting a global market for carbon emission credits in the context of climate politics.Since the inception of climate politics, firms have played a vital political role, initially opposing any form of regulation. However, in the late 90s, firms in Europe and subsequently in the United States began to endorse emissions trading as a form of market-based climate policy. At the core of this shift is the creation and promotion of various initiatives including advocacy networks, market-facilitating mechanisms, and private carbon trading schemes. This raises the question what drives the emergence of a transnational pro-trading coalition among multinationals in the transatlantic marketplace.Drawing from studies on policy diffusion and private governance, it is argued that coalition formation is best understood as a form of diffusion within and across industries. Here, diffusion is qualified as a distinct causal mechanism that builds on the interdependence of firm behaviour. Two main forms of diffusion are at work in coalition formation: diffusion through adaptation to global norms or competitive pressures, and diffusion through learning in transnational networks or through observation of industry peers. With this focus, the paper contributes to the understanding of the transnational mobilisation of multinationals in the creation of environmental markets. ..PAT.-Unpublished Manuscript [ABSTRACT FROM AUTHOR]